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Updated from 10:27 a.m. EDT

Crude prices erased gains Friday after the head of OPEC discounted rumors the group had agreed to its first production cut in over two years.

Light, sweet crude gave back 27 cents to $59.76 a barrel on Nymex. Crude's decline had a mixed effect on the rest of the energy sector, with heating oil adding 1 cent to $1.69 a gallon, and unleaded gasoline falling 1 cent to $1.50 a gallon.

Natural gas gained 12 cents to $6.42 per million British thermal units on projections of colder weather in the Northeast. The fuel is used by some utilities to generate electricity.

OPEC's 11 member countries could reach an agreement by Monday over supply cuts that may run as high as 1 million barrels per day. Conflicting reports circulated Thursday over whether the group would reduce output by 3% to shore up sluggish prices.

It was unclear whether OPEC would hold an emergency meeting next week to discuss supply cuts. The group, which controls about 40% of the world's crude, has been pumping 28 million barrels of crude every day and as recently as last month opted to keep production levels steady.

U.S. Energy Secretary Samuel Bodman called on OPEC not to shave output before the winter heating season, when demand, and prices, are expected to spike.

"We still need oil for sure," Bodman told

Reuters

. "We still need all the oil we can get."

Speculation has been growing over the past few weeks over whether OPEC would shave output to shore up sagging crude prices. Since touching a high in July, crude prices have slipped 25%, prompting members to rethink their decision to keep pumping at record levels.

Brimming inventories have also pressured prices and added to OPEC's quandary. Stockpiles of crude are nearly 7% higher than last year; gasoline is up 10%, and distillates, which include heating oil, are 18% greater. Natural gas is 14% above the same period last year.

Little progress in talks with Iran over halting its nuclear program have also lent support to sluggish prices. European, Chinese and U.S. diplomats discussed levying sanctions against Iran at a meeting in London Friday, but nothing concrete came out of the talks. Follow-up telephone discussions will take place either on Monday or Tuesday.

Meanwhile, in stock market action, shares of drillers and refiners were up 0.02% on the Amex Oil Index, led by

Anadarko Petroleum

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,

Marathon Oil

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,

Sunoco

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and

Valero Energy

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.

Shares of

El Paso

(EP)

were flat despite Citigroup's upgrade of the stock to buy from hold. The investment bank said shares were undervalued after the stock was hammered over plunging natural gas prices.