US oil settles under $104; geopolitics and supply weigh

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Global oil prices dropped by more than $1 per barrel on Monday despite upbeat economic data from China and Europe, as higher crude output from Iraq and a possible thaw in U.S.-Iran relations boosted the supply outlook.

Oil prices plummeted last week as Libya's production recovered to nearly 40 percent of pre-war capacity after protesters agreed to reopen major western fields, and as fears of U.S.-led military action against Syria faded. Brent has shed around $8 from its September high above $116 at the beginning of the month.

Iraq, a key OPEC producer, said on Monday it boosted output from its southern oilfields after repairing a leaking pipeline. More oil is also coming from South Sudan as it raised output to the highest level since it resumed exports through Sudan.

The bearish mood for oil also drew support from the possibility of a groundbreaking meeting between leaders of the United States and Iran on the sidelines of the United Nations gathering this week.

Iranian President Hassan Rouhani is aiming to set the tone for further nuclear talks with world powers which he hopes will bring relief from sanctions, according to diplomats and analysts.

Brent crude for November delivery shed $1.30 to trade under $108 a barrel. U.S. crude for November settled down $1.16 at $103.59.

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