Oil Prices Edge Up Ahead of OPEC Meeting
Pablo Gorondi

Oil prices fluctuated Tuesday as traders reacted to mixed signals on whether OPEC would decide to increase production during its meeting this week.

A new U.S. intelligence report concluding that Iran halted its nuclear weapons development program in 2003 limited how much prices rose.

Light, sweet crude for January delivery was up 11 cents to $89.42 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe. It traded as high as $89.98 and as low as $88.35 earlier in the day.

In London, January Brent crude futures rose 13 cents to $89.93 a barrel on the ICE Futures exchange.
Prices rose and fell throughout the day as differing statements were reported from delegates of the Organization of Petroleum Exporting Countries arriving in Abu Dhabi, United Arab Emirates, for Wednesday's meeting.

"The focus will remain on OPEC in coming days, but the (U.S. intelligence) report on Iran ... should provide for a redefinition of the geopolitical premium in coming months," Olivier Jakob of Petromatrix in Switzerland said in a report. "The fear of a unilateral strike on Iran has been an important component of the risk premium in crude oil."

Oil prices have dropped about $10 in one week on the belief that OPEC has all but decided to boost production. But the price drop itself has raised questions about whether oil ministers will follow through.

Recent OPEC comments have been divided, with ministers from Venezuela and Qatar suggesting there's no need to boost supplies, while ministers from Indonesia, Nigeria and Kuwait say they're still open to increases.

Saudi Oil Minister Ali al-Naimi, possibly the most influential member of the cartel, has struck a neutral tone, telling reporters this weekend that "the field is wide open."

Traders are also waiting for the U.S. Department of Energy's weekly petroleum inventory report due Wednesday. The report is closely watched in the oil markets as a guidepost for demand.
U.S. crude stockpiles are likely to fall by 800,000 barrels and gasoline stocks to grow by 900,000 barrels, according to an average estimate of analysts surveyed by Dow Jones Newswires.

Refinery use is expected to rise 0.2 percentage point to 89.6 percent of capacity, according to the survey.

Distillate stocks, which include heating oil and diesel fuel, are expected to drop by 300,000 barrels, according to the survey.

Nymex heating oil futures rose 1.11 cents to $2.5222 a gallon, while gasoline prices were up 1.24 cents to $2.2625 a gallon.

Natural gas futures rose 3.8 cents to $7.252 per 1,000 cubic feet.

Associated Press Writer Gillian Wong in Singapore contributed to this report.

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