LONDON - World oil prices paused close to 128 dollars per barrel on Tuesday as traders monitored ongoing supply concerns alongside fresh hints that OPEC could pump more crude.
New York's main oil futures contract, light sweet crude for July delivery, eased three cents to 127.73 dollars a barrel.
Brent North Sea crude for July added two cents to 128.04 dollars.
Traders were "pausing ahead of important US economic data this week and the weekly US fuel inventories report, which could help to establish direction for the market," said Sucden analyst Andrey Kryuchenkov.
Markets are keenly awaiting the report, due on Wednesday, because the United States is the largest energy consuming nation in the world.
Crude futures had risen in volatile trade on Monday as traders reacted to a stronger-than-expected US manufacturing report, and news of the first storm of the 2008 US hurricane season.
Barclays Capital analyst Kevin Norrish said that "prices mainly drew support (on Monday) from the start of the Atlantic hurricane season," which began last Sunday and lasts until the end of November.
"Arthur, the first storm of the hurricane season, served as a timely reminder of the potential supply disruptions that can result due to these storms, as two of Mexico's crude oil ports remained closed for the second consecutive day."
The most hurricane-prone US region is the southeastern coastline, running from the states of North Carolina to Texas, where many US energy facilities are based.
Oil prices have now lost about seven dollars since striking record peaks of 135.14 dollars in London and 135.09 dollars in New York on May 22.
Kuwait's Oil Minister Mohammad al-Olaim said Tuesday that the Organization of Petroleum Exporting Countries was prepared to pump more crude if necessary.
"OPEC is prepared to increase supplies only if the market needs it," Olaim said in statements reported by the official KUNA news agency.
Olaim, who was appointed last week, said high oil prices were not related to fundamentals of supply and demand.
Kuwait is OPEC's fourth largest oil producer, pumping around 2.5 million barrels per day.
OPEC produces 40 percent of the world's oil. Its current output stands at about 32 million barrels per day.
The cartel has repeatedly brushed aside international demands to increase output in the past, blaming speculative traders and the falling US dollar for record-breaking oil prices.
Tetsu Emori, fund manager at Astmax asset management in Tokyo, said concerns over falling global oil demand would continue to weigh on the market.
"In the near term, prices will find support at 115 dollars," he said.