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Resurface of Saudi and Iran tensions cause oil prices to decline

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An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, U.S., February 2, 2015.
An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, U.S., February 2, 2015.

 LONDON-  Oil futures were on course for their sixth straight day of falls on Friday as signs of tensions resurfaced between Saudi Arabia and Iran that could scupper a key supply cut pact while a surge in U.S. crude inventories and muted demand continued to weigh.
Brent crude futures LCOc1 were at $45.57 per barrel at 0817 ET, down 79 cents from their last close. U.S. West Texas Intermediate (WTI) futures CLc1 were down 51 cents at $44.15 a barrel.
At a meeting of OPEC experts last week, Riyadh threatened to raise oil output steeply to bring prices down if Tehran refused to limit its production, a source from the Organization of the Petroleum Exporting Countries (OPEC) said.
The meeting was intended to work out the details of cuts ahead of the next OPEC meeting on Nov. 30 following a decision to reduce output in Algiers to 32.50-33.0 million barrels per day in order to boost prices.
The dips put crude on the longest losing run since June and, before that, since January, with Brent shedding almost 14 percent since its recent peak in mid-October.
"There has been a very strong retreat and technically, prices are starting to reach oversold levels," Olivier Jakob of consultancy Petromatrix said.
Analysts said markets were also weighed down by traders pulling out money from futures ahead of the U.S. presidential election, which is seen as a risk to markets.
Global share prices fell to their lowest since early July on Friday on uncertainty over the election outcome.
Beyond election concerns, traders said fundamentals were weak, with U.S. crude stocks surging, demand growth low, and doubts that the Organization of the Petroleum Exporting Countries and non-OPEC producer Russia can agree on a meaningful output cut this month.
North Sea crude exports are also set to rise significantly in December, adding to a surplus of light, sweet grades in the market. The sudden outage of some 200,000 barrels per day of alternative light Nigerian crude on Wednesday garnered only mild attention.
While oil production remains near records and inventories are high, British bank Barclays said demand growth was timid.
Demand growth over July-September was less than a third that of the year-ago quarter, Barclays said in a note, estimating last quarter's growth below 1 million barrels per day (bpd).
The consumption rise for the last quarter will not be much higher, before averaging 1.3 million bpd in 2017, it added.
In the United States, crude oil stockpiles soared more than 14 million barrels last week, the largest build on record, highlighting that a global fuel supply overhang is far from over.
Also in the United States, the Colonial Pipeline carrying gasoline, which was disrupted this week by an explosion, is expected to restart Line 1 on Sunday afternoon.

Source: Reuters, 4 Nov. 2016