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Oil prices fall as strong dollar wipes out OPEC cut optimism
Oil prices fell on Friday as a strengthening U.S. dollar beat back renewed hope that OPEC might finally agree production cuts.
SEOUL: Oil prices fell on Friday as a strengthening U.S. dollar beat back renewed hope that OPEC might finally agree production cuts.
Brent crude oil futures LCOc1 fell 32 cents, or 0.69 percent, to $46.17 per barrel by 0751 GMT. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were down 47 cents, or 1.06 percent, at $44.95 a barrel.
A stronger U.S. dollar makes oil, which is priced in dollars, more expensive to buyers using other currencies.
"Oil traded in a sideways range overnight, as the 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," he said.
The U.S. dollar index .DXY reached a 13-1/2-year high on comments by U.S. Federal Reserve Chair Janet Yellen as she said the rate increase could happen "relatively soon", indicating higher chances of the rate hike in December.
"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," Australian bank ANZ said in a note.
Oil prices have fallen the last three days, but Brent is still up 6 percent from a three-month low hit last Friday.
Saudi Arabian Energy Minister Khalid Al-Falih's optimistic comments on potential OPEC cuts came ahead of a meeting of key oil exporters' officials scheduled to take place between 0530 GMT and 0730 GMT in Qatar's capital Doha on Friday.
Analysts said uncertainty over the OPEC deal lingered in the markets and even if the producers' group does reach a deal, the impact is expected to be short lived.
"A production cap could induce (oil producers) to start producing more in the long term if prices go up," said Ric Spooner, a Sydney-based analyst at CMC Markets.
Jason Gammel of U.S. investment bank Jefferies said at least a 700,000 barrels-per-day (bpd) cut is needed to balance the market in the first quarter of 2017.
Although Saudi Arabia is trying to lead the way to a deal on output, Venezuela President Nicolas Maduro said the OPEC member would finance $2.2 billion from a Chinese credit line to boost production from oil joint ventures with China National Petroleum Corp [CNPET.UL] by around 277,000 bpd.
Iran's increasing output also casts doubt on whether an OPEC deal will be able to clear a persistent global oil glut. Iran overtook Saudi Arabia as India's top oil supplier for the first time in October, shipping data showed.
