* OPEC keeps oil supply unchanged
* Communique calls for compliance with existing quotas
* Reuters poll sees lower U.S. crude, distillate stocks
(Updates prices, detail)
By Christopher Johnson
LONDON, Dec 22 (Reuters) - Oil slipped towards $73 per
barrel on Tuesday after OPEC agreed to maintain its existing
production targets and ahead of data expected to show a fall in
crude and distillate inventories in the United States.
OPEC oil ministers, content with oil prices, agreed to leave
output unchanged and meet again on March 17. []
The Organization of the Petroleum Exporting Countries pumps
about 50 percent of the world's oil exports and has seen crude
prices almost double since the start of the year after it sliced
output when recession hit fuel demand.
The deal left the implied target for OPEC output, excluding
Iraq, at 24.84 million barrels per day (bpd). []
But oil traders and analysts were worried OPEC members were
not sticking to their production targets and that output was
rising steadily. []
The new front-month February contract for U.S. crude futures
<CLc1> fell 50 cents to $73.22 a barrel by 1500 GMT. The January
contract expired on Monday down 89 cents at $72.47, pressured by
the stronger dollar.
London Brent crude for February <LCOc1> fell 53 cents to
$72.46, slipping below U.S. crude for the first time in a month.
"Obviously, everyone in the market has expected this result
and it is absolutely no surprise," said Mike Wittner, Global
head of oil research at Societe Generale in London.
"UPSIDE CREEP"
"But there is some reason for concern because if you look at
the numbers, the upside creep in production each month is
considerable. At this point, compared to the low point in
February-April, OPEC output is about 1 million bpd higher than
it was. So although we are bullish going forward, OPEC really
does need to address compliance."
OPEC's adherence to its output targets peaked in February at
about 80 percent but has since slipped to only about 60 percent.
Edward Meir, senior commodity analyst at brokers MF Global,
said the oil market was likely to slip lower.
"We suspect the ensuing price bias will be to the downside.
In the least, participants may be unnerved by OPEC's continuing
refusal to tighten export quotas," he said.
"In fact, given energy's bearish fundamentals, the cartel is
lucky prices are not lower than they actually are," Meir added,
citing recent weakness of the dollar, "investor infatuation with
commodities, and a return of fund money to the commodity space".
Oil prices received some support from expectations that U.S.
crude stocks had fallen by 1.6 million barrels last week, as
refiners drew down inventories for year-end tax issues.
A Reuters poll said the drop would follow declines of more
than 3 million barrels in the previous two weeks. []
Distillate stocks, which include heating oil and diesel,
were expected to be down 2.1 million barrels as last week's cold
and snow boosted heating oil demand in the U.S. Northeast, the
poll showed ahead of the release of the weekly American
Petroleum Institute report at 4:30 p.m. EST (2130 GMT).
Data from the government Energy Information Agency (EIA)
will be released on Wednesday.
Also supportive was a forecast of colder-than-normal weather
across much of the United States and Europe from January to
March by forecaster WSI. [] []
For a factbox of U.S. weather forecasts, click
[]
But despite cold weather and the expected fall in U.S.
distillates stocks last week, heating fuel stockpiles are still
above year-ago levels. According to the International Energy
Agency, almost 100 million barrels of distillates were stored on
ships at sea at the end of November.
(Editing by Anthony Barker)
