Oil prices dip as concerns ease

Iraq continues to be hit by attacks on oil pipelines

The price of oil has fallen in New York after Opec president Purnomo Yusgiantoro said that the oil cartel's members were increasing production.

He warned, however, that prices will only stay low if global conflicts are resolved, easing market jitters.

It also emerged that a bomb blast in Iraq will not affect supply.

Many investors are betting that prices are unlikely to hit record levels again in coming weeks and are looking to pocket some profits.

Mr Yusgiantoro said that there has to be a big reduction "in geopolitical tensions" for prices to stabilize.

Downward slide

US light crude lost 90 cents to $42.28 a barrel in New York, after sliding more than 3% during trading on Monday.

The decline is the sixth drop in seven sessions as crude prices fall from record highs of close to $50 a barrel.

Oil prices have been pushed higher in recent months by rising demand and fears about supply.

Demand remains at a 24-year high, led by rising consumption in China and the US.

The situation has been exacerbated by the continued sabotage of facilities in Iraq, which has hit exports from Iraq and fuelled oil market unease.

Oil market speculators have also contributed to the volatility, analysts say.

"Opec is doing everything it can to restore order and stability to the market, with reasonable prices that are acceptable to producers and consumers alike," said Mr Yusgiantoro.

Mr Yusgiantoro added that Opec countries now produce 30 million barrels a day, up from 29 million barrels in July. The producers' group aims to produce a further one million barrels a day by the end of 2004.