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UPDATE 7-Brent dips after topping $80 a barrel, highest since Oct 2018

Tue, 28th Sep 2021 04:04

* Brent touches highest since 2018, WTI highest since July

* African OPEC producers struggle to pump more

* China power shortages hit factory output
(New throughout, updates prices, market activity and comments,
changes byline)

By Rod Nickel

Sept 28 (Reuters) - Brent oil dipped on Tuesday after
topping $80 per barrel for the first time in nearly three years,
as a five-day rally ran out of steam with investors locking in
profits.

Oil benchmark prices have been on a tear, with fuel demand
growing and traders expecting major oil-producing nations will
decide to keep supplies tight when the Organization of the
Petroleum Exporting Countries (OPEC) meets next week.

Brent dipped 75 cents, or 0.9%, to $78.78 a barrel
at 12:37 a.m. EDT (1637 GMT), after reaching its highest level
since October 2018 at $80.75.

U.S. West Texas Intermediate (WTI) crude fell 60
cents, or 0.8%, to $74.85 a barrel, after hitting a session high
of $76.67, highest since July.

"You probably have a fair amount of profit-taking, because
we've had a pretty extraordinary run-up in prices," said Andrew
Lipow, president of Houston-based consultancy Lipow Oil
Associates. "We might have a little bit of a respite here as the
market evaluates what the supply and demand dynamics are."

The market also faces headwinds from a power crunch in
China, the world's biggest energy consumer.

"Recent power rationing to industries in China to drive down
emissions could weigh on economic activity, potentially
offsetting the tailwind from incremental diesel use in power
generation," investment bank Barclays said.

Some investors worried that contagion from a Chinese housing
bubble could hit the country's economy and therefore oil demand,
said Louise Dickson, senior oil markets analyst at Rystad
Energy. China is the world's top oil importer.

Oil demand will grow sharply in the next few years as
economies recover from the pandemic, OPEC forecast on Tuesday,
adding that the world needed to keep investing in production to
avert a crunch even as it makes the transition to cleaner forms
of energy.

Several members of the OPEC+ group of producers, which
includes OPEC ally Russia and several other countries, cut
output during the pandemic, and have been having trouble ramping
up to meet recovering demand.

Top African oil exporters Nigeria and Angola will struggle
until at least next year to boost output to quotas set by OPEC,
sources at their respective oil firms said, citing
underinvestment and maintenance problems.

U.S. production has been impaired by Hurricanes Ida and
Nicholas, which swept through the U.S. Gulf of Mexico in August
and September, damaging platforms, pipelines and processing
hubs.
(Reporting by Rod Nickel in Winnipeg, Ahmad Ghaddar in London
and Yuka Obayashi in Tokyo; Editing by Jason Neely, Edmund Blair
and David Gregorio)

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