NEW YORK – Oil prices rose on Thursday, with U.S. crude briefly rising as much as $1 a barrel as expectations of an OPEC deal to limit production outweighed global oversupply concerns, but a rallying dollar capped gains.
Saudi Energy Minister Khalid al-Falih said he was optimistic OPEC would formalize a preliminary oil output deal reached in Algeria in September.
“I’m still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states’ levels and fair and balanced cuts among countries,” he told Saudi-owned Al-Arabiya TV.
Falih said he believed the market was on its way to becoming balanced and that an agreement by the Organization of the Petroleum Exporting Countries at its meeting in Vienna on Nov. 30 would speed the recovery.
READ MORE: Oil on mark for biggest weekly loss since January as tensions rise over OPEC supply cut pact
OPEC countries are ready to reach a “forceful” agreement, Venezuelan President Nicolas Maduro said on Wednesday, following a meeting with OPEC Secretary-General Mohammed Barkindo, who described the situation as the most severe oil market crisis in 50 years.
Brent crude oil was up 17 cents a barrel at $46.80 by 10:43 a.m. ET after retreating from a high of $47.62.
U.S. West Texas Intermediate crude was also up 17 cents at $45.74. It reached a session high of $46.58.
The U.S. dollar rose after strong U.S. economic data and comments by U.S. Federal Reserve Chair Janet Yellen further bolstered the case for hiking rates next month.
“Two things the market is looking at: they’re looking at the OPEC news, and they’re looking at Janet Yellen,” said Phil Flynn, analyst at Price Futures Group in Chicago. “Right now with the dollar turning positive, I think that’s where we pull back.”
A stronger dollar makes the greenback-denominated crude more expensive for holders of other currencies, compounding bearish sentiments from evidence of oversupply.
READ MORE: Oil hits 1-month low on concerns OPEC won’t go ahead with planned production cut
The market was also still under pressure from U.S. Energy Information Administration data on Wednesday that showed a larger-than-expected crude build of 5.3 million barrels in the week to Nov. 11.
Stockpiles at the U.S. delivery hub for crude futures in Cushing, Oklahoma, which the EIA said increased nearly 700,00 barrels last week, rose 303,001 barrels in the week to Nov. 15, according to traders, citing energy monitoring service Genscape.
Crude inventories were also rising elsewhere, thanks to record output by OPEC, which pumps around 40 percent of world oil supply.
“The name of the game is ‘volatility’ as confusing signals are arriving before OPEC meets,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.
READ MORE: OPEC meets non-OPEC nations for oil talks, Russia still on board
“We have evidence of oversupply – U.S. stocks rising – versus hopes for some action by OPEC.”
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