Oil rises on Russia’s output freeze commitment

LONDON: Oil edged higher yesterday as Russia reiterated its commitment to joining a producers’ output freeze to stem a two-year slide in prices but a strong dollar capped gains.

Global benchmark Brent crude futures were 12 cents higher at $51.50 a barrel at 0847 GMT. US West Texas Intermediate (WTI) crude was trading at $50.65 a barrel up 2 cents from its last settlement.

Russian Energy Minister Alexander Novak said on Friday an oil output freeze agreement was necessary to prop up prices and that he would make proposals to his Saudi Arabian counterpart this weekend. The Organization of the Petroleum Exporting Countries will hold a meeting on Nov. 30 to find common ground on capping oil production. This is expected to work out how each member country will contribute to a freeze.

“The near term fundamentals in the oil market have turned positive. Demand is stabilising, OPEC production has peaked (and will fall if cuts are implemented), and global inventory declines imply that the market is more balanced than many believe,” Neil Beveridge of Bernstein Energy said in a note to clients.

But Olivier Jakob, oil analyst at Petromatrix said: “We have been cautious in the current (oil) flat price rally, based on our forecast of an OPEC supply surge in the fourth quarter and a widening of the Brent contango.”

A rise in the dollar on Friday to touch a seven-month high against a basket of currencies, in its third straight week of gains, prevented oil prices from pushing higher.

A stronger dollar means dollardenominated commodities become more expensive to hold, making it less attractive for investors to buy them. — Reuters