Jan. 24 (Bloomberg) -- Crude oil fell for a second day as OPEC's production and growing U.S. stockpiles eased concern supplies of crude from Iran and Nigeria would be interrupted.

Saudi Arabian Oil Minister Ali al-Naimi said the Organization of Petroleum Exporting Countries didn't need to alter production at current prices, an Indian television channel reported yesterday. U.S. stockpiles, already higher than average, may have risen for a fourth straight week last week, a Bloomberg News survey showed.

``You've got OPEC saying there's plenty of oil around and the Saudis have come out giving some calming comments that they may keep quotas unchanged,'' said Peter Luxton, an energy analyst at Informa Global Markets in London. ``Stock levels in the U.S. are quite comfortable and rising. What may happen in Iran and Nigeria, isn't happening.''

New York crude reached a four-month high of $69.20 a barrel yesterday on concern rebel attacks in Nigeria would further disrupt its oil output and on speculation Iran would cut crude exports to retaliate against any United Nations sanctions related to its nuclear program. Oil fell as much as 80 cents today, or 1.2 percent, to $67.30 on the New York Mercantile Exchange, where it was down 65 cents at 12:57 p.m. London time.

Brent crude for March settlement declined 50 cents, or 0.8 percent, to $65.66 a barrel on London's ICE Futures exchange. Prices jumped 6.7 percent last week.

``After days of heady gains, it is perhaps not surprising to have a pause here,'' Edward Meir, a commodity analyst at Man Financial Ltd. in Darien, Connecticut, said in an e-mailed note. ``We may see another restrained session today in advance of tomorrow's U.S. inventory numbers.''

Growing Stockpiles

U.S. supplies of distillates, which include heating oil, probably climbed 938,000 barrels the week ended Jan. 20, according to the median forecast of 10 analysts in a Bloomberg News survey.

Warm weather in the U.S. Northeast is reducing demand for heating fuels, with temperatures forecast to remain higher than normal east of the Rocky Mountains through Feb. 6, according to the National Weather Service.

The Northeast uses more than 80 percent of the heating oil consumed in the U.S. Demand for heating oil will fall 16 percent below average in the week starting today, Missouri-based Weather Derivatives predicted yesterday.

U.S. gasoline supplies may have added 1.6 million barrels and crude stockpiles probably gained 1.3 million barrels as deliveries to refiners slowed during the start of the maintenance season, the survey showed. The Energy Department will publish its weekly inventory report tomorrow at 10:30 a.m. Washington time.

OPEC's Output

OPEC, the source of more than a third of the world's oil, meets on Jan. 31 in Vienna to discuss its production and quota policy. The group of 11 producers is pumping almost as much as it can, close to the highest level in 25 years, benefiting from selling oil at high prices and helping to meet rising world demand.

Oil reached a record $70.85 a barrel on Nymex on Aug. 30. It has dropped 4.5 percent since.

The oil and gas equity team at Merrill Lynch & Co. today raised its forecast for the 2006 average price of West Texas Intermediate, the New York benchmark, by 9.6 percent to $57 a barrel, from $52 previously. It also boosted its 2007 forecast by 12 percent to $47 a barrel, from $42, citing geo-political tensions in countries such as Iran.

``There's fear of tightness in oil markets further out,'' Informa Global's Luxton said. ``It's a battle between there being plenty of oil now and relative sound stocks against what could happen if the geopolitical tension grows.''

The U.S., France, Germany and the U.K. want Iran brought before the UN Security Council after it resumed nuclear research this month. UN sanctions could limit investment Iran needs to improve oil production, or prompt Iran to halt oil exports. Some analysts and traders say the impasse will last for months.

As the world's fourth-largest oil producer, Iran pumps almost 5 percent of the world's crude. Neither its output nor its exports have been affected so far.

To contact the reporter on this story: Alejandro Barbajosa in London at abarbajosa@bloomberg.net

Last Updated: January 24, 2006 08:09 EST