Oil back near $59 after Dec expiry; OPEC talks cut

SINGAPORE, Nov 20 (Reuters) Oil prices eased below $59 a barrel on Monday as the expiration of a heavily depressed December contract put prices well above their 17-month low, while more OPEC members flagged a second production cut next month.

Macro concerns triggered by tepid readings of the U.S. economy as well as healthy U.S. oil inventories, particularly in the mid-continent region that has the most influence over prompt prices, knocked prices sharply lower at the end of last week.

U.S. crude futures for January delivery slipped 20 cents to $58.77 a barrel by 2353 GMT, once again trading in the $56-$62 price range that has defined prices since early October. January crude fell nearly $2 over Thursday and Friday.

Prices on Monday stood about $3 higher than last week due to the expiry of the December contract on Friday after a rush to roll or book out prompt-month positions dragged prices down to their lowest since June 15, 2005.

''GS Research believes that in addition to technical trading pressures, the anomalous depression on front-end WTI prices has resulted in large part from physical constraints at Cushing, Oklahoma, the delivery point for NYMEX contracts,'' Goldman Sachs said in a research report over the weekend.

''(The) underperformance of WTI relative to the rest of the complex is reflective of the poor US Midcontinent fundamentals and not the global situation, which is much tighter.'' Prices may get some lift amid signs that OPEC is growing more inclined to cut production further when it meets in Nigeria next month, deepening the 1.2 million barrel per day cut imposed this month, even though only about half those curbs may materialise.

Qatar Oil Minister Abdullah al-Attiyah told Reuters on Saturday that OPEC had ''no choice'' but to agree another reduction in supply because markets were still oversupplied.

He also said that a $60 crude price was ''moderate for consumers'' -- among the strongest signals yet that the group will not tolerate anything below that.

On Sunday Algeria's Energy and Mines Minister Chakib Khelil also said that another cut was possible due to fears that prices could slump again in the second quarter.

It remains to be seen what impact the contract expiry will have on OPEC's decision, however.

''As prices go closer to $55 the need for OPEC action looks more urgent, but closer to $60 the urgency ebbs away,'' said Tobin Gorey, strategist at the Commonwealth Bank of Australia.

Gains may also be offset by signs of tepid U.S. economic growth.

In October the pace of U.S. home construction sank to the lowest level in more than six years, while new building permits fell to the weakest in nearly nine.

A wave of funds selling amid fears of slower expansion in the world's top economy knocked the whole commodities complex lower on Thursday, although metals and crop prices rebounded on Friday.

In the oil markets, many speculators had moved to the sidelines in recent weeks as prices steadied and risk appetite diminished, but non-commercial crude players returned last week to place their biggest bullish bets since mid-September.

NYMEX crude speculators switched from an overall net short stance to more than 17,000 lots net long in the week to Nov. 14, just before frontmonth prices tumbled.

REUTERS DKS PM0555