Oil prices fall on strong dollar, trading thin ahead of OPEC meeting
SINGAPORE: Oil prices fell on Friday, under pressure from a strong dollar, but activity was low after the US Thanksgiving holiday and with many traders reluctant to take big new positions ahead of a planned OPEC-led crude output cut to be decided next week.
International Brent crude oil futures were trading at $48.57 at 0435 GMT, down 43 cents, or 0.9 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $47.59 per barrel, down 37 cents, or 0.8 per cent, from their last settlement.
Traders said the main drag on prices on Friday was the strong dollar, which this month hit levels last seen in 2003 against a basket of other leading currencies.
A strong dollar, in which oil is traded, makes fuel purchases more expensive for countries using other currencies at home, potentially crimping demand.
Traders said market activity was low due to the US holiday, while there was a reluctance to take on big price directional bets because of uncertainty about the planned oil output cut, led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC is due to meet on November 30 to coordinate a cut, potentially with non-OPEC member Russia, but there is disagreement within the producer cartel as to which member states should cut and by how much.
“Crude oil prices treaded water as OPEC and non-OPEC members spent more time in preliminary meetings ahead of the Vienna gathering…Investors look like they are sitting on the sidelines as they await the OPEC meeting in Vienna next week,” ANZ bank said on Friday.
Most analysts believe that some form of a production cut will be agreed, though it is uncertain whether this will be enough to prop up a market that has been dogged by a fuel supply overhang for over two years.