NEW YORK - OIL prices tumbled on Wednesday as the market digested Opec's widely expected decision to leave output unchanged and the United States reported mixed energy reserves data.

New York's main contract, light sweet crude for January delivery, dropped 83 US cents (S$1.19) to close at US$87.49 per barrel.

In London, Brent North Sea crude for January slid US$1.04 to settle at US$88.49 per barrel.

'Oil prices were higher after Opec left production targets unchanged, as we expected,' said Sucden analyst Michael Davies in London.

'The outcome will come as a disappointment to consumer nations, especially the US, as they have been urging Opec to raise supply, claiming that even with the recent price decrease, oil prices are still too high.'

Opec, which pumps about 40 per cent of the world's crude supply, insisted it was not responsible for the price soaring to recent record highs near US$100 a barrel.

'The market is not controlled by supply and demand ... It is totally controlled by speculators who consider oil as a financial asset,' Opec secretary general Abdalla al-Badri told a news conference in Abu Dhabi, where the cartel ministers decided to freeze output.

Feb 1 meeting
Opec also announced an extraordinary meeting for Feb 1 in Vienna, 'given the need for extreme vigilance in assessing the market during the coming months'. The cartel would still hold its scheduled March 5 meeting.

Traders said US data showing a sharp headline drop in energy stockpiles had only a muted impact as components of the report offered some positives.

The US Department of Energy (DoE) said US inventories of crude had plunged by 8.0 million barrels in the week ending Nov 30, far higher than the consensus forecast of a drop of 1.25 million barrels.

'The most supportive element of the (DoE) report was the ... drop in total crude stocks,' said Citigroup analyst Tim Evans.

However, technical factors helped offset this headline lead.

'The impact of this surprise might be moderated by the further 671,000-barrel rise in stocks at Cushing, Oklahoma, the delivery point for Nymex futures,' Mr Evans noted.

Heating fuel stockpiles fell as demand rose for the peak of the northern hemisphere winter.

The DoE said stockpiles of distillates, including heating fuel and diesel, were down 1.4 million barrels in the week, against market expectations for a fall of 300,000 barrels.

Consumer anxiety
In Paris, the International Energy Agency (IEA), which monitors energy policies in developed countries, said consumer anxiety about oil shortages would remain.

'While the lack of a formal output increase by the Opec 10 may do little to calm current market anxiety, the IEA recognises that total Opec output has been much higher - largely from Iraq and Angola - than implied,' said IEA executive director Nobuo Tanaka.

'There are signs that more Opec oil may be on its way in December,' he added.

Oil prices had plunged last week on speculation that Opec would raise production amid signs of slowing US economic growth that could dampen demand in the world's largest energy consumer.

Before the Opec call, oil price were down about 10 per cent since striking a record high of US$99.29 on Nov 21. -- AFP

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