Oil prices slightly lower due to profit-taking

Oil prices slightly lower due to profit-taking

SINGAPORE (Reuters): Oil prices were slightly lower on Monday as the market stepped back from last week's gains and cashed in some profits.

Benchmark October delivery U.S. light crude futures last traded at 0656 GMT (01.56 at Jakarta time) at US$27.95 barrel, down eight cents from Friday when the market had jumped 45 cents to close at $28.03 in New York.

Monday's slight decline in prices, attributed to profit taking, was in thin trading.

"Some selling came out so prices are a bit off, but traded volumes are really light," a New York broker said.

On Friday, declining fuel stocks in the United States and a reduction in OPEC output brushed aside news that U.S. unemployment had risen to a four-year high and heightened concern the economic downturn could deepen.

The Organization of the Petroleum Exporting Countries curbed output for a third time this year -- a million barrels per day, or four percent, from Sept. 1 -- to counter the negative impact on crude prices from the economic malaise and to prop up oil revenues.

Meanwhile, long-running wrangling between Iraq and the United Nations over the pricing of Baghdad's sanctions-bound crude exports continued to threaten to disrupt supplies.

Britain and the United States are pushing the United Nations for shorter pricing periods for Iraqi oil sales in an effort to stem illegal surcharges Iraq receives from buyers.

Russia on Thursday rejected an Anglo-American proposal to approve Iraqi oil prices for first-half September U.S. shipments instead of for the whole month.

Meanwhile, a Reuters survey said OPEC oil output rose in August, fuelled by a return to full flows from Iraq and growing leakage from the rest of the group that will raise fresh concerns about quota compliance.

The survey put overall production up 970,000 barrels a day for the month at 28.01 million bpd from 27.04 million in July.

Output from 10 OPEC members with quotas, excluding Iraq, edged up 260,000 bpd to 25.22 million, according to the survey of industry officials and OPEC monitors.

That put the group 1.02 million bpd in excess of official limits for the 10 of 24.2 million during August compared to leakage of 760,000 bpd in July.

Having decided to reduce production by another million barrels daily, that output target was cut to 23.2 million from September. Monitors see little prospect of the group meeting its target at the first attempt this month.

Extra leakage in August was noticeable from Saudi Arabia and Nigeria. But while Saudi's extra 225,000 bpd puts it nearly three percent over quota, Nigeria's 227,000 bpd puts it 11 percent above quota, making it OPEC's least compliant member.

Iraqi output in August was lifted by U.N.-supervised exports that rose to 2.09 million, up about 700,000 bpd on the month.

Supplies have been maintained despite continued tension over pricing. Exports eased in the last week of August to 1.86 million bpd after peaking the previous week at 2.4 million.