* Canadian oil sand output to gradually improve after
wildfires
* U.S. crude inventories rise to a record 543.1 million
barrels
* Middle East producers in war of discounts over market
share
* But global supply cuts prevent steeper price falls
By Henning Gloystein
SINGAPORE, May 11 (Reuters) - Oil prices dipped on Wednesday
as Canadian oil sand production was expected to gradually ramp
up following forced closures due to wildfires, and as record
crude inventories especially in the United States put pressure
on markets.
An ongoing fight by Middle East producers for market share
in Asia also weighed on prices, countering production declines
and disruptions around the world.
International Brent crude oil futures LCOc1 were trading
at $45.49 per barrel at 0153 GMT, down 3 cents from their last
settlement, while U.S. West Texas Intermediate (WTI) crude
futures were down 8 cent at $44.58 a barrel.
ANZ bank said that recent "gains in prices were capped as
concerns over further disruptions in Canada eased as producers
looked to return to their operations."
Oil sands companies around the Canadian energy hub of Fort
McMurray began to restart operations on Tuesday after an
out-of-control wildfire forced a week-long shutdown.
Provincial and industry officials said production in much of
the region should ramp up soon. Facilities north of Fort
McMurray that had been shuttered largely because of heavy smoke
rather than fire were seen as likely to come back online in a
matter of days in many cases.
The fires in Canada's oil sand field region have knocked out
around 1.5 million barrels of daily crude production, leading to
a significant tightening of global markets, supported by more
production declines and disruptions in the United States, Latin
America, Asia, and Africa.
With Canadian oil sand production gradually coming back and
U.S. crude inventories hitting record highs, some analysts say
that a price rally away from decade low prices hit early this
year may fizzle out.
Industry group American Petroleum Institute (API) said on
Tuesday that U.S. crude inventories rose by 3.45 million barrels
to a record 543.1 million barrels during the week ended May 6.
In a sign of an ongoing aggressive fight for market share,
Iran has set its June official selling prices (OSPs) for heavier
crude grades it sells to Asia at the biggest discounts to Saudi
and Iraqi oil since 2007-2008.
Iran on Tuesday set the June OSP for Iranian Heavy crude at
$1.60 a barrel below the Oman/Dubai average in the latest sign
that producers especially in the Middle East are willing to
accept low prices in return for market share.