Oil prices traded lower on yesterday but held above $30 a barrel, defying OPEC's attempt to cool the market with a crude supply rise.

International benchmark Brent crude for December delivery was trading 71 cents weaker at $30.43 a barrel. US light crude stood 56 cents lower at $32.25.

OPEC confirmed it would increase daily crude supply by 500,000 barrels a day from yesterday under an informal price band mechanism designed to ease high prices.

Expectations of the rise drove prices down sharply last Friday but traders on Tuesday said the market seemed indifferent because of doubts that OPEC would deliver new supplies given its spare output capacity limitations.

Traders said weaker refined oil products in the US market were putting pressure on prices while dealers were still keeping an eye on tensions in the Middle East.

Violence in the Middle East pushed oil prices to a 10-year high of $35 this month, underscoring fears that oil supplies could be threatened if Israeli-Palestinian clashes spread in the region.

OPEC, meanwile, is faced with the task of proving to oil traders that its latest output rise will translate into new supplies and not just legitimise existing quota violations.

That will be a daunting task as most OPEC members are already pumping at full throttle.

Saudi Arabia, the world's largest oil exporter, holds most of OPEC's spare capacity but analysts and traders say it is already producing about 500,000 barrels per day above its output ceiling and is unlikely to go beyond that.

Saudi Arabian Oil Minister Ali al-Naimi has said that the kingdom and other producers were ready to fill any supply shortfall.