Oil Prices Dip Amid Rise in US Output

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Neighbouring Oman backs prolonging the output limits beyond March and sees producers extending them until the end of 2018, Oil Minister Mohammed Hamad Al Rumhy told reporters.

"The excess of OECD oil inventories over their five-year average levels has fallen by more than 50 percent in 2017, with inventories now at around 160 million barrels".

Overnight, crude oil prices settled higher on Monday, as investors weighed the prospect of supply disruptions amid rising Middle East tensions while growing expectations of a ramp up in output capped upside momentum.

He added that while he had not heard any OPEC members discussing the possibility of not extending the deal, the time and duration of an extension was still to be decided.

The American Petroleum Institute (API) reports weekly crude and refined product inventories later on Tuesday.

Crude oil prices were mixed in Asia on Tuesday with weekly industry estimates of USA inventories ahead as well as monthly supply and demand figures from the Paris-based International Energy Agency.

OPEC forecast higher demand for its oil in 2018 and said its production-cutting deal with rival producers was reducing excess oil in storage, pointing to an even tighter global market next year.

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OPEC and allied oil producers should extend their production cuts beyond March to help re-balance the market, the United Arab Emirates said, adding weight to a gathering consensus for longer reductions in output among participants in the global accord.

Another possible outcome of November's OPEC meeting is the delay of the decision that everyone seems to expect.

According to OPEC's monthly market report, the forecast demand for its oil next year has been increased by around 400,000 barrels a day from the previous month to 33.4mmbpd, about 0.46mmbpd higher than in 2017. U.S. West Texas Intermediate (WTI) crude was at $56.78 per barrel, up 4 cents.

The country's total exports declined by 9 per cent on a year-on-year basis in the first seven months of this year, to 197.08 million barrels from 216.46 million barrels.

The rig count is also much higher than a year ago when only 452 rigs were active, indicating that the USA oil industry is comfortable operating at current prices.

Tensions in the Middle East have raised the prospect of disruptions, but it was unclear whether a strong quake that hit Iran and Iraq on Sunday had affected the region's oil production.

Bahrain said at the weekend that an explosion that caused a fire at its main oil pipeline on Friday was caused by sabotage, linking the attack to Iran, which denied any role.

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