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Oil prices fell in early trading on Friday as the strengthening US dollar snuffed out rekindled hopes that OPEC might agree production cuts. US benchmark West Texas Intermediate (WTI) crude futures were down 53 cents from their last settlement, or 1.17 per cent, at $44.89 a barrel at 0107 GMT. International Brent crude futures were down 46 cents, or 0.99 per cent, at 46.03 a barrel.
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A stronger US dollar makes oil, which is priced in dollars, more expensive to buyers in other currencies. “Oil traded in a sideways range overnight, as stronger US dollar (overhadowed) 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 US dollar index reached a 13-1/2-year high on comments by US 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. 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 on Friday.
The oil exporters’ representatives – from Saudi Arabia, Algeria, Russia, Iran, Kuwait, Libya, Venezuela, Bahrain, the United Arab Emirates, Qatar and Nigeria – are meeting in Qatar’s capital Doha to discuss details of a potential deal on output cuts. Despite hopes for an accord, Iran’s increasing output 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.