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CORRECTED-UPDATE 6-Oil falls on doubts over OPEC, pipeline restart
November 28, 2017 / 4:35 AM / in 15 days

CORRECTED-UPDATE 6-Oil falls on doubts over OPEC, pipeline restart

(Corrects paragraph 1 to say OPEC meeting is this week, not next week)

* OPEC meeting outcome “more uncertain than usual” - Goldman Sachs

* Woodmac says 2.4 mln bpd could be added if OPEC ends curbs

* Sell-off in crude oil price if no 9-month extension - Citi

* Keystone pipeline to restart at reduced pressure

By Christopher Johnson

LONDON, Nov 28 (Reuters) - Oil prices dipped on Tuesday, weighed down by uncertainty over the outcome of an OPEC meeting this week at which an extension to its price-supporting oil output cuts will be discussed.

Brent crude oil fell 44 cents on the day to $63.40 a barrel by 1406 GMT. U.S. light crude was 26 cents lower at $57.85, after falling 1.4 percent in the last session.

Members of the Organization of the Petroleum Exporting Countries and other key producers, including Russia, meet on Nov. 30 to discuss whether to continue to limit production in an effort to drain global inventories to help push up prices.

They cut production by 1.8 million barrels per day (bpd) in January and agreed to hold down output until March. The market had expected OPEC to extend the limits by another six to nine months, but this is now less certain.

“We believe that the outcome of this meeting is much more uncertain than usual,” Goldman Sachs analysts said.

“We view risks to oil prices as skewed to the downside this week as we believe that current prices, time spreads and positioning already reflect a high probability of a nine-month extension,” the Goldman analysts said.

Doubts have emerged over whether Russia will agree to join the OPEC-led group in an extension of production curbs, which Economy Minister Maxim Oreshkin has described as negative for the country’s economy.

Though the government wants high oil prices ahead of a presidential election in March 2018, officials have also voiced worries about pricier oil boosting the rouble and undermining the competitiveness of Russia’s economy.

Citigroup’s head of commodity research told Reuters on Tuesday that he expects OPEC to extend the deal until the middle of next year, rather than the end.

But anything less than an extension until the end of next year will cause a sell-off in the price, Citi’s Ed Morse added.

U.S. crude touched $59.05 a barrel on Friday, its highest since mid-2015, fuelled by the outage of the Keystone pipeline, one of Canada’s main crude export routes to the United States.

But TransCanada Corp this week said it would restart the 590,000 barrel-per-day pipeline at reduced pressure on Tuesday after getting approval from U.S. regulators.

“This bearish development adds to the underlying unease surrounding the outcome of Thursday’s OPEC meeting,” PVM Oil Associates analysts said in a report.

Consultancy Wood Mackenzie said it looked as if producers had nearly concluded an agreement to extend cuts until the end of next year.

“(But) if the production cut agreement ends in March 2018, our forecast shows there would be a projected 2.4 million bpd year-on-year increase in world oil supply for 2018,” said Ann-Louise Hittle, vice president for macro oils.

Additional reporting by Amanda Cooper in London and Keith Wallis in Singapore; Editing by Louise Heavens

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