By Jiwon Chung
SINGAPORE, Nov 28 (Reuters) - Oil extended losses to below
$94 on Wednesday after falling 3 percent a day ago, dragged lower
by growing expectations of a rise in OPEC production and negative
U.S. economic data.
U.S. oil <CLc1> was down 49 cents or 0.5 percent to $93.93 a
barrel by 0206 GMT, after tumbling $3.28 to $94.42 a barrel
overnight. London Brent <LCOc1> crude fell 48 cents to $92.04 a
barrel.
"It's difficult to buy oil when you know that the market is
worrying about a recession in the world economy, especially in
the United States," said Ken Hasegawa, commodity derivatives
sales manager of Fimat Japan Inc.
U.S. consumer confidence fell for a fourth straight month in
November to a two-year low on concerns about rising gasoline
prices and financial market volatility. [ID:nL27733251]
Market concerns that a U.S. economic slowdow could crimp oil
demand in the world's top energy consuming nation have weighed on
crude's record rally, as have prospects that OPEC could agree to
ramp up output at a meeting next week.
Some OPEC members are already making noises about raising
production, with Indonesia's oil minister saying he would back a
hike of 500,000 barrels per day (bpd).
"I will support OPEC on a new production increase,"
Indonesian Energy Minister Purnomo Yusgiantoro said on Tuesday.
But some traders were sceptical that OPEC will hike
production, noting some ministers have said supplies are
sufficient to meet demand.
OPEC President Mohammed bin Dhaen al-Hamli repeated on
Wednesday that there was no shortage of crude in the market.
Saudi Oil Minister Ali al-Naimi reiterated that oil prices
nearing $100 a barrel were not justified by fundamentals as
markets remained well supplied and inventories were comfortable.
"Fundamentals do not support current high petroleum prices,"
he told a regional energy conference in Singapore.
"We observe with great concern the recent escalation of oil
prices. But we believe that the world market is well supplied and
petroleum inventories are comfortable," he said, blaming the
weaker U.S. dollar, geopolitical tensions and speculators for the
rise.
But consumers worry dwindling stockpiles might not be
sufficient to keep up with winter demand.
U.S. government inventory to be released on Wednesday is
expected to show U.S. distillates inventories, which include
heating oil, down 1.3 million barrels, according to a Reuters
survey of analysts.
Crude stocks are expected to fall by 900,000 barrels while
gasoline was forecast to rise by 600,000 million barrels, a
preliminary Reuters survey found. [EIA/S]
Oil prices have surged more than 40 percent since mid-August
in a rally to above $99 a barrel on the slumping U.S. dollar,
supply concerns ahead of the Northern Hemisphere winter and
rising investor interests.
(Editing by Kim Coghill)
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Keywords: MARKETS OIL