Oil prices slip on demand concerns following United States hurricanes

Opec and other producers including Russia pledged to reduce oil output by about 1.8 million barrels a day through March

Opec and other producers including Russia pledged to reduce oil output by about 1.8 million barrels a day through March

Irma slammed into Florida on Sunday, leaving more than 7.4 million homes and businesses without power.

Irma hit Florida on Sunday morning as a risky Category 4 storm, the second highest level on the five-step Saffir-Simpson scale, but by afternoon it weakened to a Category 2 with maximum sustained winds of 110 miles per hour (177 kph).

Benchmark Brent crude has lost 6 per cent this year and was trading at $53.81 a barrel at 11.10am UAE time on Tuesday.

Members of the Organization of Petroleum Exporting Countries and other producers including Russian Federation have pledged to reduce crude output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices.

Geoffrey Craig, the oil futures editor for Platts, said markets will be tested by what could be a steady buildup in USA crude oil inventories.

The initial OPEC-non-OPEC agreement pushed Brent prices up to nearly US$57 a barrel and WTI to over US$54 a barrel in January this year, but since then, the benchmarks have been sliding down, with a few notable interruptions of the trend thanks to supply disruptions and the May decision to extend the cuts beyond the original deadline of June 30, 2017.

In a monthly report, the Organization of the Petroleum Exporting Countries said the world would need 32.83 million barrels per day (bpd) of OPEC crude next year, up 410,000 bpd from its previous forecast.

"We believe that Irma will have a negative impact on oil demand but not on oil production or processing", Goldman Sachs analysts said in a note.

Backwardation in Brent is consistent with a tightening global oil market while contango in WTI is consistent with local oversupply of crude as a result of refinery shutdowns and the closure of export terminals.

The market is also watching closely for USA inventories data in the wake of recent storms.

Oil prices headed higher Tuesday, stretching gains in to a second-consecutive session as the latest OPEC report that showed oil production from the cartel fell last month.

The hurricanes have rattled energy markets, with Irma shutting Florida fuel stations and ports and Harvey earlier halting about one-quarter of the nation's refining capacity.

Stretching the duration of OPEC production limits by three months or more would fall under a worst-case scenario that ministers are now contemplating, the people said, asking not to be named because the talks were private.

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