Oil prices fell on Tuesday March 7, 2011 after Kuwait's oil minister said OPEC was considering the first official production boost in more than two years to ease anxiety about Libya's supply disruption and the potential for other disruptions in the region.

The Organization of the Petroleum Exporting Countries has not changed its official policy, though analysts have said the producer group's output has informally risen for months and Saudi Arabia has offered to help make up for Libya's shut output, estimated at about 1 million barrels per day of its normal 1.6 million bpd.

Brent crude futures for April delivery fell $1.94 at $113.10 a barrel by 12:37 p.m. EST , having fallen as low as $112.13.

U.S. crude futures for April delivery fell 55 cents to $104.89 a barrel, after posting a low of $103.33.

Brent's premium to the U.S. benchmark West Texas Intermediate crude fell $1.44 to $8.34 a barrel, down from a peak of more than $17 last week.

"We are in consultations about a potential output increase," Kuwait's Sheikh Ahmad al-Abdullah al-Sabah told reporters. But he added that the group had taken no decision yet to produce above existing output targets.

Saudi oil minister Ali Al-Naimi said world oil markets were sufficiently supplied and the kingdom held 3.5 million bpd of spare production capacity to meet any shortages.

While acknowledging the discussions about production, Algeria's oil minister said he sees no physical deficits in oil markets and Iran's OPEC governor downplayed the discussions and said there was no need for an output boost as consumer worries over supply were mostly "psychological”.

Investment bank Goldman Sachs raised its oil price forecast and said it believed Saudi Arabia already had used up more of its surplus capacity than is widely thought.

U.S. crude prices will average $102 a barrel in 2011 because of the unrest in North Africa and the Middle East, the U.S. Energy Information Administration said, raising the forecast by $9 from its February outlook.