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• Oil fell over $1 on Wednesday, pressured by record borrowing costs for Italy after the Federal Reserve warned that turmoil in Europe threatened the U.S. economy, and after OPEC agreed their first output limit in three years.The Organization of Petroleum Exporting Countries agreed a new supply target of 30 million barrels daily, Venezuelan Oil Minister Rafael Ramirez said, roughly in line with current production in a deal that settles a 6-month-old argument over output levels in Saudi Arabia's favour.Oil was already weaker on economic worries, and it showed little reaction to the widely expected deal.Brent crude fell $1.11 to $108.39 a barrel by 1311 GMT. U.S. crude fell 1.55 $98.59. Both contracts gained sharply on Tuesday.
• "The 30 million bpd level is roughly the current production level, so for OPEC to ratify that level is just a catch up. So we don't take it as a bearish sign in terms of an increase in production," said James Zhang, commodity strategist at Standard Bank. Reinforcing the difficulties facing some euro zone governments to raise funds Italy sold 3 billion euros of five-year government bonds on Wednesday at a yield of 6.47 percent, up from 6.29 percent at the previous comparableThe euro broke 11-month lows versus the dollar below $1.30 after Rome's auction, with foreign exchange markets still speculating that more rating downgrades were in prospect for euro zone governments.OPEC OUTLOOK Some analysts think that the OPEC target around 30 million bpd level will do little to prevent a spike in oil prices next year, and could ulimately be supportive of prices.
• "After some consideration, it could have led to some upside for prices as OPEC gives the impression they are stronger and therefore will be more successful in defending the downside," said David Wech, head of energy studies at JBC Enery in Vienna.Tensions remain high between Iran and western powers over the Islamic Republic's nuclear programme, a factor which is supporting oil prices on fear of supply disruption.Iran will move its uranium enrichment plants to safer sites if conditions make this necessary, the semi-official Mehr news agency on Wednesday quoted a senior Revolutionary Guards commander as saying.
• Saudi Arabia will not seek to replace Iranian oil in the case of oil sanctions against Iran, Iranian Oil Minister Rostam Qasemi said on Wednesday.Oil was also under pressure from an industry report that showed crude stocks in the world's largest consumer, the United States, rose 462,000 barrels in the week to Dec. 9, compared with analysts' expectations for a fall of 2 million barrels.Distillate stocks rose 1.2 million barrels versus a forecast for an 800,000-barrel gain.Investors will now watch data from the U.S. Energy Information Administration due at 1530 GMT.Commercial crude stockpiles are expected to have fallen last week due to lower imports and end of the year destocking, an expanded Reuters poll of analysts showed on Tuesday.

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