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US crude settles down 56 cents, or 1.1%, at $50.79, hit by OPEC deal concerns

Oil futures fell on Tuesday, retreating from one-year highs, on mixed responses by Russian oil industry officials toward an OPEC call for all major crude producers to cut output.

Oil prices jumped as much as 3 percent on Monday, after Russia and Saudi Arabia both said a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members like Russia in curbing crude output was possible.

December Brent crude oil futures were down 78 cents, or 1.5 percent, at $52.36 a barrel by 2:38 p.m. ET (1838 GMT), more than a dollar off Monday's one-year intraday high of $53.73.

U.S. crude futures settled down 56 cents, or 1.1 percent, at $50.79 a barrel, after closing on Monday at $51.35, the highest level since July 15, 2015.

Global oil supply could fall into line more quickly with demand if OPEC and Russia agree to a steep enough cut in production, but it is unclear how rapidly this might happen, the International Energy Agency said on Tuesday.

Global oil industry officials in Istanbul for the World Energy Conference issued a raft of statements on OPEC's first planned production cut in eight years.

The energy ministers of Saudi Arabia and Russia intend to hold further consultations in Riyadh after the Istanbul meeting, the Saudi energy ministry said in a statement.

Igor Sechin, Russia's most influential oil executive and the head of Rosneft, told Reuters in an interview his company will not cut or freeze oil production as part of a possible agreement with OPEC.

The previous day, Russian President Vladimir Putin said an output freeze or even a production cut were likely the only right decisions to maintain energy sector stability. Russian Energy Minister Alexander Novak said the base-case scenario for Russia would be to leave current output unchanged.

OPEC Secretary General Mohammed Barkindo said any deal to freeze oil production was likely to be reviewed after six months. OPEC is not interested in or targeting a specific oil price, Barkindo also said on Tuesday.


OPEC, which groups Saudi Arabia with big oil producers such as Iran, Iraq, Libya, Kuwait and Nigeria and Venezuela, aims to cut 700,000 barrels per day of its production, bringing output to 32.5-33 million bpd by its next policy meeting in Vienna on Nov. 30.

OPEC has asked non-OPEC producers besides Russia to contribute with cuts too, although the United States, the world's No. 1 oil producer, will not be part of the plan.

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

Goldman Sachs said in a note to clients on Tuesday that despite a production cut becoming a "greater possibility," markets were unlikely to rebalance in 2017.

"Higher production from Libya, Nigeria and Iraq are reducing the odds of such a deal rebalancing the oil market in 2017," the U.S. bank said, and added that even if OPEC producers and Russia implemented strict cuts, higher prices would allow U.S. shale drillers to raise output.

Adding to the drag on oil, the dollar rallied to its highest in 11 weeks, lifted by rising expectations that the Federal Reserve could raise U.S. interest rates by the end of the year.

— CNBC's Tom DiChristopher contributed to this report.