Oil prices dip before US inventories data

Oil fell further Wednesday as dealers awaited the latest update on crude reserves in the United States.

At around 1145 GMT, US benchmark West Texas Intermediate for delivery in October declined 36 cents at $45.99 a barrel.

Brent North Sea crude for October lost 54 cents to $47.83 a barrel compared with the close on Tuesday.

Prices also fell on the back of the stronger greenback, which makes dollar-denominated commodities more expensive for buyers using weaker currencies.

"In the short-term, oil is likely to find direction from the latest US oil stockpiles report and ... the direction of the US dollar," said analyst Fawad Razaqzada at trading firm City Index.

Later Wednesday the US Department of Energy (DoE) will publish its report on commercial oil inventories for the week ending August 26.

The numbers are a major focus for oil traders because the United States is the world's top crude consuming nation.

Ahead of the weekly US data, the market was roiled once again by oversupply worries after Iran's oil minister reportedly stated that his country planned to boost output.

The comments by Bijan Zangeneh, carried by Iran's official news agency on Tuesday, added to a feeling that an informal OPEC meeting with Russia in September may not result in a deal that would boost prices.

Zangeneh said Iran needed to raise its output to regain the market share lost while it was under international sanctions, which were lifted only in January.

Iran has struggled to raise production above four million barrels per day since the sanctions were removed, according to the report, which said it is currently producing 3.8 million.

"Many speculators are now just waiting to find out whether Saudi Arabia and other members of OPEC will agree next month to a production freeze deal with some non-OPEC producers, led by Russia," added Razaqzada.

"Both Iran and Iraq have come out in recent days, stating that they support the idea of an output freeze... as long as it doesn't impact their own pursuit of market share.

"If these important OPEC members go into the meeting with that sort of mentality, I would be very surprised to see any sort of agreement being achieved."

Traders are now awaiting the release this coming Friday of US jobs figures, which will give a fresh handle on the US economy and could guide the Fed's decision on when to hike rates.

The non-farm payrolls data release is a crucial indicator of the strength of the world's largest economy.

burs-rfj/bcp/jh