12 November 2004	Friday	28 Ramazan 1425

LONDON, Nov 11: Oil prices fell Thursday as the market reckoned there was enough heating fuel to meet demand in key markets over the northern winter despite further drops in US stockpiles, analysts said.

The death of Palestinian leader Yasser Arafat and a threat to oil exports from major crude producer Nigeria helped to limit losses, they added.

New York's main contract, light sweet crude for delivery in December, lost 1.36 dollars to 47.50 dollars a barrel at about 1700 GMT, giving back most of the steep gains seen a day earlier.

Brent North Sea crude for December slumped by 1.45 dollars to 43.30 dollars in late trade in London, having closed up 1.04 dollars the day before.

Prices jumped Wednesday after the US Department of Energy said distillates - mostly heating oil and diesel - fell by 100,000 barrels to 115.6 million in the week to November 5, the eighth consecutive drop.

Heating oil inventories alone eased 100,000 barrels to 48.4 million barrels while diesel stocks were flat at 65.2 million.

Analysts said the market's initial reaction to the data was overdone, especially as US crude oil inventories increased by 1.8 million barrels to 291.5 million, about average for this point of the season.

"With the crude oil being there and most of the refiners now coming out of maintenance and coming back on stream, people don't believe there is actually going to be a shortage of heating oil this winter," said Richard Slape, energy analyst at stockbroker Seymour Pierce.

Prior to Wednesday's rebound in prices, New York light sweet crude had tumbled by about 14 percent in two weeks, and Brent by 15 percent as supplies showed signs of recovery after hurricane-induced losses in the Gulf of Mexico.

Slape said there could be a big rise in prices should the death of Arafat, who passed away overnight in a Paris hospital, lead to a big flare-up of violence in the Middle East.

But he added: "Things have been problematic there for a long time now and I can't see that his death would change the situation so much for the worse that it results in another Arab oil embargo or something like that."

Elsewhere, traders were closely watching events in Nigeria, where the country's main oil unions on Thursday said their members would join next week's planned nationwide general strike and warned of disruptions to crude exports.

"There will be no activities at the oil rigs and export terminals," Mojibayo Fadakinte, general secretary of the PENGASSAN union, told AFP.

A Nigerian court later declared the planned general strike illegal, but Labour leaders immediately dismissed the ruling by judge Ibrahim Tanko Muhammad of the Abuja appeals court.

"We are not bothered by the court order. They cannot stop us. No court order can stop us," declared Denja Yacqub, national mobilisation officer of the Nigerian Labour Congress (NLC), which has led calls for next week's action.

With exports of 2.5 million barrels per day, Nigeria is Africa's biggest oil producer and the sixth largest in the world. Its sweet, light crude is ideal for refining into petrol, and it supplies around 15 percent of US oil needs.

Any news from Nigeria would be watched "very closely", said Lee Elliott, a trader with brokers GNI-Man Financial.

"Next week we'll probably get a clearly picture of what's going on."-AFP