A sharp rally in oil prices to near-record peaks stalled on Friday after Opec-member Nigeria said the cartel may agree later this month to raise output to cool the red-hot market. US light crude was off 7 cents to $53.50 a barrel, after dropping as low as $52.90. A rally that started at midweek had prices briefly within 50 cents of last October's $55.67 record. London Brent crude fell 30 cents to $51.65 a barrel after hitting $53.00 on Thursday, its highest price in 17 years of trade on the International Petroleum Exchange.
Nigeria's presidential advisor on petroleum, Edmund Daukoru, told Reuters in an interview that members were eager to prevent high prices from damaging world economic growth and could agree to raise quotas or relax compliance.
"I can see two potential outcomes: that discipline would be relaxed so everybody could really do close to their available potential, except Saudi Arabia. We may, on the other hand, take a definite increase in production, in quota," Daukoru said.
Opec will meet in Iran March 16.
Daukoru added that Nigeria continued to favour a US oil price between $45 and $55 per barrel, but that a sustained price above $55 would harm global economic growth.
Many Opec ministers are wary of boosting output ahead of an expected seasonal decline in post-winter demand, fearing that a hefty increase in consumer inventories could weaken prices.
Venezuelan President Hugo Chavez said on Friday that Opec does not need to increase production when it meets later this month. "We are producing enough. The increase in prices has nothing to do with Opec," he said.
Analysts said that despite the calmer market, a fresh bull rally could be around the corner.
"In my opinion we are going to see higher prices than we have seen, but the market is taking a breather," said John Brady at ABN Amro in New York.
"It raced up there and probably got a little ahead of itself. I would think usually with a kind of reversal like that, on very good volume, it would usually indicate a day or two days of potential weakness," he added.
Acting Opec secretary-general Adnan Shihab-Eldin said on Thursday that a supply disruption in already tight markets could push prices as high as $80 over the next two years.
Booming commodity markets have become increasingly attractive to speculators as they bet that voracious Chinese demand for raw material will strain global supplies.
Despite lingering concerns about an unusually cold March in the United States, gasoline is taking the market's spotlight from heating oil as the summer driving season approaches.
Already high pump prices could hit record levels over the spring and summer as motorists hit the road for the holiday season, the AAA auto group said. Retail pump prices are now only about 13 cents below the all-time record of last May.
Refinery troubles in the massive US market, and the spectre of possible revision to US government gasoline inventories, also piled on pressure.
The US Energy Information Administration said it was checking the accuracy of record high gasoline inventories in the Gulf Coast region, adding that it was too early to say whether data would be revised.
On Thursday, NYMEX gasoline futures hit an all-time record of $1.5450 a gallon. They were trading down 35 cents to $1.5040 a gallon on Friday after dipping as low as $1.4900.
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