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Oil dips on technical selling after two days of strong rises

Oil prices eased on Friday, pulled down by a technical sell-off following two sessions of strong rises and on caution ahead of a gathering of OPEC ministers next week in Algeria to dicuss possible production cooperation to rein in global oversupply.

By: | Singapore | Published: September 23, 2016 7:52 AM
International Brent crude oil futures were down 43 cents, or 0.9 percent, at .22 a barrel. (Reuters) International Brent crude oil futures were down 43 cents, or 0.9 percent, at .22 a barrel. (Reuters)

Oil prices eased on Friday, pulled down by a technical sell-off following two sessions of strong rises and on caution ahead of a gathering of OPEC ministers next week in Algeria to dicuss possible production cooperation to rein in global oversupply.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $45.80 per barrel at 0151 GMT, down 52 cents, or 1.12 percent, from their previous close.

International Brent crude oil futures were down 43 cents, or 0.9 percent, at $47.22 a barrel.

Traders said that the declines were largely down to technical chart indicators and also selling following strong price gains in the previous two trading sessions.

Reuters technical chart analyst Wang Tao said that WTI prices may test support at $45.65 per barrel, and Brent was likely to retrace to $46.93 per barrel in the near future.

The price falls may also be related to an increase in crude supplies, with global production already exceeding consumption almost without interruption since mid-2014.

War-torn Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), exported its first cargo from its Ras Lanuf port since at least 2014 this week, contributing to OPEC’s record production <PRODN-TOTAL> of 33.5 million barrels.

“Supply has increased again,” said London-based commodity brokerage Marex Spectron, adding that at the same time “a significant amount of refining capacity is out of the market, which puts a lid on the demand for crude oil.”

OPEC could see a new push to clinch a first deal to curb output since 2008 next week when the group meets informally in Algeria next week, although most market observers say an agreement that would signmificantly cut record output was unlikely.

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