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Not good, you might delete the only good backup you have. If your system fails at the wrong time you could be in big trouble.
before RMAN deletes the prior night's backup due to limitation of space
You need to add space.
Unfortunatelly I am limited in the amount of hard drive space available. The good thing is that before RMAN deletes the backup files, my backup server copies those files into tape. So if I ever need to restore an older backup my theory is I can restore the backup files from tape first and then use RMAN to restore the backups.