Oil retreats after pre-OPEC rally; Brent dips, U.S. crude steady

By Barani Krishnan

NEW YORK (Reuters) - Brent futures edged lower while U.S. crude gave back much of its earlier gains on Monday as a pre-OPEC-meeting rally and run-up in U.S. refined oil products faltered.

A Reuters survey that estimated higher OPEC production in November, after a rise in Saudi Arabian output, also weighed on market sentiment.

Another negative factor was the dollar's surge to an 8-month high , which weakened demand for dollar-denominated oil from holders of the euro and other currencies.

Brent was down 20 cents at $44.66 a barrel as of 1:59 p.m. EST (1859 GMT), after rising nearly $1 earlier.

WTI was up 1 cent at $41.72, versus a session high at $42.61.

On November's last trading session, Brent and WTI looked set to end the month down about 10 percent as a global supply glut showed little signs of diminishing.

Few traders and investors expect any material change to OPEC's production policy when the Organization of the Petroleum Exporting Countries convenes in Vienna on Friday. Still, some had hedged earlier on Monday for the possibility of a surprise.

"We feel the only real hope for oil bulls now would be a year-end destocking of crude that will create draws," said Tariq Zahir of New York's Tyche Capital Advisors, which has a bearish position on WTI.

"Even if we get a bounce in any fashion, that will be prime opportunity for bears like me to try and ride the elevator down to the $30 handle."

OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy's chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20.

Any policy U-turn would be possible only if large producers outside the exporters' group, like Russia, were to join coordinated output cuts. Russia's Energy Ministry said Monday it would not attend this week's meeting, but expects an experts-level discussion with OPEC in mid-December.

Russia is, meanwhile, drilling for more oil, according to data suggesting the No. 1 producer was ready for a long tussle with OPEC over market share.

Iran, once the second-largest OPEC producer after Saudi Arabia, hopes to raise crude exports by as much as 1 million barrels per day within months of having sanctions against its nuclear programme lifted.

U.S. gasoline futures were down nearly half a percent, while ultralow sulfur diesel (ULSD) lost almost 1 percent. Both rallied earlier as their front-month contracts headed for expiry.

(Additional reporting by Karolin Schaps and Christopher Johnson in London; Editing by Marguerita Choy and Bernadette Baum)