Oil prices slipped on Thursday, pressured by larger-than-expected product inventories in the United States, and some profit-taking after a recent run-up in oil benchmarks.
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Ongoing tension in the Middle East has kept a bid under the market, however, as reduced flows from the Iraqi Kurdish pipeline through Turkey have raised worries about supply.
Brent crude fell 64 cents to $57.52 a barrel from Wednesday's mid-week high of $58.15 a barrel by 1135 EDT (1535 GMT). The global benchmark is still about 30 percent above its mid-year levels. U.S. light crude lost 45 cents to $51.59, and is still almost 25 percent higher than June's lows.
Analysts said they have seen some profit-taking after two weeks of gains as upward momentum in prices appears to be waning. Energy equities were also weaker, falling to three-and-a-half week lows.
"There seems to be a macro selloff across the board with energy stocks also coming down," said John Kilduff, partner at Again Capital LLC.
The U.S. Energy Information Administration said on Wednesday that U.S. crude inventories fell by 5.7 million barrels in the week to Oct. 13. <C-STK-T-EIA>
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U.S. output slumped by 11 percent from the previous week to 8.4 million barrels per day (bpd), lowest since June 2014, as production was shut in by Hurricane Nate.
U.S. distillate and gasoline inventories rose, however, even as refining activity fell.
Instability in the Middle East is increasing risks to supply from key oil-producing areas.
"Anything that happens in the Middle East seems to put a little premium on oil prices," said Ryan Kelbrants, energy market analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota.
Iraqi Kurdistan's oil exports more than halved to 200,000 bpd on Wednesday as the Iraqi military retook some of the biggest fields from Kurdistan's Peshmerga forces.
However, Iraq said Thursday that it expects to restore Kirkuk's oil production to last week's levels by Sunday.
U.S. President Donald Trump last week refused to certify Iran's compliance with a nuclear deal, leaving Congress 60 days to decide further action against Tehran. That could imply the resumption of sanctions against Iran, which reduced supply by about 1 million bpd during the previous round.
However, it is unlikely the United States will get the same level of cooperation from other countries as it did when it previously sanctioned Iran.
Analysts say crude supply should keep tightening if the Organization of the Petroleum Exporting Countries and partners, including Russia, agree an expected extension to their deal to curb production.
(By Bryan Sims; Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Alistair Bell)