Oil slips on worries Mideast rift could undermine OPEC cuts

Brent, the global benchmark, fell $2.06, or 4.1%, to $48.06 - their lowest level since before the Organization of the Petroleum Exporting Countries and other major producers struck an agreement to cut output in November.

US light crude prices were at $46.12 USA per barrel, downward $2.07 cents, or 4.3%.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July CLN7, +0.74% traded at $46 a barrel, up 28 cents, or 0.6% in the Globex electronic session.

The EIA (U.S. Energy Information Administration) will release its weekly crude oil inventory report on June 7, 2017.

USA crude production will average more than 10 million barrels a day for the first time in 2018, breaking a record nearly five decades old and keeping prices from rising as much as previously estimated, government forecasts showed Tuesday. Imports from Iraq surged to 1.14 million barrels a day, the most since 2012, according to preliminary EIA data.

USA crude imports rose last week by 1.1 million bbl/d.

As of 1810 BST, front month West Texas Intermediate crude oil futures were down by 5.1% to $45.85 per barrel on the ICE.

Oil prices remain about 8 percent lower than before OPEC and its non-OPEC allies said they were extending output cuts until March 2018.

The sharp rise in US inventories comes a day after the EIA lowered its crude oil price forecast and raised its USA production outlook for 2018. Investors, many of whom have been burned by oil's bumpy ride to recovery, have been watching the USA storage figures each week for signs that the glut that has weighed on the market for almost three years is dissipating. Originally thought to be a drop of 3 million barrels, we ended up getting a gain of 3 million barrels instead.

"In terms of oil flows it doesn't change very much but there is a wider geopolitical impact one needs to consider", Jakob added, explaining that a breakdown in relations between Qatar and Saudi Arabia could make the OPEC-led agreement on production cuts less effective.

Rising US production is also putting pressure on oil.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.364, down less than a penny from $2.372 a week ago and down about a penny and a half per gallon compared with the month-ago price.

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