shooting down of oil prices with more than 20% . It is an issue of economy and development rather than a political issue.
Oil holds below $58 as OPEC drags feet on cut
SINGAPORE (Reuters) - Oil held ground on Thursday near 2006 lows below $58, as traders waited for OPEC to hammer out details of an output cut to prop up falling prices, while the market anticipated a rise in U.S. crude inventories.
U.S. crude <CLc1> rose 14 cents to $57.73 a barrel at 0605 GMT (7:05 a.m. British time), after a 93-cent loss on Wednesday, when it touched $57.37, the lowest level since December 2005. London Brent crude <LCOc1> was up 9 cents at $58.74.
OPEC ministers aim to remove a million barrels per day (bpd) from oil supplies, but are divided on whether to make a reduction from a notional 28 million-bpd production ceiling or from actual supply of nearly 27.5 million bpd in September.
"Speed is of the essence more than anything else -- dithering to date has cost them credibility," said Tobin Gorey, commodity strategist at Commonwealth Bank of Australia (Munich: 882695 - news) . "Actual output will of course have to fall to have an impact on actual prices."
Investec Bank Ltd. said in a report on Thursday that with OPEC's unsuccessful haggling over output, oil was likely to hang below $60 a barrel for the time being.
Qatar's oil minister Abdullah bin Hamad al-Attiyah said on Wednesday he expected the cut to come from actual output. He said a formal decision will soon be announced, either in a statement within two or three days or at a meeting between October 16 and 18.
But Libya's top oil official said on Wednesday that OPEC ministers are still debating how to implement the cut and how to distribute the quotas among members, although the aim was a 1 million-bpd cut.
"If prices remain at this level there's still not much motivation to cut, but if prices keep falling rapidly they will want to pre-empt that," said Gordon Kwan of CLSA.
A Reuters survey of analysts found that U.S. crude stocks are seen having risen 800,000 barrels last week and distillate stocks by 100,000 barrels, in government data due later on Thursday, a day later than usual due to a Monday holiday <EIA/S>.
Distillate stocks, including heating oil, were already at their highest since 1999 and U.S. government forecasters said this week they expected warmer-than-average temperatures across much of the world's top oil consumer for the winter season.
Adding to bearish supply factors, Iraq pumped crude exports through its vulnerable northern pipeline to Turkey on Wednesday for the first time in over a month. Sabotage attacks have mostly idled the line since the U.S.-led invasion of Iraq in March 2003.
China's crude oil consumption, however, is robust, after customs data on Thursday showed its crude imports in September jumped 24 percent from a year earlier to a record high of 13.46 million tonnes, or 3.28 million bpd.
"Prices have come down so I wouldn't be surprised if China started filling its strategic reserves," said Kwan.
Traders are also closely watching the delayed restart of the largest U.S. oilfield and Iran's nuclear dispute with the West.
BP <BP.L> said on Wednesday the restart of its giant Prudhoe Bay oilfield in Alaska would take several days as the company cleans power lines following a severe dust storm.
The field, which has a capacity to produce 450,000 bpd but had been running close to 400,000 bpd, was shut on Tuesday after bad weather caused a power outage.
On Iran, which failed to meet an August 31 U.N. deadline to give up uranium enrichment, major powers failed on Wednesday to agree what sanctions to impose and sent the dossier to the U.N. Security Council, the U.S. State Department said.
The Security Council is expected to start drawing up the resolution by the end of the week or early next week.