Oil falls towards $49 on high output, strong dollar

[August 29, 2016]  By Alex Lawler

LONDON (Reuters) - Oil fell towards $49 a barrel on Monday, pressured by high output from Middle East OPEC members and as a stronger U.S. dollar weighed on commodities.

Iraq, which has exported more crude from its southern ports in August, will continue ramping up output, its oil minister said on Saturday. Top exporter Saudi Arabia has kept output at around record levels this month.

Brent crude <LCOc1> was 62 cents lower at $49.30 a barrel at 0904 GMT. The global benchmark is down more than 6 percent from its 2016 peak of $52.86 reached on June 9.

U.S. crude <CLc1> was down 60 cents at $47.04.

The comments about high oil output have dampened expectations that OPEC and outside producers such as Russia will agree steps next month to support prices such as a production freeze, following the collapse of a similar effort in April.

"The market is increasingly likely to discount the outcome of the event, given, even in the instance of a freeze being agreed, compliance will be an issue," Barclays said in a report.

Members of the Organization of the Petroleum Exporting Countries are due to meet informally in Algeria on Sept. 26-28 on the sidelines of the International Energy Forum. Russia is also expected to attend the IEF.

Oil prices are less than half their level of mid-2014 because of a persistent supply glut. The chief executive of U.S. oil company ConocoPhillips, Ryan Lance, said at an industry conference in Stavanger, Norway, he believed oversupply would extend into 2017.

A pumpjack drills for oil in the Monterey Shale, California, April 29, 2013. REUTERS/Lucy Nicholson

A strong dollar also weighed on oil, traders said. The U.S. currency rose to a three-week high against the yen on Monday after the Federal Reserve bolstered expectations that it would increase interest rates soon.

A rise in the dollar makes dollar-priced commodities such as crude more expensive for holders of other currencies, and tends to put downward pressure on oil prices.

(Additional reporting by Henning Gloystein and Karolin Schaps; Editing by Dale Hudson)

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