Prices Dip Slightly on Reports Iran May Agree to Small Production Hike

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Prices Dip Slightly on Reports Iran May Agree to Small Production Hike

US light crude was 1.05 dollars higher at 66.12 dollars.

Saudi Arabia, backed by non-member Russian Federation, is now racing to convince the alliance to raise production again in order to meet growing demand in the second half of 2018.

United States oil prices managed to stage a bounce this week after a rapid decline last Friday saw WTI crumple into 63.36 after lifting steadily into 66.80 for most of the week; with the technical bounce over oil has resumed drifting lower, though today's lift sees crude challenging the key 65.00 handle once again, a level that has become familiar in recent weeks.

After sitting down with several counterparts, Iranian Minister Bijan Namdar Zanganeh said he was optimistic about the outcome of the OPEC meeting, a marked contrast to comments on Tuesday when he said a deal was unlikely.

In a sign of strong demand, United States refineries processed a seasonal record of 17.7 million barrels per day (bpd) of crude oil last week, according to data from the Energy Information Administration (EIA) said on Wednesday.

Iran, with some support from Venezuela, has so far rejected any increase, including one compromise mooted in private by some OPEC officials for a 300,000-to-600,000 barrel-a-day hike in the second half of the year.

Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told Reuters Global Oil Forum he expected OPEC and Russian Federation to agree a compromise that would see a small increase in global oil production.

Oil prices have spiked by as much as 20% this year, in part because OPEC has produced even less than was foreseen under the 2016 agreement, which was supposed to reduce supply by 1.8 million barrels per day.

Regional rival Iran however is fiercely opposed to unwinding the agreed production curbs, as its oil industry is bracing for fresh sanctions following US President Donald Trump's decision to quit the global nuclear pact.

Investigation by Vanguard showed that the disagreement became obvious, following Saudi Arabia's lobbying of members to support its call for increased oil supply to the market.

According to the EIA, U.S. crude inventories fell by 5.9 million barrels in the week-ending June 15, traders were looking for a draw of 2.1 million barrels.

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