Oil was steady on Wednesday as the market awaited Opec's decision on production and the release of US oil inventory data, both due later in the day. US crude inched up 8 cents to $88.40 a barrel. It had settled 99 cents lower at $88.32 in the previous session following the release of a US intelligence report saying Iran halted its nuclear weapons programme in 2003.
London Brent crude rose 17 cents to $89.70 a barrel after ending above US oil for the first time since August 23 on Monday. Opec is meeting later on Wednesday and it remained unclear whether the group would raise output as some Gulf members are worried high prices may be exacerbating a downtown in global economic growth, even as cartel members agree world oil supplies are sufficient.
"Our own thinking is that Opec may agree to lift production ceilings, but on a temporary or "to-be-reviewed" basis, reflecting the uncertain outlook for oil demand," said David Moore, commodity strategist for Commonwealth Bank of Australia.
Oil prices have fallen about 10 percent since peaking at $99.29 on November 21 and officials from Qatar, Venezuela, Iran and Libya have spoken against the need to pump more oil.
Opec's core Gulf producers, led by Saudi Arabia, have avoided comment on whether the group might still opt for an output increase to prevent crude heading back towards $100 a barrel. US Energy Secretary Sam Bodman on Tuesday reiterated calls for Opec to increase production to bolster supplies at Wednesday's meeting.
The unfolding implications of the subprime mortgage crisis are expected to hit demand growth in the United States, the world's largest energy consumer. Traders said the release of US inventory data on Wednesday would give further price direction.
Last week showed a build in stocks at the Cushing, Oklahoma and hub that is the delivery point for US crude futures. A poll of analysts by Reuters ahead of Wednesday's US inventory data showed crude stockpiles probably fell 800,000 barrels in the week to November 30. Distillate stocks were seen down 300,000 barrels. A report released on Tuesday that grouped the findings of various US intelligence agencies contradicted the Bush administration's assertion that Tehran was intent on developing a bomb.