Oil edged higher on Friday biggest weekly loss in nearly eight months

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Oil edged higher on Friday, supported by the previous session’s weakness in the U.S. dollar and Russian comments in favour of a production freeze, though contracts remained on track for the biggest weekly loss in nearly eight months.

Russian President Vladimir Putin told Bloomberg an agreement between oil exporters to freeze output would be the right decision to support the market.

OPEC members will discuss a potential production cap again at an informal Sept. 26-28 meeting in Algeria.

Global benchmark Brent crude futures were up 23 cents at $45.68 a barrel by 0840 GMT but were on course for an 8.5 percent decline over the week, the steepest weekly loss since mid-January.

U.S. West Texas Intermediate crude futures were up 19 cents at $43.35 a barrel, on track for a 9 percent weekly loss and marking the same milestone as Brent.

“Prices are up on a weaker dollar in the aftermath of the U.S. ISM numbers yesterday and Putin’s latest attempt to stabilise the price,” said Saxo Bank senior manager Ole Hansen.

The dollar was flat against a basket of currencies on Friday but had one of its worst days in two weeks on Thursday after a surprise contraction in U.S. manufacturing that cast doubts on the economic strength of the United States, the world’s biggest oil consumer.

An oil rig lights up Cape Town harbour as the sun sets August 6, 2011.  REUTERS/Mike Hutchings/File Photo
An oil rig lights up Cape Town harbour as the sun sets August 6, 2011. REUTERS/Mike Hutchings/File Photo

Investors were also looking ahead to non-farm payroll data later in the day for a steer on the U.S. economy, with a strong reading seen as boosting the chance of a Federal Reserve interest rate rise soon. [MKTS/GLOB]

Higher interest rates could strengthen the dollar, which could depress oil prices as the commodity becomes more expensive for holders of other currencies.

Despite Putin’s comments on Friday, there is increasing scepticism among traders that oil producers will agree on an output freeze at this month’s meeting.

“The likeliest scenario is that there will be no freeze in production growth whatsoever,” said Hans van Cleef, senior oil economist at ABN Amro.

It is more likely, he said, that participants will continue to monitor the market and possibly postpone freeze talks to the official OPEC meeting in Vienna on Nov. 30.

“The oil price will remain volatile over the coming weeks,” he added.

Additionally, more U.S. supply will return to the market as some producers in the eastern parts of the Gulf of Mexico restart offshore operations as Hurricane Hermine makes landfall.

Asmaa Mubita is a Kenyan journalist of international repute with over fifteen years of experience in broadcast journalism. Asmaa Mubita began his journalism career at the Kenyan state broadcaster (KBC) and later worked at the KTN owned by the Standard Group and Citizen Television, the flagship brand of Royal Media Services. These exploits together with his reporting experience with the Voice of America, CNN and BBC have been rewarded with local and global recognition.