(Corrects RIC for Brent crude oil futures in paragraph 4)
* Kuwait says OPEC discussing output increase
* Witnesses report air strikes against oil town Ras Lanuf
* Brent premium over WTI falls below $10 from $17 last week
* Coming Up: API U.S. oil inventory report; 2130 GMT
(Updates prices)
By Nia Williams and Christopher Johnson
LONDON, March 8 (Reuters) - Oil prices fell on Tuesday, with
North Sea Brent crude dropping by as much as $2 a barrel, after
Kuwait's oil minister said OPEC was considering boosting
production for the first time in more than two years.
An official increase in OPEC output would signal the group's
determination to put a cap on prices after uprisings and unrest
across North Africa and the Middle East sent oil to its highest
in more than two and a half years.
Fighting in Libya has idled around 1 million barrels per day
(bpd) -- two-thirds of the country's oil output -- and consumers
have been looking for a response from the Organization of the
Petroleum Exporting Countries.
Brent crude <LCOc1> dropped steeply to dip below $113 per
barrel before creeping back to $113.75, $1.29 lower on the day,
by 1400 GMT. U.S. light crude futures <CLc1> were 10 cents
higher at $105.54.
On Feb. 24, Brent hit $119.79, its highest since 2008, when
it reached an all-time high of $147.50.
"We are in consultations about a potential output increase,"
Kuwait's Sheikh Ahmad al-Abdullah al-Sabah told reporters, but
added the group had taken no decision yet to produce more than
its existing output targets. []
Iran, which holds OPEC's rotating presidency, said there was
no need for a boost in production as consumer worries over
supply were mostly "psychological."
"There is no shortage in the market. There is no need for
further OPEC supply," Iran's OPEC governor Mohammad Ali Khatibi
told Reuters in a telephone interview on Tuesday, pointing to a
difference of opinion among members. []
Saudi Arabia, the world's largest oil exporter and home to
most of OPEC's spare capacity, has boosted oil production to
fill the gap left by Libyan exports and is now pumping about 9
million bpd, almost 1 million bpd above its OPEC quota.
Brent's premium over U.S. crude <CL-LCO1=R>, known as West
Texas Intermediate or WTI, shrank below $10 on Tuesday with
analysts saying geopolitical worries were tending to move both
crude benchmarks in tandem.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FACTBOX on emergency oil stockpiles: []
Graphics on U.S. strategic oil reserve, U.S. and other IEA
nations' reserves: http://link.reuters.com/cah48r
Graphics showing:
Middle East unrest http://r.reuters.com/nym77r
Oil price shocks http://r.reuters.com/qes28r
Those most reliant on oil http://r.reuters.com/dux28r
OECD commercial oil stocks http://link.reuters.com/qyg48r
Brent and WTI open interest http://r.reuters.com/cag48r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
BATTLE FOR LIBYA
Libyan oil output and exports have dwindled over the last
few days and the key Libyan oil ports of Ras Lanuf and Brega in
the east of the country are closed due to violence in the area.
[]
Witnesses reported at least four airstrikes by Muammar
Gaddafi's forces on Ras Lanuf on Tuesday, contributing to
concerns the country's oil infrastructure could suffer long-term
damage in the conflict. []
"The market is now waiting for the next piece of news to
unfold," said Harry Tchilinguirian, head of commodity markets
strategy at BNP Paribas, who said $2 moves were not surprising
in such a volatile market.
"A turn for the worse for the market would be oil
infrastructure being hit as a result of the fighting. The demise
of the current regime or a more forceful statement from OPEC
followed by an increase in production would be significant too."
The industry group American Petroleum Institute (API) will
issue its weekly inventory report at 2130 GMT on Tuesday,
followed by government statistics from the U.S. Energy
Information Administration on Wednesday, at 1530 GMT.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by James Jukwey)
