Doha/London: Brent crude oil prices were headed for their first weekly gain in five yesterday buoyed by renewed hopes that Opec might agree production cuts, but a stronger US dollar capped gains.
Brent crude oil futures were up 27 cents to $46.76 per barrel at 1255 GMT. US West Texas Intermediate (WTI) crude oil futures were up 23 cents at $45.65 a barrel and on track for their first weekly gain in four.
At the meeting held yesterday in Doha, Opec member countries proposed Iran cap its oil output at 3.92 million barrels per day (bd), a source familiar with the proposal told Reuters. Iranian officials attended the gathering although minister Bijan Zanganeh did not come. Iran has previously said it would accept a freeze at between 4 and 4.2 million bpd. Gulf Opec sources have said they wanted Iran to cap output at around 3.6-3.7 million bd - the volume the Islamic Republic is currently producing, according to Opec estimates. The source said Tehran had yet to respond to the proposal. Iran’s Opec governor, who attended yesterday's talks, said he was optimistic that the producer group would reach a deal when it gathers formally in Vienna on November 30.
Minister of Energy and Industry H E Dr Mohammed bin Saleh Al Sada (pictured), said that the meeting touched on all issues related to fixing oil production. audi Arabian Energy Minister Khalid Al Falih said meeting went well, but declined further comment. If Opec reaches a deal on November, it may also draw support from non-Opec members including Russia, which promised to cooperate but so far has refrained from any firm commitment. While Iran has not yet responded to the proposal, it suggests Opec members may be coming nearer to a consensus on how much Iran should produce.
Saudi Arabian Energy Minister said on Thursday he was optimistic about Opec’s deal to limit oil output and mentioned the lower end of a previously agreed production target of 32.5-33 million bd.
But analysts said there were still obstacles for the producer group to overcome before it could reach a deal. Opec is scheduled to meet next on November 30. “Iranian and Iraqi intransigence to the proposed output cuts remains in full force while competitive pressures among Opec members was highlighted by news that Iran displaced Saudi Arabia as the top oil supplier to India,” Stephen Brennock of oil brokerage PVM said.
Iraq would have to compensate international oil companies for limits placed on their production, further reducing the prospect it would join any Opec deal to curb output.
Jason Gammel of US investment bank Jefferies said a cut of at least 700,000 barrels per day was needed to balance the market in the first quarter of 2017.
The rise in the US dollar to its highest levels since 2003 against a basket of currencies yesterday weighed on oil prices.
The US dollar index reached a 13-1/2-year high on comments by US Federal Reserve Chair Janet Yellen that a rate increase could happen “relatively soon,”indicating higher chances of the rate hike in December.
