By Timothy Puko, Sarah McFarlane and Dan Strumpf 

Oil prices slipped off one-year highs Tuesday, as traders took profits from a sharp rally that followed OPEC's decision to cut production.

While many traders and analysts have become more confident that the Organization of the Petroleum Exporting Countries was likely to follow through on production cuts, others remain skeptical. On Tuesday, the skeptics pointed to data showing another monthly increase to a new record-high output in November and to a deeper-than-expected price cut Saudi Arabia just issued for Asian customers.

An increase in U.S. stockpiles also may be weighing on prices, brokers said. Stockpiles at Cushing, Okla., rose by about 3 million barrels in the week ended Friday, data provider Genscape Inc. said on Monday, according to people who had reviewed the report. That limited gains Monday and appeared to be adding to losses again Tuesday, ahead of the official U.S. government update on stockpiles scheduled for Wednesday, brokers said.

U.S. crude for January delivery recently lost $1.32, or 2.6%, to $50.47 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, lost $1.13, or 2.1%, to $53.81 a barrel on ICE Futures Europe. Losses would snap a four-session winning-streak for both benchmarks.

A stall in the rally wasn't surprising, even within a week of OPEC's decision, Amrita Sen, chief oil analyst at Energy Aspects in London, said in an email. "We have always said prices will move up on the news, then sell off till the market finds evidence of the cuts and then move higher," she said.

OPEC's decision to cut output by 1.2 million barrels a day, equivalent to around 1% of global supply, had sent oil rallying around 15% over the past week.

But traders are spooked that output from OPEC has kept growing, seemingly up to the very day of the deal, brokers said. There also are questions about whether a meeting for Saturday between OPEC and nonmembers, including Russia, happens the way it is supposed to, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. OPEC wants its non-OPEC counterparts to slash 600,000 barrels a day.

Commerzbank cast doubt on such a deal partly because Saudi Arabia, the quasi-head of OPEC, appears to be waiting until January to seasonally adjust its production to its lower winter level, while also cutting its January selling price for Asian consumers, maintaining its strategy of defending market share.

"What you want to keep a watch out for now is the (price) for Iran," Mr. Yawger said. "If they undercut the Saudis, then we have a problem."

There is also a risk that the OPEC members who are exempt from the deal -- Libya and Nigeria -- may ramp up production faster than anticipated, offsetting cuts elsewhere.

Traders and analysts will keep a close watch on export volumes in the New Year for evidence of the cuts. The cartel has a checkered history for complying with quotas.

"The initial reaction is understandably bullish, but the question on everyone's mind is how credible is last week's agreement," said Tamas Varga at brokerage PVM.

Gasoline futures recently lost 1.5% to $1.5345 a gallon, and diesel futures lost 1.4% to $1.6348 a gallon.

Write to Timothy Puko at tim.puko@wsj.com, Sarah McFarlane at sarah.mcfarlane@wsj.com and Dan Strumpf at daniel.strumpf@wsj.com

(END) Dow Jones Newswires

December 06, 2016 10:25 ET (15:25 GMT)

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