Oil prices up on optimism over non-OPEC output cuts

 By Devika Krishna Kumar

NEW YORK, Dec 9 (Reuters) – Oil prices rose about 1 per cent on Friday, trading within a narrow range, on hopes that non-OPEC producers meeting in Vienna over the weekend would agree to cut output to bolster the group’s own agreement to limit production.

Still, a strong U.S. dollar sapped some of the price strength, and both crude benchmarks remained nearly 2 per cent below the highs reached after the Organization of the Petroleum Exporting Countries (OPEC) announced plans to cut production late last month.

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On Saturday, oil ministers from OPEC countries will meet non-OPEC producers in Vienna to seek help in curbing a global glut.

U.S. crude’s West Texas Intermediate (WTI) futures for January delivery rose 67 cents to $51.51 a barrel, a 1.3 per cent gain by 10:35 a.m. EST (1535 GMT). Brent crude futures for February delivery rose 36 cents to $54.25 a barrel, a 0.7 per cent gain.

Brent traded at a high point for the day of $54.46 and a low of $53.77 a barrel while WTI prices traded at a high point for the day of $51.64 and a low of $50.86

Both contracts were on track for their first weekly loss in four weeks.

Gains in the U.S. dollar index versus a basket of currencies, which makes oil more expensive to many of the world’s buyers, helped pull prices back from the highs reached earlier in the day.

Russia has said it would cut 300,000 barrels per day, meaning other non-OPEC producers combined would need to pledge the same amount to lower output by the 600,000 bpd OPEC wants. Russia’s No.2 oil producer Lukoil said on Friday it was ready to take part in the output cut commitment.

Azerbaijan has said it will come to the Austrian capital with proposals for its own reduction, while Kazakhstan’s energy minister said they may offer to freeze output at last month’s level.

Still, questions remained over such output plans.

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Russia plans to hold additional talks on Friday with some OPEC and non-OPEC nations to discuss unresolved issues related to the planned cut in oil output, two Russian sources told Reuters.

“We see event odds as skewing towards a slightly positive price impact,” Macquarie Research analysts said in a note.

“That said, we believe a status quo outcome that keeps the November deal intact is the most probable scenario and hinges on a repeated commitment from Russia (300,000 b/d). In addition to potential cuts from Oman, this scenario could also include softer commitments due to natural declines (e.g. Mexico) or other less credible cuts.”

OPEC last week agreed to slash production by 1.2 million b/d in the first half of 2017.

Saudi Arabia and Iraq plan to supply full contracted volumes of crude to Asia in January, in an effort to retain market share in Asia, but the former ordered supply cuts to U.S. and European buyers.

The market awaits weekly data on U.S. oil rig counts issued by oil services firm Baker Hughes at 1:00 p.m. EST (1800 GMT) on Friday.

(Additional reporting by Libby George in London, Osamu Tsukimori; in Tokyo; Editing by Marguerita Choy and Adrian Croft)

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