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Fri 18 Nov 2016 03:56 PM

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Oil set for first weekly gain in five on OPEC deal optimism

OPEC member countries have proposed Iran cap its oil output at 3.92 million barrels per day

Oil set for first weekly gain in five on OPEC deal optimism
Participants gather in the lobby ahead of an informal meeting between members of the Organization of Petroleum Exporting Countries, OPEC, in the Algerian capital Algiers, on September 28, 2016. (Stringer/AFP/Getty Images)

Brent crude oil prices were
headed for their first weekly gain in five on Friday buoyed by
renewed hopes that OPEC might agree production cuts, but a
stronger U.S. dollar capped gains.

Brent crude oil futures were flat at $46.49 per
barrel at 1101 GMT. U.S. West Texas Intermediate (WTI) crude oil
futures were down 7 cents at $45.35 a barrel and were on
track for a their first weekly gain in four.

OPEC member countries have proposed Iran cap its oil output
at 3.92 million barrels per day (bpd) under a
production-limiting deal for the whole group, a source familiar
with the proposal has told Reuters.

While Iran has not yet responded to the proposal, it means
OPEC members may be coming nearer to a consensus on how much
Iran should produce.

Iran has previously sent mixed signals, saying it would
accept a freeze at between 4.0 and 4.2 million bpd.

Russian Energy Minister Alexander Novak said on Friday after
meeting OPEC members he was more confident an output deal could
be reached between Moscow and the group to help to boost oil
prices.

Saudi Arabian Energy Minister Khalid Al-Falih said on
Thursday he was optimistic about OPEC's deal to limit oil output
and mentioned the lower end of a previously agreed production
target of 32.5-33 million bpd.

But analysts said there were still obstacles for the producer
group to overcome before it could reach a deal. OPEC is
scheduled to meet next on Nov. 30.

"Iranian and Iraqi intransigence to the proposed output cuts
remains in full force while competitive pressures among OPEC
members was highlighted by news that Iran displaced Saudi Arabia
as the top oil supplier to India," Stephen Brennock of oil
brokerage PVM said.

Iran overtook Saudi Arabia as India's top oil supplier for
the first time in October, shipping data showed.

Iraq would have to compensate international oil companies
for limits placed on their production, further reducing the
prospect it would join any OPEC deal to curb the group's output.

Jason Gammel of U.S. investment bank Jefferies said at least
a 700,000 barrels-per-day (bpd) cut is needed to balance the
market in the first quarter of 2017.

The rise in the U.S. dollar to its highest levels since 2003
against a basket of currencies on Friday weighed on oil prices.
A stronger U.S. dollar makes oil, which is priced
in dollars, more expensive to buyers using other currencies.

The U.S. dollar index reached a 13-1/2-year high on
comments by U.S. Federal Reserve Chair Janet Yellen that a rate
increase could happen "relatively soon", indicating higher
chances of the rate hike in December.