Oil's losses deepened on Monday after Saudi Arabia's oil minister said he would back a rise in Opec output at a meeting of the cartel this week and as worries about tropical storm Arlene in the United States faded. US July light sweet crude was down 35 cents or more than half a percent, at $53.19 a barrel, extending a 1.4- percent loss on Friday. Prices have generally traded between $50 and $55 for almost two weeks.
Saudi Oil Minister Ali al-Anima said on Saturday he backed a 500,000-barrel-per-day rise in Opec's output ceiling and that current prices above $50 a barrel were too high.
"Raising the ceiling seems reasonable," Naimi said during a visit to Norway. "I support the process of raising the ceiling by 500,000 barrels per day, yes."
Opec ministers will meet on Wednesday in Vienna to discuss output policy for the second half of the year. The cartel is expected to consider lifting official production limits to help cool down prices, although analysts say that would do little more than legitimise existing overproduction.
"The market is working in the expectation that Opec will keep production unchanged, or that it may raise the volume," said Kazunaga Maeno, assistant manager of risk management at Mitsubishi Corp in Tokyo.
"I expect the market to come down a little bit at least until Opec makes an official announcement," Maeno said. Indonesia on Monday reiterated its support for an increase in the official quota, first proposed a week ago by Opec President and Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah.
However, Iran Oil Minister Bijou Zanganeh said on Monday raising the ceiling would not cool prices. "Increasing oil production will have no influence on the conditions in the market," he was quoted as saying on the oil ministry Web site.
Worries output from the US Gulf Coast would be disrupted eased as tropical storm Arlene faded to a mass of thunderstorms. Arlene, the first storm of the Atlantic season, threatened to turn into a hurricane in a region which accounts for about 25 percent of US oil-and-gas production.
The Louisiana Offshore Oil Port LLC resumed offloading tankers while workers returned to offshore platforms as Arlene crossed the northern shore of the US Gulf of Mexico.
Arlene was downgraded to a tropical depression on Sunday, but traders will be on alert during the hurricane season for storms like last year's devastating Ivan, which shut in 45 million barrels of oil production over five months.
Oil prices were also under pressure from a report suggesting slower demand growth in China than previously thought. The International Energy Agency said on Friday Chinese consumption would rise 460,000 bpd this year, a cut of 10,000 bpd compared with a month forecast. Still, the agency left its forecast for 2005 global demand growth little changed at 1.78 million bpd, or 2.2 percent, and said world demand remained supported by strength in the United States and developed Asian economies.
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