Oil set for first weekly gain

Brent crude oil prices are heading for their first weekly gain in five buoyed by renewed hopes that OPEC may agree to production cuts, but a stronger United States dollar caps gains.

A report by Reuters indicated that Brent crude oil futures LCOc1 were up on Friday by 27 cents to $46.76 per barrel at 1255 GMT. The US West Texas Intermediate crude oil futures CLc1 were up by 23 cents at $45.65 a barrel and on track for their first weekly gain in four.

OPEC member countries had proposed Iran cap its oil output at 3.92 million barrels per day under a production-limiting deal for the whole group, a source familiar with the proposal told Reuters.

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.

Iran has previously sent mixed signals, saying it would accept a freeze at between 4.0 and 4.2 million bpd.

The Russian Energy Minister Alexander Novak said on Friday after meeting OPEC members he was more confident an output deal could be reached between Moscow and the group to help to boost oil prices.

The Saudi Arabian Energy Minister Khalid Al-Falih 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 bpd.

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.

Iran overtook Saudi Arabia as India’s top oil supplier for the first time in October, shipping data showed.

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 on Friday weighed on oil prices.

A stronger dollar makes oil, which is priced in dollars, more expensive to buyers using other currencies.