Oil steadied over $61 on Tuesday as Algeria renewed its call for Opec to keep the taps open when it meets on March 8 and analysts forecast another rise in US crude oil inventories.
"Algeria thinks that Opec production should stay at its current level," Algerian Energy and Mining Minister Chakib Khelil told Reuters. "We are not in favour of any decision to cut output. The stability of the market is very important."
US crude was up 41 cents at $61.41 a barrel at 1700 GMT, recovering from Monday's $2 fall. London Brent was up 77 cents at $61.76.
Opec ministers gathering in Vienna next week will have to balance oil prices that are still within sight of record highs against rising fuel stocks in the top consumer the United States and slowing demand growth.
With oil close to $61 and consumer nations worried their economies will suffer, Opec recognises it will be difficult to cut output from a near-maximum 28 million barrels per day.
Figures released on Tuesday showed the US economy grew at its weakest pace in three years during the fourth quarter of 2005. Opec President Edmund Daukoru visits Washington later on Tuesday for talks with US Energy Secretary Sam Bodman that will focus on energy security.
"Prices have dropped but they are still high, because of high demand generated by strong growth especially in China and India," Khelil said.
Supply disruptions in Nigeria and Iraq and tensions over Iran have been the main price driver in recent months. A failed al Qaeda suicide bombing against a huge oil facility in top exporter Saudi Arabia pushed prices $2 higher on Friday.
"With speculators short of crude oil, Iran reportedly going ahead with its nuclear fuel enrichment and potential for further trouble in Nigeria, we see the likelihood of a significant move down below $60/barrel as limited," said Barclays Capital.
Chevron on Tuesday cut 13,000 barrels per day (bpd) of oil production in Nigeria due to a pipeline leak. That comes atop some 455,000 bpd of Nigerian oil production is still shut after a series of militant attacks.
Analysts at PFC Energy noted that "increasingly pessimistic" funds had been steadily selling US crude futures before Friday's al Qaeda attack.
"Fundamentals have been weak for the past couple of months," said Tony Nunan, manager at Mitsubishi Corp's risk management business.
The United States will release weekly inventory data on Wednesday. It is forecast to show an increase of 1.2 million barrels in crude inventories as more refineries shut down for seasonal maintenance, according to a Reuters poll.
Gasoline stocks - which have soared to their highest level in over six years - were forecast to have held steady.
Distillate stocks are seen showing a drop of 1.3 million barrels, the forecasts showed, with colder temperatures in the heating oil consuming region of the Northeast lifting demand.
Iran's nuclear ambitions continued to hang over the market after a UN watchdog report said on Monday the country was forging ahead with a nuclear fuel enrichment programme.