Oil pauses after breaking record streak, OPEC eyed

SINGAPORE, Oct 18 (Reuters) Oil was steady on Thursday, hovering nearly SINGAPORE, Oct 18 (Reuters) Oil was steady on Thursday, hovering nearly $2 shy of its record high of $89 a barrel as one OPEC minister raised the prospect of another output increase and U.S.

data showed rising inventories and weak demand.

U.S. crude for November gained 9 cents to $87.49 a barrel by 0542 GMT. Oil touched its fourth consecutive intraday record high on Wednesday, but ended 21 cents lower on the day as traders took profits from a six-day rally that lifted prices 11 percent.

London Brent crude for December shed 14 cents to $82.99 a barrel.

Oil's surge to near its inflation-adjusted peak in 1980 has alarmed both consumers and producers, fearful that it may blunt economic growth and diminish demand for crude.

Nigeria's oil minister told Reuters on Wednesday that OPEC policymakers could opt to take action when heads of state meet in Saudi Arabia on Nov. 17, opening the door to a possible supply boost sooner than the next official meeting in early December.

''There will be a meeting of ministers, initially informally, but there may be a formal meeting,'' Minister Odein Ajumogobia said, adding that he could not rule out a supply rise.

''We are still a month away and it depends what transpires before then.'' The Organization of the Petroleum Exporting Countries has already agreed to pump another 500,000 barrels a day from Nov. 1.

Oil has roared into the fourth quarter, rebounding from below $70 just two months ago as fears of a winter supply crunch, a weakening dollar and rising tensions between Turkey and Kurdish rebels in Iraq fuelled a fresh rush of investor capital.

DEMAND Wednesday's brief surge to $89 a barrel was propelled by news Turkey's parliament granted its troops permission to launch an attack against Kurdish rebels inside Iraqi territory, despite international pressure.

Although little oil is immediately at risk from any military action -- Iraq's exports via its pipeline to Turkey have been sporadic since 2003 -- traders fear an escalating conflict could endanger other supplies from the Middle East.

Further tempering oil's rally on Wednesday, U.S. crude stocks and refined fuel stockpiles rose more than expected last week, a government report said, although gasoline and heating fuel inventories remain below their historic norms. S] The data also showed that demand from the world's top consumer is already showing signs of slowing. Deliveries are up just 0.2 percent over last year, the data showed, although growth remains robust in China and other developing economies.

U.S. Energy Secretary Sam Bodman said on Wednesday that high oil prices were of ''great concern'' to the United States, whose economy is already facing headwinds from the meltdown in the subprime mortgage market.

Even so, the prospect of global refiners quickly draining crude inventories to meet stronger winter demand is keeping many traders and analysts on edge.

''The move up is then a completely fundamental phenomenon in our view, and is the result of a supply-demand dynamic that has been happening in slow motion for a full year,'' analysts at Barclays Capital said in a report. ''The issue seems no longer to be whether oil will reach $100 per barrel, but when.'' Prices are approaching their inflation-adjusted high from 1980, when they averaged $90.46 a barrel after the Iranian revolution and at the start of the Iran-Iraq war.

Reuters AE DB1136 shy of its record high of a barrel as one OPEC minister raised the prospect of another output increase and U.S.

data showed rising inventories and weak demand.

U.S. crude for November gained 9 cents to .49 a barrel by 0542 GMT. Oil touched its fourth consecutive intraday record high on Wednesday, but ended 21 cents lower on the day as traders took profits from a six-day rally that lifted prices 11 percent.

London Brent crude for December shed 14 cents to .99 a barrel.

Oil's surge to near its inflation-adjusted peak in 1980 has alarmed both consumers and producers, fearful that it may blunt economic growth and diminish demand for crude.

Nigeria's oil minister told Reuters on Wednesday that OPEC policymakers could opt to take action when heads of state meet in Saudi Arabia on Nov. 17, opening the door to a possible supply boost sooner than the next official meeting in early December.

''There will be a meeting of ministers, initially informally, but there may be a formal meeting,'' Minister Odein Ajumogobia said, adding that he could not rule out a supply rise.

''We are still a month away and it depends what transpires before then.'' The Organization of the Petroleum Exporting Countries has already agreed to pump another 500,000 barrels a day from Nov. 1.

Oil has roared into the fourth quarter, rebounding from below just two months ago as fears of a winter supply crunch, a weakening dollar and rising tensions between Turkey and Kurdish rebels in Iraq fuelled a fresh rush of investor capital.

DEMAND Wednesday's brief surge to a barrel was propelled by news Turkey's parliament granted its troops permission to launch an attack against Kurdish rebels inside Iraqi territory, despite international pressure.

Although little oil is immediately at risk from any military action -- Iraq's exports via its pipeline to Turkey have been sporadic since 2003 -- traders fear an escalating conflict could endanger other supplies from the Middle East.

Further tempering oil's rally on Wednesday, U.S. crude stocks and refined fuel stockpiles rose more than expected last week, a government report said, although gasoline and heating fuel inventories remain below their historic norms. S] The data also showed that demand from the world's top consumer is already showing signs of slowing. Deliveries are up just 0.2 percent over last year, the data showed, although growth remains robust in China and other developing economies.

U.S. Energy Secretary Sam Bodman said on Wednesday that high oil prices were of ''great concern'' to the United States, whose economy is already facing headwinds from the meltdown in the subprime mortgage market.

Even so, the prospect of global refiners quickly draining crude inventories to meet stronger winter demand is keeping many traders and analysts on edge.

''The move up is then a completely fundamental phenomenon in our view, and is the result of a supply-demand dynamic that has been happening in slow motion for a full year,'' analysts at Barclays Capital said in a report. ''The issue seems no longer to be whether oil will reach 0 per barrel, but when.'' Prices are approaching their inflation-adjusted high from 1980, when they averaged .46 a barrel after the Iranian revolution and at the start of the Iran-Iraq war.

Reuters AE DB1136