NEW YORK (DTN) -- New York Mercantile Exchange oil futures advanced at the start of regular trading Thursday, rallying on a weakening dollar and renewed hope that leading oil suppliers will finalize an agreement to curb output and stabilize the market later this month.
The main focus for traders is news from the Organization of Petroleum Exporting Countries. Saudi Energy Minister Khalid al-Falih said he was optimistic OPEC would formalize a tentative oil output deal reached in Algiers back in September.
He said the market was on its way to rebalancing and a deal to limit output would accelerate that process.
Al-Falih is due to meet with his counterparts from Russia and other Arab Gulf allies in Doha today through Friday to fine-tune a plan that would attract Russia and other non-OPEC producers to participate in the cuts. Russian Energy Minister Alexander Novak was also optimistic Wednesday about the chances of reaching a conclusive deal.
OPEC tentatively agreed in Algiers Sept. 28 to limit its total output to a range of 32.5 and 33 million bpd but deferred the final approval of the plan to Nov. 30 at their biannual summit in Vienna. However, they have failed to agree on a formula for sharing the proposed cuts among their 14 members and their production increased 240,000 bpd in October to 33.64 million bpd, according to the latest OPEC report that based its data from secondary sources.
A major issue standing in the way of a deal is Iran, who wants a production cap of 4 million bpd while the Saudis and other OPEC members want Tehran to freeze supply at about 3.7 million bpd. OPEC's recent report said Iran self-reported a production rate of 3.92 million bpd for October while secondarily sourced data showed Iran produced 3.69 million bpd for the month.
In a further effort to forge consensus, OPEC Secretary-General Mohammed Barkindo is visiting more OPEC members in the next few days.
In early trade, NYMEX December West Texas Intermediate crude futures were up 69cts at $46.26 bbl. ICE January Brent futures were up 69cts at $47.32 bbl. NYMEX December ULSD futures gained 3.10cts to $1.4660 gallon while December RBOB futures added 2.765cts to $1.3456 gallon.
In currency trade, the dollar moved off a one-year high, easing despite data out this morning showing a drop in jobless claims to a 43-year low, a 25.5% jump in housing starts to a 9-year high, and a 0.4% increase in producer price index due to a 3.5% jump in fuel prices.
The dollar has recently been trending up on expectation the Federal Reserve would raise interest rates in December, but analysts said the currency's weakness this morning is due to the housing starts data.
In her prepared testimony to be given to Congress today, Fed Chair Janet Yellen signaled the central bank is close to lifting rates as the economy continues to improve and to create more job, with inflation also inching higher.
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.