Oil prices rose three per cent yesterday to their highest in three weeks, catching a lift from a weaker dollar, as the Organisation of Petroleum Exporting Countries (OPEC) move closer to agreeing an output cut when it meets next week.
Brent crude futures gained $1.44 to $48.30 a barrel having touched their loftiest level since Nov. 1, while U.S. West Texas Intermediate (WTI) futures strengthened by $2.01 to $47.70 a barrel.
Brent has risen 11 per cent in a week since OPEC’s de facto leader, Saudi Arabia, started a diplomatic offensive to persuade the cartel’s more reluctant members to join its proposed output cut.
ABN Amro chief energy economist, Hans van Cleef said: “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.
“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