* OPEC keeps oil supply unchanged
* Communique calls for compliance with existing quotas
* Reuters poll sees lower U.S. crude, distillate stocks
(Recasts, updates prices, adds detail; changes dateline from
LONDON)
By Edward McAllister
NEW YORK, Dec 22 (Reuters) - Oil prices slipped on Tuesday
after OPEC agreed to maintain its existing production targets
and as the dollar rose against other currencies.
OPEC oil ministers, content with current oil prices, agreed
to leave output unchanged in a meeting on Tuesday and decided
to meet again on March 17. []
The new front-month February contract for U.S. crude
futures <CLc1> fell 37 cents to $73.35 a barrel by 11:30 a.m.
EST (1630 GMT). The January contract expired on Monday down 89
cents at $72.47, pressured by the stronger dollar.
In London, Brent crude for February <LCOc1> fell 51 cents
to $72.48, slipping below U.S. crude for the first time in a
month.
"OPEC was expected and is neutral to bearish near term. The
market expects compliance [] to continue to go
down. If the dollar continues to rally, maybe that will be the
impetus for the market to push lower," said Mike Lebow, an
analyst at MF Global in New York.
The dollar rose on Tuesday to its highest level in nearly
two months against the yen as U.S. bond yields rose on
expectations for U.S. economic growth. The euro also slipped
against the greenback.
A stronger dollar makes dollar-denominated crude more
expensive for holders of other currencies and tends to pressure
prices.
U.S. stocks added to gains on Tuesday after a
bigger-than-expected jump in November existing home sales
reassured investors the housing market was stabilizing.
OPEC OUTPUT
Oil prices above $70 a barrel have satisfied OPEC in recent
months enough for the group to decide not to change its output
targets.
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 the economic recession hit fuel demand.
The deal left the implied target for OPEC output, excluding
Iraq, at 24.84 million barrels per day. []
But oil traders and analysts were worried OPEC members were
not sticking to their production targets and that output was
rising steadily. []
"There is some reason for concern because, if you look at
the numbers, the upside creep in production each month is
considerable," said Mike Wittner, global head of oil research
at Societe Generale in London.
"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.
U.S. crude stocks fell by 1.6 million barrels last week, as
refiners drew down inventories for year-end tax reasons,
according to a Reuters poll of analysts. []
Weekly inventory data will come from the American Petroleum
Institute report at 4:30 p.m. EST (2130 GMT) Tuesday and from
the U.S. Energy Information Administration on Wednesday.
(Additional reporting by Robert Gibbons in New York and
Christopher Johnson in London; Editing by Walter Bagley)
