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Oil prices dip as Iraq raises exports

May 30, 2016 17:53 IST

While OPEC has been unable to agree on an output freeze in an effort to support prices, Iraq was the latest Middle East producer to raise its exports quota

Oil prices dipped to around $49 a barrel on Monday as Iraq raised its crude exports target ahead of an OPEC meeting while Canadian production was set to restart after huge wildfires.

Attention turned to a meeting by the Organization of the Petroleum Exporting Countries (OPEC) in Vienna this week, although most analysts did not expect any changes in the group's production.

While the group has been unable to agree on an output freeze in an effort to support prices, Iraq was the latest Middle East producer to raise its exports quota ahead of the meeting, supplying 5 million barrels of extra crude to its partners in June.

Brent crude futures were at $48.97 a barrel at 0959 GMT, down 35 cents in a third straight day of declines.

US West Texas Intermediate (WTI) crude futures were trading at $49.13 per barrel, down 20 cents.

The strengthening of the dollar on higher expectations for a near-term US interest rate hike further weighed on greenback-priced commodities.

Trade was however limited due to public holidays in Britain and the United States, where Monday's Memorial Day is seen as the traditional start of US peak demand summer driving season.

Vienna-based consultancy JBC Energy said global oil demand between January and April 2016 rose by 1.5 million barrels per day from a year earlier, stronger than many forecasts, driven by strong consumption in the United States, China and India.

US crude output also declined to its lowest since September 2014 after oil drillers cut rigs for a ninth week in the last 10 despite a recent rally in oil prices.

An expected rise in Canadian oil sands production also weighed on WTI, traders said. Oil producer Suncor Energy is planning to ramp up output at its fields in Alberta this week after it was forced to shut them down earlier in May due to massive wildfires.

Outages due to wildfires in Canada and unrest in Libya and Nigeria have helped push oil prices to a seven-month high in recent weeks.

Additional reporting by Henning Gloystein in Singapore

Photograph: Darrin Zammit Lupi/Reuters

Ron Bousso in London
Source:
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