``It's just a pull-back after the price rise this week, but the tone of the market is still firm, and there is more upside for prices,'' said a source at a US brokerage in Singapore. He said there was potential for prices to break the $25 resistance and reach $26 within a short time. Current US crude prices, though short of the 32-month high of $25.12 traded in late September, are still almost $1.00 per barrel higher from the start of the week.

Prices this week have been bolstered by reports showing declining stocks, and producers' plans to maintain the existing supply curbs into the second quarter next year. Mexico's oil minister Luis Tellez said his country had already agreed to extend its output cuts to end June next year if other producers followed suit. Non-OPEC Mexico, with Saudi Arabia and Venezuela, had engineered the supply cut accord.

Other producers, including Venezuela and Kuwait have made strong indications this week that the output cuts would be extended beyond the March 2000 expiry.

Paris-based International Energy Agency (IEA) said in its monthly report that global stocks were set to see a record decline in the northern hemisphere winter period if OPEC maintains its compliance to output cuts.The IEA said that in September oil stocks held in industrialised countries had dropped sharply.

Latest weekly data from the American Petroleum Institute and the US Department of Energy also showed large drawdowns in heating oil and gasoline stocks, convincing the market of a tightly supplied winter this year.