Oil prices were down slightly on Friday, weighed by a stronger dollar and oversupply concerns, but expectations for a cut in production from Opec had Brent and US crude on track for their first weekly gains in about a month. The Organisation of the Petroleum Exporting Countries (Opec) is moving closer to finalising its first deal since 2008 to limit output, with most members prepared to offer Iran flexibility on production volumes, ministers and sources said.
Iran has been the main stumbling block for capping production. While it has not yet responded to the proposal, the flexibility shown by others suggests Opec members may be coming nearer to consensus as the November 30 meeting approaches. Prices on Friday were pressured by a stronger dollar, which reached its highest levels against a basket of currencies since 2003 after US Federal Reserve Chair Janet Yellen said on Thursday a rate increase could happen "relatively soon."
A stronger dollar makes oil, which is priced in the greenback, more expensive to buyers using other currencies. Brent was down 16 cents, or 0.3 percent, to $46.33 per barrel at 1:09 p.m. (1809 GMT), but it was still on track to gain 3.6 percent for the week, its first weekly increase in five weeks.
US West Texas Intermediate crude was down 33 cents, or 0.7 percent, at $45.09 a barrel. It was on track to gain about 4 percent for the week, the first weekly increase in four. Opec agreed late September to limit production to boost prices, but had not set out how much each individual member should cut.
Any cut is likely to help profitability for US producers. Activity continues to rise in the US, as oil services company Baker Hughes Inc said US drilling rigs rose by 19 to 471 in the week to November 18, the 22nd week of gains out of the last 25. Analysts said there were still obstacles for Opec to overcome before it could reach a deal.
"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. Jason Gammel of US investment bank Jefferies said a cut of at least 700,000 bpd was needed to balance the market in the first quarter of 2017.