Oil prices weakened Wednesday after news that US energy inventories had fallen less than expected last week and as Saudi Oil Minister Ali Al-Nuaimi refused to be drawn over whether OPEC would hike output.
Crude futures had slumped Tuesday, losing more than three dollars on increasing speculation that the Organization of Petroleum Exporting Countries may decide at a meeting in Abu Dhabi next week to hike production.
On Wednesday following the US stocks data, New York's main contract, light sweet crude for January delivery, slumped 1.67 dollars to 92.75 dollars a barrel.
Brent North Sea crude for January shed 57 cents at 91.95 dollars a barrel.
The US Department of Energy (DoE) on Wednesday said US crude inventories fell by 400,000 barrels in the week to November 23. Analysts had forecast a drop of 1.0 million barrels.
Meanwhile stocks of distillates, which include heating fuel, shed only 100,000 barrels last week when the market forecast had been for a drop of 1.2 million.
Distillate stocks are closely watched in the run-up to the northern hemisphere winter, when demand for heating fuel tends to soar.
The DoE added that US refinery usage jumped to 89.4 percent of capacity, up 2.4 percentage points compared with a week earlier.
"The big news is that (refinery) runs shot way up," Man Financial trader Andy Lebow said.
Crude futures have tumbled from almost 100 dollars since last week, when New York crude struck a record high of 99.29 dollars on concerns over tight oil supplies.
Saudi Oil Minister Ali Al-Nuaimi on Wednesday insisted that the world oil market was well supplied and that high prices did not properly reflect the supply-demand situation.
"There is no relationship between the fundamentals today and the price of oil. There is a mismatch," the Saudi told reporters after delivering a speech at an energy forum in Singapore.
"Fundamentals do not support high petroleum prices. The world market is well supplied," he said in his speech.
Asked whether Saudi Arabia, the world's biggest oil exporter, would push for an increase in production at the meeting in Abu Dhabi, Nuaimi said the cartel would first need to see data.
"You are trying to get a premature answer. We need to meet first, we need to look at the data and then decide accordingly," he said.
Meanwhile OPEC president Mohammad al-Hamli on Wednesday announced that the oil cartel would invest more than 150 billion dollars (102 billion euros) by 2012 on more than 120 projects, including large refineries, to expand output.
The projects are expected to raise OPEC's existing production capacity by more than five million barrels a day, said al-Hamli, who is also the oil minister of OPEC producer United Arab Emirates.
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