Oct. 26 (Bloomberg) -- Oil fell for a third day after Nigerian rebels announced a ceasefire amid speculation that prices have risen above levels justified by demand. Oil dropped below $80 a barrel after a leading Nigerian militant group agreed to talks to end a conflict that has cut output from Africa’s biggest oil producer. Prices also fell as OPEC’s president said the group may increase production at a December meeting should oil remains above $75 a barrel. “Energy demand is still soft, OPEC quotas are being exceeded with impunity while geopolitical variables, like Iran and Nigeria, seem to be fading,” said Edward Meir, an analyst with MF Global Ltd. in Darien, Connecticut. Crude oil for December delivery fell as much as 93 cents, or 1.2 percent, to $79.57 a barrel on the New York Mercantile Exchange, and was at $80.15 at 10:10 a.m. London time. Futures have gained 79 percent this year and touched a one- year high of $82 a barrel on Oct. 21. Prices have climbed 22 percent in the four weeks to Oct. 23. The Nigerian cease fire, which went into effect at midnight yesterday, followed an Oct. 19 meeting between President Umaru Yar’Adua and Henry Okah, leader of the Movement for the Emancipation of the Niger Delta. Okah later conveyed the government’s readiness to talk with the group’s negotiators, MEND spokesman Jomo Gbomo said yesterday in an e-mailed statement. The militant group, which surfaced in January 2006 and orchestrated attacks blamed for reducing Nigeria’s oil output by more than 20 percent a year, called off a three-month cease fire on Oct. 16. Nigeria produced 1.81 million barrels of oil a day in September, according to a Bloomberg estimate. Brent Crude Brent crude oil for December settlement fell as much as 77 cents, or 1 percent, to $78.15 a barrel on the ICE Futures Europe exchange in London and was at $78.70 at 10:10 p.m. London time. “We are seeing some kind of profit taking after the huge jump of more than $10 in two weeks which was mainly speculative driven,” said Carsten Fritsch, an analyst with Commerzbank AG in Frankfurt. “Fundamentally speaking, these high prices aren’t justified.” The Organization of Petroleum Exporting Countries will meet Dec. 22 in Luanda, Angola, to review its production quotas. Some member countries are able to pump more oil if the market requires it, OPEC’s president, Jose Maria Botelho de Vasconcelos, who is also Angola’s oil minister, said in an interview late yesterday. ‘Maintain Equilibrium’ Oil at $100 a barrel would make a supply boost inevitable because “it is necessary to maintain the equilibrium,” the minister said. China’s crude oil imports rose 15 percent to 17.2 million metric tons in September from a year earlier, data from the customs office showed today. Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Oct. 20, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 74,383 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 5,547 contracts, or 8 percent, from a week earlier. To contact the reporters on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.netAnn Koh in Singapore at akoh15@bloomberg.net.

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