Oil Prices Decline as Strong Greenback Wipes Out OPEC Cut Optimism

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On Friday, oil prices decline in early trading as the strengthening U.S. dollar put out  renewed expectations that OPEC might agree production cuts.

“International Brent crude oil futures  were trading down 13 cents at $46.36 per barrel at 0445 GMT, from their last close,” according to the reports.

U.S. West Texas Intermediate (WTI) crude oil futures  were trading at $45.19 per barrel, down 23 cents, or 0.51%, from their previous settlement.

A stronger U.S. dollar makes oil, which is valued in dollars, more costly to buyers in other currencies.

“Oil traded in a sideways range overnight, as a stronger U.S. dollar (overshadowed) optimism from Saudi’s Energy Minister over a production cut agreement,” said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

“With the dollar reigning supreme, Asia trading of crude should have a slightly heavy tone today as traders lighten up positioning into the weekend,” Halley said.

The U.S. dollar index touched a 13-1/2-year peak on statements by U.S. Fed Reserve Chair Janet Yellen as she stated the rate surge could happen “relatively soon”, signaling the higher possibility of the rate hike in December.

Australian bank ANZ said in a note,”Commodities were mixed, with the stronger dollar creating headwinds for the sector. Brent crude oil traded around $46 per barrel as investors saw an increasing chance that OPEC would reach an agreement on production cuts.”

Saudi Arabian Energy Minister Khalid Al-Falih’s optimistic statements on the possible Organization of Petroleum Exporting Countries (OPEC) reduction came ahead of a meeting of key oil exporters’ officials arranged to happen between 0530 GMT and 0730 GMT on Friday.

The oil exporters’ representatives from Saudi Arabia, Algeria, Russia, Iran, Kuwait, Libya, Venezuela, Bahrain, the United Arab Emirates, Qatar and Nigeria scheduled a meeting in Qatar’s capital Doha to talk about the details of a potential deal on output reduction.

“I think (OPEC deal) would have a short-term impact on the market…production cap could induce (oil producers) start producing more in the long term if prices go up,” said Ric Spooner, a Sydney-based analyst at CMC Markets.

Even though Saudi Arabia is leading to reach an agreement on reducing outputs. Venezuela President Nicolas Maduro stated the OPEC member would finance $2.2 billion from a Chinese credit line to increase oil joint ventures with China National Petroleum Corp by around 277,000 barrels per day.

Iran’s increasing production also casts uncertainty on whether an Organization of Petroleum Exporting Countries (OPEC) agreement will be able to eliminate persistent global oil surplus. For the first time in October, Iran surpassed Saudi Arabia as India’s top oil supplier for the first time, in the presented shipping data.

On Additional News

On Friday, crude prices decline in Asia with all eyes on Organization of Petroleum Exporting Countries (OPEC) to complete terms at the end of the month for broadcasted plans to trim production and weekly U.S. rig count data loomed.

Delivery of crude oil for December on the NYMEX decline 1.06% to 44.94 a barrel. While deliver of  Brent oil for January on the ICE Futures Exchange in London was quoted flat at $46.04 a barrel.

The previous week, the oil services company Baker Hughes stated “the number of rigs drilling for oil in the U.S. last week increase by 2 to 452, the 21st increase out of the last 24 weeks.

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