Oil buoyed by the weaker dollar but freeze deal pessimism remains
Oil prices rose this morning, partly due to the weaker greenback, despite mounting pessimism over the ability of global producers to a reach a freeze deal.
Crude received a shot in the arm after the US dollar index fell one per cent today, in the wake of softer US economic data. This is a boon for commodities investors, because it effectively cheapens dollar-denominated oil contracts.
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Brent crude, the global benchmark, led the charge rising by as much as 1.44 per cent to $47.94 per barrel this morning. Its US counterpart, West Texas Intermediate crude, swelled as much as 1.32 per cent to $45.42.
Earlier this week, oil tsars Russia and Saudi Arabia agreed to cooperate on stabilising the embattled market. However, the deal fell short of some speculators' hopes for immediate action for a production freeze.
Crude has been buoyed recently by hopes that the world's biggest oil producers will be able to hash out a production freeze deal at informal talks in Algeria on 26-28 September — but analysts remain unconvinced.
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"The market is reacting to all those headlines but I think if there is a 'Doha Two', it's probably going to be at the end of March or April 2017 and until then, there will continue to be discussions and negotiations, which will make a lot of headlines," Petromatrix strategist, Olivier Jakob, said.
Opec rebel Iran, which played a role in the collapse of talks in Doha earlier this year, has said it will only freeze production if its peers recognise its right to return market share to pre-sanction levels.