Oil prices drop on demand concerns

LONDON (AFP) – Oil prices fell on Friday as investors fretted about energy demand in the United States, the world's biggest energy-consuming nation, analysts said.

New York's main contract, light sweet crude for January delivery dropped 56 cents to 75.90 dollars a barrel.

Brent North Sea crude for January delivery shed 29 cents to 78.07 dollars a barrel.

This week's US Department of Energy (DoE) report of a rise in US crude stockpiles has renewed fears over weak American demand for oil as the country struggles to mount a strong recovery from a deep recession, analysts said.

"Caution is expected to remain on the back of unexpected high levels of inventories," analysts from Singapore's United Overseas Bank said in a report.

The DoE in its weekly report Wednesday said crude reserves rose by 2.1 million barrels in the week ending November 27, more than double market expectations.

It said US gasoline reserves had soared by four million barrels last week, much higher than the 700,000-barrel rise tipped by analysts.

However, US distillate stocks, which include heating fuel, dropped by 1.2 million barrels.

Meanwhile Friday's US jobs data is expected to be closely tracked by all financial markets. Analysts expect the figures to show that the unemployment rate held steady at 10.2 percent in November and that the economy shed 125,000 non-farm jobs, down from 190,000 in October.

Oil traders were also looking ahead to an upcoming OPEC meeting that will decide on producers' crude output levels.

Kuwait's Oil Minister Sheikh Ahmad Abdullah al-Sabah said on Thursday that the emirate did not want any change to OPEC production quotas and believes there is a consensus to keep output unchanged.

Asked about Kuwait's position ahead of OPEC's ministerial meeting later this month, Sheikh Ahmad said: "No change" in production.

The minister also told reporters outside parliament that he believes there is consensus among members of the Organization of Petroleum Exporting Countries to maintain production quotas.

Kuwait, with a daily production of around 2.2 million barrels per day, is OPEC's fourth largest producer.

The oil exporters cartel will hold its next meeting on output on December 22 in Luanda, Angola.

Several OPEC members have already said they want to keep production unchanged because the current crude prices are satisfactory.

OPEC president Jose Maria Botelho de Vasconcelos of Angola said in November that a price of between 75 and 80 dollars a barrel was satisfactory.

Oil prices have rallied this week also on rising tensions over key oil exporter Iran's nuclear programme and thanks to waning worries about Dubai's debt woes, traders said.