Oil slips towards $60, Saudi Arabia sees steady market

By David Sheppard

LONDON (Reuters) - Brent crude oil slipped towards $60 a barrel on Wednesday as a stronger dollar pressured commodity prices, while Saudi Arabia's oil minister said he expected the market to balance itself and for prices to recover.

Oil Minister Ali al-Naimi said he expected supply and demand would soon match and oil prices, which hit a near six-year low of $45 in January, would stabilise, adding to signs OPEC's largest exporter is confident consumption is growing.

"I hope and expect supply and demand to balance and for prices to stabilise," Naimi said in a speech in Berlin. "Global economic growth seems more robust."

OPEC decided not to cut output last year and let prices fall as it moved to defend its share of the market against fast-growing U.S. shale output. Naimi said it was not Saudi Arabia's responsibility to "subsidise" higher cost oil producers.

April Brent was down 66 cents at $60.36 by 1405 GMT, after rising 2.5 percent on Tuesday. U.S. crude futures were up 10 cents to $50.62 a barrel, narrowing their discount to Brent to less than $10 a barrel.

The speech followed news that Saudi Arabia had raised its official selling prices (OSPs) for oil deliveries to Asia and the United States on Tuesday.

"This is a sign that prices have bottomed out because it means Saudi is confident in raising prices without being afraid of losing market share," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

Oil faced some pressure from a stronger dollar as the U.S. currency rose its highest since September 2003 against a basket of currencies, making commodities priced in the greenback more expensive.

Air strikes on oil terminals in Libya on Tuesday helped to underpin prices, further threatening supplies from the OPEC member that have been slashed by ongoing fighting across the country.

Islamist militants, who have gained ground during the turmoil, took over Libya's Bahi oil station and the Mabrouk oilfield, after forces guarding the installations, from which staff have already left, were forced to retreat.

Traders were also looking to weekly U.S. government inventories data due on Wednesday to provide direction. An industry report showed a smaller than expected build-up in U.S. commercial crude stocks last week.

However, uncertainty about talks between major powers and Iran over its nuclear programme capped oil's gains. A deal could release more Iranian oil to the market.

"We have made some progress but have a lot of challenges yet ahead," a senior U.S. State Department official told reporters travelling with U.S. Secretary of State John Kerry.

(Additional reporting by Florence Tan in Singapore; editing by Jason Neely and David Clarke)