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Oil minister confident of deal to extend output cut this month

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Brent Crude Oil

Analysts said investors believe the geopolitical tension will disrupt oil production in the region, so to offset rising USA output.

The West Texas Intermediate for December delivery was up 0.02 USA dollar to settle at 56.76 dollars a barrel on the New York Mercantile Exchange, while Brent crude for January delivery lost 0.36 dollar to close at 63.16 dollars a barrel on the London ICE Futures Exchange.

Despite the Middle East tensions and OPEC-led supply cuts, traders were cautious in betting on further price rises, not least because of an increase in US drilling for new production.

Despite the cautious sentiment, traders said oil prices were unlikely to fall far, largely due to supply restrictions led by the Organization of the Petroleum Exporting Countries and Russian Federation, which have helped reduce excess stockpiles.

Brent crude futures reached $62.94 per barrel.

The country's total exports declined by 9 per cent on a year-on-year basis in the first seven months of this year, to 197.08 million barrels from 216.46 million barrels. Last year, Denning says, investors and traders were highly skeptical of OPEC's ability to really change prices by controlling production.

They also claimed that they were careful and doubtful on betting on further price rises.

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Additionally, the organization raised its oil demand forecast. That figure would be up 360,000 barrels per day from its previous forecast, marking the fourth consecutive monthly increase in the outlook since July.

Traders said crude prices were well supported as output cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russian Federation have contributed to a reduction in excess supply that had dogged markets since 2014.

Crude oil prices traded in a narrow range on Monday as investors weighed the prospect of supply disruption in the Middle East supporting a further rally in crude prices against expectations that US producers will ramp up output.

Mazroui, whose country next year holds the rotating OPEC presidency, said that while the UAE backed an extension, he could not say yet whether it would support maintaining the supply cut until the end of 2018.

Furthermore, the International Energy Agency stated on Tuesday that there will be 50 million electric vehicles on the road by 2025 and 300 million by 2040.

Still, the IEA's “New Policies Scenario”, based on existing legislation and policy intentions, expects oil prices to rise towards $83 a barrel by the mid-2020s.

December Gold futures on the Comex division of the New York Mercantile Exchange fell 0.13 percent to $1277.26 a troy ounce.

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