NEW YORK – Oil slipped more than a dollar to below $59 a barrel on Tuesday as investors awaited formal word from OPEC producers on supply curbs of around 1 million barrels a day to prop up prices.
U.S. crude settled $1.44 lower at $58.52 a barrel. London Brent crude lost $1.20 to $59.34.
The Organization of the Petroleum Exporting Countries, which pumps more than a third of the world's oil, is working out details of the cut but has yet to announce a final deal.
"The market is awaiting definitive word from OPEC," said Mike Wittner, analyst at Calyon investment bank. "Until OPEC gets its act together, they run the risk of the market testing their resolve and prices drifting lower."
OPEC's plan to lower supply comes after a price slide from a July peak of $78.40 alarmed many members of the 11-nation group. The cut would be OPEC's first since April 2004.
Iran's OPEC governor said on Tuesday talks continue on the plan to reduce OPEC's output limit by 1 million bpd, the oil ministry's Web site reported. The 28 million bpd output ceiling covers 10 members, all except Iraq.
"Efforts to reach agreement of OPEC members to reduce 1 million barrels of crude oil from the production ceiling of this organization and creating stability in the market are continuing," Iran's Hossein Kazempour Ardebili said.
On Monday, top OPEC producer Saudi Arabia lowered shipments to global oil majors, signaling its intent to join the supply curbs. The kingdom appeared to spare refiners in Asia from further reductions, sources said on Tuesday.
OPEC president Edmund Daukoru has sent a letter to member countries proposing the group cut 1 million bpd, equal to about 3.4 percent of total OPEC supply. He requested responses by the end of Tuesday.
Ministers remain undecided over whether to meet in person to formalize the cut before the next scheduled gathering on Dec. 14, an official at OPEC's Vienna headquarters said.
NORTH KOREA CONCERNS
Tension over North Korea, which claimed its first nuclear test on Monday, lent some support to prices as world powers condemned the communist state. China's build-up of its strategic crude reserves may bolster the market further.
China, the world's second-biggest oil consumer, began filling its oil reserves by pumping at least 1 million barrels of crude into new tanks in August, official media and port sources said on Tuesday.
While the dispute over North Korea is unlikely to affect oil flows, traders were watching for any impact on the row between the West and major oil exporter Iran over Tehran's nuclear work.
Throughput along Alaska's Trans-Alaska Pipeline, the northwestern state's main crude transit line, was shutdown on Tuesday due to telecommunications problems.
Operator Alyeska Pipeline Services hopes to restart throughput later Tuesday, but BP (BP) was forced to temporarily shut down production at the Prudhoe Bay field because of the problem.
BP has been restoring output at Prudhoe Bay, the largest U.S. oil field, after pipeline damage disrupted operations in August.
Traders' attention will turn later this week to the latest report on fuel inventories in the United States, the world's top oil consumer. The Energy Information Administration's report is due out on Thursday.
U.S. distillate inventories, which include heating oil, probably rose last week as refiners raised output ahead of winter, an initial Reuters poll of analysts showed.