NEW YORK (DTN) -- New York Mercantile Exchange oil futures settled higher Friday afternoon as the prospect for an oil production cut by the Organization of Petroleum Exporting Countries offset a stronger dollar and data showing an increase in the number of active domestic oil rigs.
"The petroleum markets are…consolidating within their recent trading range despite a further 0.3% gain in the US dollar," said Tim Evans, energy specialist at Citi Futures. "The steady performance in oil suggests ongoing respect for the possibility that OPEC, Russia, and possibly others, may reach a firm agreement to limit supply."
The main trigger for the rally today were comments from Russia that suggested Moscow is serious about coordinating production targets with OPEC.
Russian Energy Minister Alexander Novak said an oil production freeze agreement was necessary to support prices, adding that he would seek to work out a deal with his Saudi Arabian Oil Minister Khalid al-Falih at a meeting this weekend.
Last month, Russian President Vladimir Putin pledged to at least freeze his country's oil output, but left details to be negotiated by Minister Novak and Saudi Minister Falih in subsequent meetings. The statement today by Novak recommitting Russia to joining OPEC in their plan to cut oil production next month revived market optimism about reducing a supply glut.
Russia is a major oil producer with output over 11.0 million bpd.
OPEC hopes to finalize a Sept. 28 agreement to limit output to 32.5 to 33.0 million bpd when they meet on Nov. 30 in Vienna, but its 14 members are still negotiating details including their individual output quotas.
NYMEX December West Texas Intermediate crude oil futures settled 22cts higher at $50.85 bbl. On Thursday, November WTI contract expired $1.17 lower at $50.43 bbl after rallying Wednesday to a 15-month spot high of $51.93. The spot-month price is up 50cts versus a week ago, posting the fifth straight weekly gain.
The December Brent futures contract on the IntercontinentalExchange was up 40cts at $51.78 bbl at settlement while down 17cts on the week.
In products trade, NYMEX November ULSD futures settled up 1.44cts at $1.5740 gallon but were little changed on a weekly basis, up 0.67cts from prior Friday.
The November RBOB futures contract rallied, settling 3.77cts higher at $1.5314 gallon while posting a weekly gain of 3.78cts.
On Wall Street, equities were mostly lower while the dollar rallied to a better than eight-month high on expectations the Federal Reserve would raise its federal funds rate in December. A stronger dollar is bearish for oil futures.
Domestic data released this week were mixed, with Baker Hughes Inc. today reporting the number of active oil rigs up 11 to 443 from prior Friday--the eighth consecutive week with an increase in the rig count, with active rigs now the highest the most since early February.
The Energy Information Administration said midweek that crude stocks fell 5.3 million bbl for the week-ended Oct. 14, with supplies at the Cushing supply hub in Oklahoma, down 1.6 million bbl to 59.7 million bbl.
George Orwel can be reached at email@example.com
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