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Oil buoyed by the weaker dollar but freeze deal pessimism remains

Jessica Morris
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Crude has been buoyed recently by hopes that the world's biggest oil producers will be able to hash out a production freeze deal (Source: Getty)

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.

Read more: Opec warns of "lingering concerns" over US and European oil demand

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.

Read more: Oil rout forces Kuwait to hike petrol prices 80 per cent

"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.

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