UPDATE 12-Oil slips on OPEC output talk, eyeing Libya

                                
 * Kuwait says OPEC discussing output increase
                                
 * Brent premium over WTI falls below $8 from $17 last week
                                
 * Coming up: API oil data at 4:30 p.m. EST (2130 GMT)
 (Updates with additional detail)
                                
 By Robert Gibbons
                                
 NEW YORK, March 8 (Reuters) - Oil prices slipped on
Tuesday, with Brent falling nearly 2 percent, after Kuwait's
oil minister said OPEC was considering a production boost as
war-torn Libya's output remained disrupted and the region's
unrest fueled concerns about more supplies being cut off.
                                
 The Organization of the Petroleum Exporting Countries has
left official policy steady for more than two years, but
analysts have said output has been informally rising. [OPEC/O]
                                
 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.
                                
 Brent crude for April delivery <LCOc1> fell $1.98 to settle
at $113.06 a barrel, having fallen as low as $112.13.
                                
 U.S. crude futures for April delivery <CLc1> fell 42 cents
to settle at $105.02 a barrel, above an early $103.33 low.
                                
 Brent's premium to the U.S. benchmark West Texas
Intermediate crude <CL-LCO1=R> fell $1.86 to $7.89 a barrel by
4:04 p.m. EST (2104 GMT), down from a peak of more than $17
last week. [ID:nLDE7271IQ]
                                
 U.S. gasoline <RBc1> and heating oil <HOc1> futures settled
lower, slumping with the Brent contract. A big jump in U.S.
retail gasoline prices may be hitting retail demand, which fell
1.8 percent last week against the previous week and was lower
against a year ago, MasterCard said. [ID:nN08200706]
                                
 OPEC TALKS PRODUCTION BOOST
                                
 "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]
                                
 Saudi oil minister Ali Al-Naimi and others in OPEC said
world oil markets were sufficiently supplied. Naimi said the
kingdom held 3.5 million bpd of spare production capacity to
meet any shortages. [ID:nWEA7207]
                                
 Algeria's oil minister said he sees no supply deficits and
Iran's OPEC governor downplayed the discussions and said there
was no need to boost output as consumer worries over supply
were mostly "psychological." [ID:nLDE7270Q8]
                                
 Investment bank Goldman Sachs raised its oil price forecast
and said it believed Saudi Arabia already had used up more of
its surplus capacity than is widely thought. [ID:nLDE7270QE]
                                
 U.S. crude prices will average $102 a barrel in 2011, the
U.S. Energy Information Administration said, raising its
forecast by $9 from February. [ID:nN08434794] [ID:nLDE7270QE]
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 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://r.reuters.com/sup48r
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 BATTLE FOR LIBYA
                                
 Libyan government forces attacked rebels on western and
eastern fronts, intensifying their offensive to crush the
revolt against Muammar Gaddafi. [ID:nLDE72701U]
                                
 U.S. President Barack Obama and British Prime Minister
David Cameron conferred by telephone and agreed "to press
forward with planning ... on the full spectrum of possible
responses," including a no-fly zone, the White House said in a
statement. [ID:nWEN9181]
                                
 "The market is now waiting for the next piece of news to
unfold," said Harry Tchilinguirian, head of commodity markets
strategy at BNP Paribas.
                                
 "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
                                
 A Reuters analyst survey on Tuesday yielded a forecast for
crude stocks to be up slightly, with distillate and gasoline
stocks expected to have fallen last week. [EIA/S]
                                
 The industry group American Petroleum Institute will issue
its weekly oil inventory report at 4:30 p.m. EST (2130 GMT) on
Tuesday. The EIA's report of government data follows on
Wednesday, at 10:30 a.m. EST (1530 GMT).
 (Additional reporting by Nia Williams and Christopher Johnson
in London and Alejandro Barbajosa in Singapore; Editing by
Walter Bagley)