CARACAS, Venezuela – Oil slipped nearly $1 a barrel Thursday ahead of an OPEC meeting at which the cartel was expected to hold production near its full capacity.
The 11-member Organization of the Petroleum Exporting Countries, the source of more than a third of the world's oil, is meeting in Caracas, Venezuela.
OPEC worries that $70 per-barrel crude could slow global economic growth and encourage investment in alternative energy.
"There's no reason to cut with prices at this level," said Qatar Oil Minister Abdullah al-Attiyah shortly before the meeting which began right after the end of day-session oil futures trade.
"It's going to be a rollover of the quotas," said Kevin Norrish of Barclays Capital. "The message will be as it has been — we continue to produce at a high level to supply the market."
U.S. crude settled down 95 cents at $70.34 a barrel on NYMEX. In London, July Brent crude dropped $1.02 to settle at $69.39.
The United States said it was willing to join European countries in talks with Iran, which helped push down prices.
Earlier, oil had risen after a smaller-than-expected rise in gasoline inventories in the United States, the world's largest oil consumer.
U.S. gasoline stocks rose by 800,000 barrels, the fifth consecutive weekly increase, a government report showed. But the gain was smaller than the 1.1 million-barrel increase analysts expected.
"The report is overall bullish for gasoline," said Phil Flynn, an analyst at Alaron Trading in Chicago. "Gasoline demand edged up again to 9.4 million barrels per day and that is stronger than anticipated."
The United States, which severed ties with Tehran in 1980, said it would join talks with Iran if the country halted enrichment of uranium — a condition the world's fourth-biggest oil exporter rejected.
Fears that Iran could halt exports or that military action could disrupt supplies, as well as supply cuts in Nigeria, have helped oil extend its four-year rally. U.S. crude hit a record $75.35 in April and is up 15 percent this year.
A meeting of world powers in Vienna later Thursday, to agree on incentives for Iran to halt its nuclear work, will also be in focus for traders.
A senior Bush administration official said Washington hoped that a rejection of the offer from Tehran would convince Russia and China to pursue sanctions, a step they had opposed.
Iran's foreign minister said Iran was willing to hold talks with the United States but stood firm on what he called his country's right to enrich nuclear fuel.
"We will not give up our nation's natural right (to enrichment). But we are ready to hold talks over mutual concerns," Foreign Minister Manouchehr Mottaki said Thursday.
Analysts doubt the dispute will be settled quickly.
"This doesn't really resolve the situation between them," said Gerard Burg, minerals and energy economist at National Australia Bank. "I'm still seeing this as an influence for a number of months yet."
The dispute over Iran's nuclear work has come on top of a real supply break in fellow OPEC member Nigeria, a source of high-quality crude prized by refiners.
Royal Dutch Shell has cut production of a further 50,000 barrels per day of crude oil in Nigeria due to a pipeline leak, a spokesman for Shell's Nigerian venture said Thursday.
The company is investigating the cause of the leak, which brings the company's production outage in Nigeria to 505,000 bpd after militant attacks this year shut down several facilities.