But officials from Saudi Arabia and Russian Federation this month have acted to reassure markets, suggesting that producing countries could agree to limit output in an effort to stabilise prices.
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U.S. West Texas Intermediate (WTI) crude was flat at $48.22 a barrel after reaching $48.75, its highest since July 5.
OPEC will hold an informal meeting in Algeria next month with producers outside the group.
The potential for an output agreement is “the No. 1 obsession in oil right now” and is making traders cautious to bet on falling prices, said Walter Zimmermann, chief technical analyst at brokerage United-ICAP. “Traders have temporarily lost their appetite for playing the short side of crude oil”.
In addition, the WSJ Dollar Index, which tracks the greenback against a basket of other currencies, has fallen about 1% this week. A weaker dollar can make oil, which is traded in dollars, cheaper for buyers using foreign currencies.
Oil futures had tumbled during a bearish July as investors anxious about a global supply glut, bloated inventories and weak demand.
“Some believe – or more appropriately, hope – that the OPEC may come up with a plan to support prices at its informal meeting next month, something which we doubt will happen”, said Fawad Razaqzada, a market analyst at Forex.com. The contract advanced $1.04 to close at $50.89 on Thursday, also entering a bull market after climbing more than 20 percent from its early-August low. Any increases in the USA oil rig count typically provide lagging indication that domestic production could be on the verge of climbing. “Higher prices would only add to growing risks”.
An agreement to freeze output is within reach as Saudi Arabia, Iran and non-OPEC member Russian Federation are producing at, or close to, maximum capacity, Chakib Khelil, former OPEC president and Algerian energy minister, said in a Bloomberg Television interview on August 17.
“We feel that this month’s approximate $9 crude advance could easily be followed by an equivalent sized price decline next month”, said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates. Prices rose 10% this week.
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Futures fell 0.4 percent in NY, erasing an earlier gain of 1.1 percent, yet still poised for weekly increase of 7.9 percent.
