Oil futures fluctuated between small gains and losses on Monday after major oil producers said their output fell last month.
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Brent crude, the global oil benchmark, fell 0.05% to $63.49 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.12% at $56.81 a barrel.
Crude output by members of the Organization of the Petroleum Exporting Countries dropped by 0.46%, to 32.59 million barrels a day in October, compared with the month prior.
The move was driven by reduced production in countries including Iraq, Nigeria, and Iran, said the cartel in its closely watched, monthly oil market report.
OPEC also raised its forecasts for world oil demand growth for the current year and 2018. The cartel now expects demand growth to rise by 1.53 million barrels a day in 2017 and 1.51 million barrels a day in 2018.
Oil futures have hovered around two-year highs since last week after Saudi Arabia detained hundreds of individuals in a corruption investigation and after rising tension between the kingdom and Iran.
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But analysts view the rise in oil's fortunes as unsustainable because of new supply flows from outside of OPEC.
"The market can stay irrational for long periods," said Georgi Slavov, head of research at commodity brokerage Marex Spectron. "We believe that the price as it is today...is not justified by market fundamentals."
Brent has also been supported OPEC's ongoing effort to rebalance the market and eliminate about 2% of global supply with the help of external producers such as Russia.
But the Eastern European country produced about 2% more oil between January and October of this year compared with the same period in 2016 "which clearly clashed with the official deal they have with OPEC," said Mr. Slavov.
Moreover, high oil prices may have stimulated the U.S. shale machine, say analysts who are bracing for an American crude barrage.
Baker Hughes released numbers showing the U.S. oil rig count climbed by 9 to 738 last Friday, the largest gain since June, according to analysts, who are concerned the trend will continue.
Data from the U.S. Energy Information Administration shows American shale oil producers have stepped up their output despite the slowdown in drilling activity in recent months. The EIA projects U.S. production could reach "a record level of more than 6 million barrels a day in November," according to Commerzbank.
The IEA will release its Drilling Productivity Report later Monday, which has shown some downward revisions in drilling productivity since April. Some analysts are watching to see whether U.S. shale has hit a speed bump.
"It may be interesting to see whether that trend continues," said Emily Ashford, director of energy research at Standard Chartered. "That ties in with our concern about U.S. shale and when that output will peak."
Investors may also be looking to the Organization of the Petroleum Exporting Countries to do more to help balance the oil market said analysts.
The group is due to meet on Nov. 30 when members are expected to discuss a potential nine-month extension to the deal to cut global supply.The current agreement is due to expire in March 2018.
Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- rose 0.64% to $1.82 a gallon. ICE gas oil changed hands at $565.25 a metric ton, down $3.75 from the previous settlement.
Write to Neanda Salvaterra at email@example.com
(END) Dow Jones Newswires
November 13, 2017 08:13 ET (13:13 GMT)