Oil goes off the boil after output cut doubts

Analysts worry that production of USA shale oil, crimped this year by prices as low as almost $26 a barrel, will begin to increase again if crude prices maintain their recent upward momentum.

Brent crude oil for December delivery was down 83 cents, or 1.6% to $52.30 a barrel, off the one-year high of $53.73 hit on Monday, paring earlier losses of nearly 2%.

"Oil rose to a one-year high on optimism regarding a future agreement between OPEC and major producers to restrict output", ANZ bank said on Tuesday.

OPEC's September report showed that it produced 33.39 million barrels per day, up 220,000 bpd from August, and as much as 890,000 bpd above the new supply target.

It also said that the OPEC limit, set at between 32.5 and 33 million barrels per day, will also be impacted by the level of cooperation of non-OPEC producers like Russian Federation.

Saudi Arabia, the biggest oil exporter, sees its crude reserves of 266.5 billion barrels lasting 70 more years and hasn't sought an independent consultant to review the figures, according to a bond prospectus.

"Benchmark crude prices rose in September as market rebalancing continued and participants anticipated an OPEC supply cut", a spokesperson for IEA said.

Iraq pumped at its highest level ever and Libya reopened its ports in September. OPEC has not decided how it will achieve production cuts including which countries will agree to sacrifice output. "It's smart to pause because we are faced with the fact that we have a well-supplied market and USA producers will come back if prices rise".

"Unfortunately due to prior commitments I am leaving now so I will not be in the meeting but I will be following it from afar and I will be getting indications about what countries have agreed to", he said. Russia's state-owned energy company Rosneft, which produces 40% of Russia's oil, dismissed the OPEC agreement yesterday.

Sechin's remarks came a day after Russian President Vladimir Putin said an output freeze or even a production cut were likely the only right decisions to maintain energy sector stability.

Oil production from OPEC nations hit a record last month, according to an global energy group, highlighting the cartel's challenge in trimming output to drive up prices. Instead of cutting production, OPEC opted to pump at high volumes to maintain market share and perhaps drive out US shale oil and gas producers, who have higher operating costs.

The statement helped push oil prices to their highest level in several months.