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Oil prices edged lower on Monday, with futures on track for the worst monthly performance since mid-2016, after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude.

Brent crude futures fell 28 cents to settle at $77.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 55 cents to settle at $67.04 a barrel.

Global benchmark Brent was on track to drop about 6.6 per cent for the month. U.S. crude was on course to fall about 8.5 per cent. Both were set for the steepest monthly decline since July 2016.

Even with U.S. sanctions on Iranian exports due to come into force on Nov. 4, oil prices have fallen about $10 a barrel since four-year highs reached in early October.

Russian Energy Minister Alexander Novak said on Saturday there was no reason for Russia to freeze or cut its oil production levels, noting that there were risks that global oil markets could be facing a deficit.

The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and non-OPEC member Russia, agreed in June to lift oil supplies, but OPEC then signaled last week that it may have to reimpose output cuts as global inventories rise.

“When the Russians start talking about keeping the production levels high and even the possibility that they need to increase it because of a possible tightness in supply, that brought on some selling pressure,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut.

Industrial commodities such as crude and copper have also been rattled by hefty losses in global equities due to concern over corporate earnings, and fears over the impact to economic growth from escalating trade tensions, as well as a stronger dollar.

The U.S. dollar index also rose, supported by robust U.S. consumer spending data. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies.

Fund managers have cut their bullish positions in crude futures and options for four weeks in a row to their lowest since July 2017, as the demand outlook grows more uncertain.

“The hedge funds really abandoned the long side of the market and there’s some short-selling going on this perception that perhaps the economy is slowing,” said Phil Flynn, analyst at Price Futures Group in Chicago.

“There’s continued psychological weakness on the market.”

On the supply side, Iran has started selling crude to private companies via a domestic exchange for the first time, the oil ministry’s news website reported.

With just days to go before U.S. sanctions on Iran take effect, three of Iran’s top five customers – India, China, and Turkey - are resisting Washington’s call to end oil purchases outright, arguing there are not sufficient supplies worldwide to replace them, according to sources familiar with the matter.

That pressure, along with worries of a damaging oil price spike, is raising the possibility of bilateral deals to allow some buying to continue, according to the sources.

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