Oil prices slip, pulling back from recent gains

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The prices of crude oil hit a new 2017 high Monday, continuing a rally fuelled by improving demand and expectations that the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC producers will extend output cuts.

Oil prices were trading around their highest level in over two years, amid Turkey's threat to cut crude flows from Iraq's Kurdistan region following the independence referendum.

"We're expecting the second half to see improvements, and we're witnessing those improvements as we speak", UAE Energy Minister Suhail Al Mazrouei said on Monday in Abu Dhabi.

Brent for November settlement dropped 58 cents to end the session at US$58.44 a barrel on the ICE Futures Europe exchange.

The US benchmark West Texas Intermediate (WTI) light sweet crude for November's delivery added $1.56 to settle at $52.22 a barrel on the New York Mercantile Exchange.

Both WTI and Brent benchmarks fell on Tuesday, but they were both still up over $2.00 week on week.

US prices had rallied on growing talk of a possible extension of the OPEC-led production-cut deal. Prices have shot up about 15 per cent in the past three months.

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The Organization of Petroleum Exporting Countries and 11 rival producers, including Russian Federation, have committed to output cuts of 1.8 million bpd between January 2017 and March 2018 to help global supply align with demand.

Kirkuk, controlled by the Kurdish forces, produces close to 400,000 barrels a day, which makes up nearly 10 percent of total Iraqi oil production. So overall petroleum stockpiles declined by 5.1 million barrels from last week.

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Refinery crude runs increased by 1 million barrels per day as utilization rates rose by 5.4 percentage points to 88.6 percent of total capacity, its highest rate since Harvey hit on August 25, EIA data showed.

"The big surprise. has been on the distillate side, where it looks like we will hit 1.6 percent growth", Matti Lehmus, vice president of oil products at Finnish refiner Neste Oil, said last week at an industry gathering in Brussels.

While there appears consensus on the view that U.S. shale oil producers have the ability to increase their output at fairly short notice, it's less certain that the U.S. Gulf Coast has enough export infrastructure to handle a surge of cargoes. Total volume traded was about 28% above the 100-day average.

"OPEC production curtailments did not achieve the desired price outcome, and once again Texas and the United States are the chief offenders - and I say that with great pride", he said in a statement.

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