NEW YORK (DTN) -- New York Mercantile Exchange oil futures shook off early weakness and rallied to higher settlements Thursday afternoon as the dollar eased ahead of Friday's speech by Federal Reserve Chair Janet Yellen at the Jackson Hole, Wyoming, bankers conference. Futures were also supported by rising hopes next month's informal meeting of the Organization of Petroleum Exporting Countries will result in an agreement to freeze or cut production.
The market opened lower on higher domestic U.S. oil supplies and weakening demand, but the prospect of a deal by OPEC to reign in output prompted traders to buy on the dips and cover their short positions, said analysts.
"The petroleum markets have turned higher, encouraged at least in part by news that Iranian Oil Minister Bijan Namdar Zanganeh will attend the informal talks planned on the sidelines of the International Energy Forum, Sept. 26-28 in Algeria," said energy specialist Tim Evans at Citi Futures. "Prices are also rebounded on technical grounds, with Wednesday's weakness having proven limited."
At settlement, NYMEX October WTI crude futures climbed $0.56 to $47.33 per barrel (bbl), reversing off a one-week spot low of $46.42. October Brent futures contract on the IntercontinentalExchange settled 62 cents lower at $49.67 bbl after inside trade.
NYMEX September ULSD futures advanced 1.31 cents to $1.5094 gallon at settlement, and September RBOB futures edged up 0.18 cent to $1.5114 gallon.
The Wall Street Journal reported Thursday that Iran and Ecuador are now discussing stabilizing oil prices, joining Saudi Arabia, Iraq, Algeria and Nigeria that have indicated they will back an OPEC production freeze. Ecuadorian foreign minister Guillaume Long also issued a statement saying that he met with his Iranian counterpart Mohammad Javad Zarif to discuss "stabilization of oil prices."
Russia, a major non-OPEC producer has also indicated a willingness to work with OPEC to stabilize oil prices.
Meantime, the market is also bracing for to Fed Chair Yellen's comments in Jackson Hole tomorrow for indications of her view on U.S. economic conditions and the potential for a Fed interest rate hike.
Fresh U.S. data released today showed durable goods rose more than expected in July, while weekly jobless claims, a proxy for layoffs, came in less than expected. These positive data points could sway the Feds decision on interest rates.
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