Oil prices fall on strong dollar, trading thin ahead of OPEC meeting
Oil prices fell on Friday, under pressure from a strong dollar, but activity was low after the U.S. Thanksgiving holiday and as many traders are reluctant to take big new positions ahead of a planned OPEC-led crude output cut to be decided next week.
International Brent crude oil futures were trading at $48.57 at 0557 GMT, down 43 cents, or 0.9 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $47.61 per barrel, down 35 cents, or 0.7 percent, from their last settlement.
Traders said the main drag on prices on Friday was the strong dollar, which this month hit levels last seen in 2003 against a basket of other leading currencies.
A strong dollar, in which oil is traded, makes fuel purchases more expensive for countries using other currencies at home, potentially crimping demand.
Traders said market activity was thin because of the U.S. holiday and because of uncertainty about the planned oil output cut, led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC is due to meet on Nov. 30 to coordinate a cut, potentially with non-OPEC member Russia, the world’s largest producer, but there is disagreement within the producer cartel as to which member states should cut and by how much.
Most analysts believe that some form of a production cut will be agreed, though it is uncertain whether this will be enough to prop up a market that has been dogged by a fuel supply overhang for over two years.
“We do expect some form of agreement, but oil market reaction will hinge on the credibility of the proposed action,” said U.S. investment bank Jefferies on Friday, adding that recent output increases to record levels in many countries now required a deep cut for it to significantly lift oil prices.
“The surge in OPEC output since August has shifted the market back into oversupply and re-balancing will be deferred until the second half of 2017 without a cut of at least 700,000 barrels per day,” Jefferies said.
Source: Reuters
