NEW YORK (AP)

Crude oil futures declined yesterday drifting from 11-month closing highs on suggestions that OPEC may increase its output.

Hasan Qabazard, research director of the Organisation of Petroleum Exporting Countries, told Dow Jones Newswires he thinks oil is fairly valued at US$60 to US$65 a barrel, leading some to conclude the cartel may be open to reversing its long-held position that oil supplies are adequate.

"I'm shocked, they had a sudden change of heart," Phil Flynn, an analyst with Alaron Trading Corp. in Chicago, said of OPEC.

The resumption of exports at a key Angolan oil facility also weighed on prices.

Light, sweet crude for September delivery dropped $1.01 to $74.78 a barrel on the New York Mercantile Exchange. September Brent crude lost $1 to $76.64 a barrel on the ICE Futures exchange in London.

Keeping demand

Natural gas futures fell sharply on the Nymex, tumbling 35.6 cents to $6.09 per 1,000 cubic feet on growing supplies and mild temperatures, which are keeping demand in check. The drop added to last week's 21.6-cent decline, but it was too early to tell if this drop would translate into lower heating costs next winter.

Energy traders were most focused on the prospect that OPEC could boost output, Flynn said. For months, the cartel has maintained that high oil prices are not its fault. Analysts have criticised OPEC for cutting production this year.

Word that Total SA is resuming exports from its 240,000 barrel-a-day Dalia field facility in Angola also put pressure on oil prices.

While Goldman Sachs recently predicted oil prices would go to US$95 a barrel this year, a group of Citigroup analysts on Monday said crude prices are unjustified at their current levels.

"Aside from the usual raft of geopolitical noise, there seems little justification for crude's steady march toward US$80, other than the fulfilment of technical trends," the Citigroup analysts said in a report.

Indeed, evidence emerged Friday that some of the speculative buying that has pushed oil prices higher is ebbing.