Oil prices start Friday in hesitant rally

OPEC’s oil production cut will cap output at 32.5 million barrels per day in order to rebalance the supply-side of the oil market, Saudi Arabia’s oil minister Khalid al-Falih said earlier today, thus clarifying the extent of the much-anticipated reduction deal.

The news dampened a rally infused by news that OPEC members were meeting ahead of an official group gathering on November 30 to build consensus for a deal to limit production, and by oil pipeline attacks by militants in Nigeria.

His Algerian counterpart said the group is near a consensus on capping production for at least six months.

The sharply rising U.S. Dollar returned to the mix of fundamental data driving the price action in the crude oil market this week on Thursday.

The U.S. Energy Information Administration reported (http://ir.eia.gov/wpsr/wpsrsummary.pdf) that domestic crude supplies in the week ended November 11 rose by 5.3 million barrels. January Brent crude LCOJ7, -0.75% on London’s ICE Futures exchange fell 30 cents, or 0.7%, to $46.18 a barrel. US crude stockpiles climbed for a third week, the longest run of gains since August, according to a government report.

Brent was down 16 cents, or 0.3 percent, to $46.33 per barrel at 1:09 p.m. (1809 GMT), but it was still on track to gain 3.6 percent for the week, its first weekly increase in five weeks.U.S.

Oil prices rose around 2 percent on Tuesday to move away from multi-month lows struck the day before, pushed higher by expectations of falling shale output and renewed optimism that OPEC will deliver on touted production cuts. Prices will probably remain around current levels if OPEC fails to cut, according to BP Plc CEO Bob Dudley.

Brent crude oil prices were headed for their first weekly gain in five on Friday buoyed by renewed hopes that OPEC might agree production cuts, but a stronger US dollar capped gains.

But analysts said there were still obstacles for the producer group to overcome before it could reach a deal.

In the US, the benchmark S&P 500 index ended higher and edged closer to its record high on Thursday as bank stocks got a boost from the prospect of higher interest rates and consumer discretionary stocks were helped by economic data and earnings.

Russia’s Energy Minister Alexander Novak was due in the Qatari capital, Doha, this week for the Gas Exporting Countries Forum (GECF), which unites 12 countries including OPEC members Algeria and Iran.

USA crude fell one cent to $45.80 US a barrel, after settling about 5.8% higher in the previous session.

“The strengthening USA currency is compounding the weight on oil”, said Ric Spooner, a chief market analyst at CMC Markets in Sydney.

“We have evidence of oversupply – United States stocks rising – versus hopes for some action by OPEC”. Crude stockpiles rose 5.27 million barrels.