Oil rises, but doubt over output deal curbs gains

Wed Sep 7, 2016 9:57am EDT
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By Amanda Cooper

LONDON (Reuters) - Oil edged up on Wednesday partly thanks to a weaker U.S. dollar, but the limited likelihood of a near-term agreement among the world's biggest exporters to tackle a global surplus by curbing production kept gains in check.

November Brent crude futures rose 25 cents to $47.51 a barrel by 1345 GMT, while U.S. crude futures added 29 cents at $45.12 a barrel.

Oil hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Prices have since fallen due to uncertainty over a deal, particularly after a meeting in Doha in April among the world's largest producers to discuss output ended in failure.

"The market is reacting to all those headlines but I think if there is a 'Doha Two', it's probably going to be at the end of March or April 2017 and until then, there will continue to be discussions and negotiations, which will make a lot of headlines," Petromatrix strategist Olivier Jakob said.

The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss an output freeze at informal talks in Algeria on Sept. 26-28.

"The best oil bulls can expect is the implied promise of concrete action on production if prices slip into the low 40s for a sustained period," PVM Oil Analytics' David Hufton said in a note.

"Whether such a threat, which has been proven so often to be empty in the past, will be enough to scare off speculative short selling remains to be seen."

Iran has said it would cooperate on a freeze only if fellow exporters recognized its right to boost market share to levels reached before the imposition of nuclear-related sanctions, which have now been lifted.   Continued...

A worker checks an oil pipe at the Lukoil-owned Imilorskoye oil field outside the West Siberian city of Kogalym, Russia, in this January 25, 2016 file photo.   REUTERS/Sergei Karpukhin