Oil fell on Monday on expectations Opec may increase output to help stem a record rally that has sent prices near $100 a barrel. Iran's Oil Minister Gholamhossein Nozari said at the weekend that some members of the Organisation of the Petroleum Exporting Countries were advocating an increase in production when the cartel meets in Abu Dhabi on December 5.
"Some countries agree with output increase and others believe there is a good balance between oil supply and demand," he told a news conference. US oil settled down 48 cents at $97.70 a barrel after trading as high as $99.11 earlier, close to the record $99.29 a barrel hit last Wednesday.
London Brent crude settled 44 cents lower at $95.32 a barrel after hitting a record $96.65 earlier in the session. "We believe the markets have yet to discount the outcome of the Opec meeting, where there will be immense - and we believe ultimately successful - pressure on the cartel to raise quotas," said Edward Meir at futures broker MF Global.
Oil has risen more than 40 percent since August, boosted by the US dollar's slump to record lows, which has spurred buying of oil, gold and other commodities. The dollar edged lower against the euro and a basket of major currencies on Monday as renewed credit market worries reinforced expectations of more Federal Reserve interest rate cuts.
The weak dollar, concerns over winter supplies and investment inflows into energy have pushed up the average forecasts for oil prices next year to about $75 a barrel, from an average of $70.20 so far this year, according to a Reuters monthly poll.
"Our oil price scenario assumes a rise in the average price of oil to $100 at the peak of the winter season and a correction from March into spring," said Harry Tchilinguirian, senior oil analyst at BNP Paribas. The onset of colder weather in the US Northeast, a major consumer of heating oil, also has bolstered prices as traders bet higher winter demand will strain below-normal inventories.
Temperatures in the region on Monday were near their norms for this time of year, according to The Weather Channel Web site, but the US National Weather Center's six- to 10-day outlook calls for colder-than-usual conditions. The United States has urged Opec to boost production because of shrinking oil inventory levels in developed economies in the run up to the northern hemisphere winter.
Opec agreed in September to raised output by 500,000 barrel per day (bpd), but this has so far failed to stem oil's advance. Most members have said markets are well supplied and extra oil would not cool prices.
CLIMBS IN ASIA:
SINGAPORE: Oil rose to a near record high on Monday, as colder US weather and sustained weakness in the dollar drove prices once again toward the $100 a barrel mark. US light, sweet crude for January delivery rose 67 cents to $98.85, building on last week's late gains and nearing the all-time high of $99.29 from last on Wednesday. London Brent crude rose 62 cents to $96.38.
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