Wednesday, May 31 2006 11:06 Hrs (IST) - World Time -

Singapore: Oil prices slipped below 72 dollars a barrel in Asian trade today (May 31, 2006)on expectations of a build-up in US gasoline supplies, providing a brief relief from supply concerns over Iran, dealers said.

Expectations that OPEC will stick with the oil cartel's current production quotas also dampened price pressures, they said.

At 0830 GMT, New York's main contract, light sweet crude for July delivery was down 22 cents at 71.81 dollars from its close of 72.03 dollars in the United States yesterday.

Brent North Sea crude for July delivery was at 70.94 dollars, down 11 cents.

The Organization of Petroleum Exporting Countries (OPEC) meets tomorrow in Caracas to decide production levels but delegates have indicated the 11-member oil cartel will keep its official production quota intact.

"It looks like (OPEC) are not going to reduce production levels (so) the market has sold off," said Tony Nunan, a Tokyo-based energy risk manager for Mitsubishi Corp.

OPEC has an official production quota of 28 millionbarrels of day, its highest level in 25 years.

Any cut to that level would likely drive oil prices to new highs well above 70 dollars and would be a risk to the major oil-consuming nations including the United States.

"Any cut in production will send prices up further but consumer countries like the US will complain about it to OPEC so I don't think OPEC will cut production," said Tetsu Emori, a Tokyo-based commodities strategist with Mitsui Bussan Futures.