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(Reuters)

Oil Slumps 4% as no Output Deal Expected for OPEC

Markets Reuters

Oil prices tumbled about 4 percent on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.

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Also weighing on sentiment was data showing the United States was on track to add the most number of oil rigs in a quarter since the crude price crash began two years ago. Lower equity prices on Wall Street and other world stock markets was another bearish factor.

Brent crude oil was down $1.88, or 4 percent, at $45.77 a barrel by 1:41 p.m. EDT (1741 GMT). It was flat on the week after showing a weekly gain of 4 percent earlier.

U.S. West Texas Intermediate (WTI) crude was down $1.94, or 4.2 percent, at $44.38. On the week, WTI showed a gain of 3 percent.

Crude futures slumped after sources said Saudi Arabia did not expect a decision in Algeria where the Organization of the Petroleum Exporting Countries and other big oil producers are set to convene for the Sept 26-28 talks.

"The Algeria meeting is not a decision making meeting. It is for consultations," a source familiar with Saudi oil officials' thinking told Reuters.

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Earlier in the day, Brent and WTI were on track to their largest weekly gain in more than a month after Reuters reported that Saudi Arabia had offered to reduce production if Iran caps its own output this year.

Oil prices are typically volatile ahead of OPEC talks and Friday's session was tempered with caution despite market sentiment on a high this week after the U.S. government reported on Wednesday a third straight weekly drop in crude stockpiles.

The talks in Algeria are OPEC's second attempt to reach an agreement on production curbs, after a failed effort in May. The market has been skeptical of OPEC's commitment, though, as key members of the group, including Saudi Arabia, Iran, Iraq, Libya and Nigeria, have been pumping at optimum levels to protect market share.

Russia, the world's largest oil exporter and a key participant at the Algeria talks, also hit record highs in production this week.

(By Barani Krishnan; Additional reporting by Sabina Zawadzki and Libby George in LONDON and Henning Gloystein; in SINGAPORE; Editing by Marguerita Choy and Bernadette Baum)

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