Oil prices rose 3 percent on Monday to their highest in three weeks, catching a lift from a weaker dollar, as OPEC appeared to be moving closer to agreeing an output cut when it meets next week.
Brent crude futures gained $1.44 to $48.30 a barrel by 1423 GMT, having touched their loftiest level since Nov. 1, while US West Texas Intermediate (WTI) futures strengthened by $2.01 to $47.70 a barrel.
Brent has risen 11 percent in a week since top OPEC officials started a diplomatic charm offensive to persuade the group’s more reluctant members to join the proposed output cut.
The dollar eased off last week’s 13-1/2-year highs as Treasury yields nudged lower, bolstering oil and the broader commodities complex including copper and gold.
“The possibility for such a deal has increased, but there is also the risk of course that the market is overreacting here, especially as the agreement will really have to be a surprise to push oil prices very much higher,” ABN Amro chief energy economist Hans van Cleef said.
“The most important part is that (OPEC) will need to stick to the deal, but it’s also the most difficult.”
Russian President Vladimir Putin said he saw no obstacle to non-OPEC member Russia agreeing to freeze oil output, which at more than 11 million barrels per day is at a post-Soviet high.
Meanwhile, OPEC members last week proposed a deal for Iran to cap, rather than cut, output.
Iran has been one of the main hurdles facing any output curtailment by the Organization of the Petroleum Exporting Countries, as Tehran wants exemptions to try to recapture market share lost under years of Western sanctions.
Libya and Nigeria, whose exports have been hampered by violence, have also asked to be left out of any deal.
Barclays analysts said some form of deal was likely, but warned an agreement could have little impact.
“We expect OPEC to agree to a face-saving statement ... (but) US tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut,” the bank said.
Hedge funds raised their net holdings of US crude futures and options for the first time in three weeks in the week to Nov. 15, having delivered one of the largest cuts on record the previous week. The move highlights the nervousness among investors about betting heavily on oil in either direction.

Source: Arab News