Oil slips after Opec rollover

Oil slipped towards $73 per barrel yesterday after Opec agreed to maintain its existing production targets and ahead of data expected to show a fall in crude and distillate inventories in the United States.

Opec oil ministers, content with oil prices, agreed to leave output unchanged and meet again on March 17.

The Organization of the Petroleum Exporting Countries pumps about 50 percent of the world's oil exports and has seen crude prices almost double since the start of the year after it sliced output when recession hit fuel demand.

The deal left the implied target for Opec output, excluding Iraq, at 24.84 million barrels per day (bpd).

But oil traders and analysts were worried Opec members were not sticking to their production targets and that output was rising steadily.

The new front-month February contract for US crude futures fell 50 cents to $73.22 a barrel by 1500 GMT. The January contract expired on Monday down 89 cents at $72.47, pressured by the stronger dollar.

London Brent crude for February fell 53 cents to $72.46, slipping below US crude for the first time in a month.

"Obviously, everyone in the market has expected this result and it is absolutely no surprise," said Mike Wittner, Global head of oil research at Societe Generale in London.

"But there is some reason for concern because if you look at the numbers, the upside creep in production each month is considerable. At this point, compared to the low point in February-April, Opec output is about one million bpd higher than it was. So although we are bullish going forward, Opec really does need to address compliance."

Opec's adherence to its output targets peaked in February at about 80 per cent but has since slipped to only about 60 per cent.

Edward Meir, senior commodity analyst at brokers MF Global, said the oil market was likely to slip lower.