UPDATE 9-Brent, U.S. oil slip as OPEC mulls output boost

                                
 * Kuwait says OPEC discussing output increase
                                
 * Brent premium over WTI falls below $9 from $17 last week
                                
 * Coming up: API oil data at 4:30 p.m. EST (2130 GMT)
 (Recasts, updates prices and market activity, changes byline
and moves dateline from LONDON)
                                
 By Robert Gibbons
                                
 NEW YORK, March 8 (Reuters) - Oil prices fell on Tuesday
after Kuwait's oil minister said OPEC was considering boosting
production for the first time in more than two years to ease
anxiety about a supply disruption in Libya and the potential
for other disruptions if unrest in the region intensifies.
                                
 The Organization of the Petroleum Exporting Countries has
yet to change its policy officially, though analysts believe
the producer group has been boosting output informally for
months and Saudi Arabia has offered to help make up for Libya's
shut output, estimated at about 1 million barrels per day of
its normal 1.6 million bpd. [OPEC/O]
                                
 Brent crude futures for April delivery <LCOc1> were down
$1.88 at $113.16 a barrel at 11:10 a.m. EST (1610 GMT), having
fallen as low as $112.13.
                                
 U.S. crude futures for April delivery <CLc1> were 70 cents
lower at $104.74 a barrel, having earlier posted a low of
$103.33.
                                
 Brent's premium to its U.S. counterpart, the benchmark West
Texas Intermediate crude, <CL-LCO1=R> fell below $9 on Tuesday,
down from a peak of more than $17 a barrel last week.
[ID:nLDE7271IQ]
                                
 "We are in consultations about a potential output
increase," Kuwait's Sheikh Ahmad al-Abdullah al-Sabah told
reporters. But he added that the group had taken no decision
yet to produce above existing output targets. [ID:nLDE72705O]
                                
 Iran, which holds OPEC's rotating presidency, said there
was no need for an output boost as consumer worries over supply
were mostly "psychological." [ID:nLDE7270LY]
                                
 Saudi oil minister Ali Al-Naimi said world oil markets were
sufficiently supplied and the kingdom held 3.5 million bpd of
spare production capacity to meet any shortages. [ID:nWEA7207]
                                
 While acknowledging OPEC members were discussing possible
output increases, Algeria sees no physical deficits in oil
markets, the country's oil minister said at a conference in
Houston. [ID:nLDE7271UO]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 FACTBOX on emergency oil stockpiles:       [ID:nL3E7E40BY]
                                
 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
                                
 Graphic of U.S. oil stocks:
                                
 http://graphics.thomsonreuters.com/ce/CRUDE+PROD.pdf
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 BATTLE FOR LIBYA
                                
 Libyan oil output and exports have been curbed and the key
Libyan oil ports of Ras Lanuf and Brega in the east of the
country are shut due to violence in the area. [ID:nLDE7261SM]
                                
 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. [ID:nLDE72718V]
                                
 "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."
                                
 U.S. OIL INVENTORY REPORTS
                                
 The industry group American Petroleum Institute will issue
its weekly oil inventory report at 4:30 p.m. EST (2130 GMT) on
Tuesday. The U.S. Energy Information Administration's report
follows on Wednesday, at 10:30 a.m. EST (1530 GMT).
                                
 A Reuters analyst survey on Monday yielded a forecast for
crude stocks to be up slightly, with distillate and gasoline
stocks expected to have fallen last week. [EIA/S]
 (Additional reporting by Nia Williams and Christopher Johnson
in London and Alejandro Barbajosa in Singapore; Editing by
Walter Bagley)