Oil prices hold close to $60

LONDON: Oil prices turned higher on Tuesday after early weakness saw them fall under 60 dollars as traders took direction from better-than-expected positive US consumer confidence data.

The prospect that OPEC will hold output unchanged at its upcoming meeting was reinforced by Saudi Arabian comments, in line with expectations.

New York's main futures contract, light sweet crude for delivery in July, rose three cents to 61.70 dollars a barrel, having earlier fallen as low as 59.53 dollars.

London's Brent North Sea crude for July added 50 cents to 60.71 dollars.

US consumer confidence leapt in May to an eight-month high, with consumers seeing signs of better times ahead for the recession-mired economy, the Conference Board said.

The business research group's consumer confidence index spiked to 54.9 points in May from 40.8 in April, bolstering hopes the worst of the global slump may be over.

Elsewhere, ministers from the Organization of the Petroleum Exporting Countries (OPEC), which pumps some 40 percent of the world's oil supply, meet on Thursday for a scheduled output gathering in Vienna.

OPEC should maintain existing production quotas at its meeting, Saudi Oil Minister Ali al-Nuaimi indicated Tuesday.

"We will stay the course," the minister, representing OPEC's biggest oil producer, said.

Asked if there was a consensus on this position among members of the group, Nuaimi replied: "We will know that on Thursday when we meet."

He also said that oil prices should rise to 75 dollars per barrel "we hope between the third and fourth quarter" of this year.

"A stronger dollar and some further comments that there will not be a production cut at this week's OPEC meeting may be weighing on oil prices," Sucden analyst Brenda Sullivan said in London.

A stronger US currency dents demand for dollar-priced crude which becomes more expensive for buyers holding weaker currencies. This in turn, pushes oil prices lower.

OPEC has steadily cut production since late last year in a bid to steady prices which have tumbled from record highs above 147 dollars in July.

Oil prices remain near 60 dollars per barrel despite plentiful crude supplies, energy consultancy CGES said Tuesday.

"Brent crude is trading at 60 dollars per barrel, yet the world appears awash with oil," CGES said in its latest monthly oil report.

"In the first quarter of 2009, global oil demand was an estimated 3.6 mbpd (million barrels per day), down on the previous year and in the current quarter we expect to record a year-on-year drop in demand of around 1.5 mbpd.

"However, it is beginning to look as if global oil consumption in the second quarter of 2009 could turn out to be higher than it was in the first quarter, potentially bringing to an end a run of five consecutive quarters of falling global oil demand."