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Oil pares gain amid doubts over OPEC agreement

London - Oil fell, trimming a second monthly gain, amid doubts that OPEC will deliver on an accord to reduce production.

Futures slipped 0.3% in New York as the dollar strengthened, undermining the appeal of commodities to investors. Prices are up 6.7% for the month, heading for the first September increase since 2010.

Nigeria, Iran and Libya have said they are exempt from an agreement the Organization of Petroleum Exporting Countries announced on September 28 to cut supply, while Iraq has said it doesn’t accept OPEC’s estimates of its production levels.

Oil surged the most in more than five months after the announcement of the deal, which will see OPEC reduce production to a range of 32.5 million to 33 million barrels a day.

The market was caught by surprise after Saudi Arabia and Iran had signaled before the meeting that an accord was unlikely. OPEC now faces the challenge of implementing the cuts, with Goldman Sachs and Morgan Stanley expressing skepticism that the deal can be completed.

“The initial euphoria that followed OPEC’s surprise decision to reduce output gave way to a much calmer tone,” said Stephen Brennock, an analyst at PVM Oil Associates.

“It has quickly dawned on many that OPEC’s change of strategy may not be a panacea for the global oil glut.”

West Texas Intermediate for November delivery declined as much as 79 cents to $47.04 a barrel on the New York Mercantile Exchange, and traded for $47.71 at 14:21. The contract rose 78 cents to $47.83 on Thursday, capping a 7% advance over two days. Total volume traded was in line with the 100-day average. Prices are down about 1.3% for the quarter.

US shale

Brent for November settlement, which expires on Friday, dropped as much as $1.03 to $48.21 a barrel on the London-based ICE Futures Europe exchange.

Prices are up 3.9% this month and down 1.7% for the quarter. The global benchmark crude was at a premium of $1.14 to WTI. The more-active December contract was 18 cents lower at $49.63 a barrel.

Oil will need to hold above $50 a barrel for months before US companies commit to more spending, according to analysts at firms including S&P Global Platts and Oppenheimer & Co.

The number of rigs targeting oil in the US climbed to 418 in the week ended September 23, the highest level since February, according to data from Baker Hughes.

Oil-market news:

OPEC’s planned output cuts will need at least six months to have an effect on the oil market, according to Bank of America Merrill Lynch.

The agreement represented a “capitulation” to US shale drillers, according to Warwick Energy Group, a closely held investor in thousands of oil wells. Brazil’s main oil union FUP has rejected Petrobras Brasileiro’s most recent salary proposal, and representatives will meet with management to demand a new offer, the union said on its website.

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