Oil prices edged higher on Wednesday but gains were capped by investors’ doubts that oil cartel OPEC would agree to a large enough production cut to significantly reduce the global surplus when it meets next week.
A strong dollar, trading near the 13 1/2-year peak hit last week, also weighed on prices amid thin trading ahead of the U.S. Thanksgiving holiday on Thursday.
International Brent crude oil futures rose 11 cents to $49.23 a barrel at 0940 GMT (4:40 a.m. ET) after climbing to $49.42 a barrel earlier in Wednesday’s session on optimism OPEC would agree to an output cut.
Reuters commodities analyst Wang Tao said that Brent could rise to $49.85 per barrel, a level marked by several technical resistance factors.
U.S. West Texas Intermediate (WTI) crude oil futures rose 12 cents to $48.15 a barrel after rising to $48.30 earlier on Wednesday.
“Yesterday you saw the price action, it closed close to unchanged. It’s uncertain whether OPEC can do a deal. The market is divided in its opinion…that’s why the market is not moving much,” Olivier Jakob of Petromatrix consultancy in Switzerland said.
Many traders anticipate some agreement at OPEC but fear the aim, proposed by Algeria, of cutting production by 4 to 4.5 percent, or over 1.2 million barrels per day according to Reuters calculations, may not be reached.
The deal’s success hinges on an agreement from Iraq and Iran, which may not give a full backing, three OPEC sources said Tuesday. In September, OPEC agreed to bring total output down to the level of 32.5-33.0 million barrels a day.
Short-term though, analysts said that investors were currently unwilling to push crude prices to $50 a barrel or higher.
Later on Wednesday, investors will eye U.S. government data on crude and refined product stockpiles. <EIA/S>
U.S. crude inventories are expected to rise by 700,000 barrels, according to the latest Reuters poll, while distillates will fall and gasoline will rise.
Source: Reuters (By Julia Payne; Additional reporting by Keith Wallis and Hennig Gloystein, Editing by Christian Schmollinger and Elaine Hardcastle)