Oil prices slip on conflicting signals from OPEC chief

Crude oil futures prices slipped on Friday amid conflicting signals from the Organization of Petroleum Exporting Countries (OPEC) and a relatively upbeat assessment of energy prices from US Federal Reserve Chairman Alan Greenspan.

Light, sweet crude for June delivery on the New York Mercantile Exchange fell US$0.12 to settle at US$46.80 a barrel. The contract expired on Friday.

Heating oil and unleaded gas prices each rose by more than US$0.01 to US$1.3673 a gallon and US$1.4191 a gallon, respectively.

On London's International Petroleum Exchange, Brent crude for July rose US$0.15 to US$48.03.

Greenspan said that oil and gas prices have calmed a bit recently, in his speech to the Economic Club of New York on Friday. Private inventories of crude oil in the US have climbed to their highest level in three years, helping to curb the recent "price frenzy," he said.

Earlier this week, Saudi Oil Minister Ali Naimi said his country -- the group's main producer -- was "ready to raise output as the market dictates."

On Wednesday, OPEC president Sheik Ahmed Fahd Al Ahmed Al Sabah, who is also Kuwait's oil minister, said the group could cut its output ceiling by 1 million barrels a day if global oil inventories pile up too quickly.

But Al Sabah appeared to reverse himself on Thursday, telling Dow Jones Newswires: "We believe we should sustain production."

The comments appeared to reflect the push-pull of OPEC's twin concerns -- maintaining stability without seeing the floor drop out of oil markets.

OPEC traditionally produces more than the group's official quota, now at 27.5 million barrels a day. PVM Oil Associates in Vienna said that -- without Iraq, which is exempt from ceilings while it rebuilds -- over-quota output from OPEC's 10 other members was at just over 700,000 barrels in May, or about 300,000 barrels less than Al Sabah has estimated.

Crude futures are more than US$10 below April's all-time high of US$58.28. OPEC is to meet June 15 in Vienna to plan strategy for the second half of the year.

Analyst Jonathan Copus of Investec Securities in London said OPEC's anxieties are being fed by "a six-year high in [US] inventories, prices pulling back a bit and various conflicting pieces of information about the possibility of demand erosion."

The US Department of Energy revealed a build of 334 million barrels in the previous week, the 13th increase in the past 14 weeks. Inventories are up 34 million barrels from a year ago, the highest since May 1999.

However, oil editorial manager Ng Weng Hoong at Energyasia.com said the inventory figures are not as bearish as they seem.