Oil hovered around $60 a barrel on Tuesday as Opec worked out the details of an expected 1 million barrels per day (bpd) production cut, with gains checked by a lack of Saudi supply curbs to Asian refiners.
Heightened geopolitical tensions over North Korea, which claimed its first nuclear test on Monday, lent some support to the market as world powers condemned the communist state.
US crude was up 8 cents at $60.04 a barrel, adding to Monday's 20-cent gains but still stuck near last week's eight-month low of $57.75 a barrel, about 26 percent below a mid-July record peak.
London Brent crude edged down 4 cents to $60.50. "There is suspicion that they have already been producing a little below quota," said Andrew Harrington, analyst at ANZ Bank.
"That means the market has already been living with the fact that the cut was going to take place." Opec President Edmund Dakar sent a letter on Monday to cartel members proposing the group cut 1 million bpd from actual output of around 27.5 million bpd.
He requested responses by the end of Tuesday. Last month Nigeria and Venezuela announced unilateral supply curbs that most other cartel members now appear set to join, although ministers were still debating some of the details.
Some members want to cut from the group's official 28 million-bpd ceiling.
Some also want to convene an emergency in-person meeting rather than agreeing curbs over the phone or waiting for its next scheduled gathering on December 14.
Kuwait's oil minister said on Monday that Opec members were still holding consultations over output cuts between 700,000 and 1 million bpd to shore up oil prices.
Leading exporter Saudi Arabia appeared to endorse the curbs on Monday by informing global oil majors that it would cut their November supplies to around 70 percent of contracted volume from around 75 percent in previous months.
But on Tuesday industry sources with three Asian refiners said the kingdom would maintain crude oil sales at 100 percent of their contracted volume in November, causing some analysts to wonder about its commitment to the cuts. "It looks like Opec is not really fired up for its output cut," said Keiichi Sano, manager with the commodities business unit at Sumitomo Corp.
Oil prices have halted a slide from a record-high of $78.40 in July, but WE distillate stocks at their highest level also weigh down fundamentals since 1999, during a period of seasonally weak demand ahead of the northern winter.
Oil dealers were also anxious over North Korea, which said it conducted its first nuclear test on Monday, prompting the UN Security Council to debate financial and arms sanctions.
Although the row is unlikely to affect oil flows, dealers were on guard for any impact on the stand-off between the West and Iran, the world's fourth-largest exporter. European officials and US said the two nuclear issues would be handled separately and saw no change in the dispute with Iran, but an Iranian diplomat said North Korea's test might push the West to think twice about its approach to the Iranian dossier.
The diplomat close to nuclear talks with the West appeared to issue a veiled threat that Tehran could some day follow Pyongyang's example, saying North Korea showed "countries can adopt various methods" to reach their goals.
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