* IEA says OPEC has increased output as prices have risen
* IEA revises upwards oil demand growth, but not by much
* Alaskan pipeline boosting flows towards 500,000 bpd
(Adds detail on US, China reports)
By Jessica Donati
LONDON, Jan 18 (Reuters) - Oil slipped on Tuesday after the
International Energy Agency (IEA) said OPEC members had been
quietly raising output while the oil producing group insisted
the market was already amply supplied.
North Sea Brent for March <LCOc1> dropped 63 cents to trade
at $96.80 a barrel by 1454 GMT, slipping from morning highs of
$98.37 a barrel. The front-month Brent contract on Friday
touched $99.20, the highest price since October 2008.
U.S. crude oil <CLc1> prices dipped as deliveries through a
key north American supply route, the Trans-Alaskan pipeline
restarted, falling by 77 cents to $91.80 a barrel.
The IEA, which advises 28 industrialised countries on energy
policy, said in a report some OPEC members appeared already to
have boosted production, and that the group's output may quietly
increase in the run up to the next scheduled producer meeting in
six months' time. []
The emphasis of the report was broadly bullish however, as
the agency revised world oil demand growth in 2011 slightly
higher, while reiterating that consumption would not reach the
"exceptional levels" of last year. []
"It looks like OPEC has been increasing production in the
past few months in a relatively big way," Credit Agricole CIB
analyst Christophe Barret said, "you may now see a change in the
market perception regarding OPEC compliance."
INCONSISTENT
The Organization of the Petroleum Exporting Countries, whose
members have consistently said the world has enough oil and any
price rises were the result of non-fundamental factors,
criticised the IEA's conclusions, arguing the agency's position
was inconsistent with previous statements.
"In 2009, when the oil price was lower, the IEA had advised
its members that they needed to increase petroleum taxes,"
OPEC's secretary general Abdullah al-Badri said on Tuesday. "So
why, today, when they are complaining that oil prices are too
high, are they not advising their members to reduce taxes?"
Badri said the oil market rally had been driven by technical
matters, including the Alaskan pipeline outage, echoing OPEC's
monthly market report on Monday in which it said inventories
should rise over the first part of the year. []
"Also, the weak dollar and speculation have added to this,
pushing oil prices higher, especially Brent," Badri continued.
Anticipation OPEC will not take any early action to adjust
supplies has given justification to market bulls who have been
pushing the market towards $100, especially for Brent, the
European benchmark, which has faced tighter supplies than the
U.S. marker.
DIRECTION
Two U.S. reports and data on Chinese inflation, industry and
economy could trigger a more decisive move in oil prices on
Thursday, according to some banks.
"We expect the market to move sideways till then and take
direction from the three sets of reports" said Standard Bank
analyst James Zhang in a report.
The weekly U.S. Department of Energy stock report was
postponed to Thursday following a public holiday in the U.S. on
Monday, and will coincide with weekly U.S. unemployment figures.
Meanwhile, China is due to release inflation, industrial
output and retail sales reports for December, and economic
growth figures for the fourth quarter.
LOSING STEAM?
Some traders said a rally that set in during the last part
of 2010 was losing steam.
"It's been going up for two months solidly. $100 is some
sort of psychological challenge," said Christopher Bellew of
Bache Commodities brokerage, adding a retracement was more
likely in the near term.
A Reuters technical report showed U.S. crude could fall to
$89.51.
U.S. crude has been trading below Brent since August last
year, reflecting high levels of inventory at Cushing, Oklahoma,
the delivery point for U.S. futures.
U.S. supplies should increase following the restoration of
flows through Alaska's crude oil pipeline on Monday.
[]
The oil price rally has followed stronger equity markets and
a weakening of the U.S. dollar, which can stimulate buying of
dollar-denominated commodities.
The euro <EUR=> rose slightly against the dollar on Tuesday
in response to a stronger-than-expected survey on German
economic sentiment. []
(Additional reporting by Barbara Lewis and Alejandro Barbajosa
in Singapore; editing by Christopher Johnson and Keiron
Henderson)
