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Oil prices shake off losses as Opec deal optimism returns

High Oil Prices Continue To Drive Gas Prices Steadily Upwards
Oil prices were buoyed last week on hopes of a production cut (Source: Getty)

Oil prices reversed earlier losses this afternoon reflecting rising optimism about an agreement among Opec producers to curb record output levels.

Brent crude, the global benchmark, increased 1.35 per cent to $52.63 per barrel, while West Texas Intermediate crude swelled 1.45 per cent to $50.53. Both benchmarks had fallen in mid-morning trading.

It was buoyed after Saudi Arabia's energy minister, Khalid al-Falih, said that he was optimistic a global production deal to limit supplies could be reached at an Organisation of the Petroleum Exporting Countries (Opec) meeting on 30 November in Vienna.

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Russian president Vladimir Putin also indicated that the non-Opec member was willing to consider freezing or even cutting oil output in line with the oil cartel, Bloomberg reported.

Last month, Opec provisionally agreed to a production cut of around 700,000 barrels per day, bringing the oil cartel's output to between 32.5m and 33m barrels per day.

However, analysts have voiced doubts over whether Opec and non-Opec producers will be able to hammer out a deal.

"A meeting between Opec and non-Opec producers (namely Russia) will add to oil headlines this week. Don't expect a firm agreement from Russia, but headlines about cooperation are likely," Morgan Stanley said today, Reuters reported.

Read more: As the Opec cartel agrees to cut oil production, should central banks prepare for a rise in inflation?

"It is also worth nothing that Iraq and Iran oil ministers will not be in attendance."

In another potential obstacle for an overall supply cut, Iraq yesterday signalled it wants to increase its oil output for the remainder of 2016 and for 2017.

Iraq has previously been identified as a potential stumbling block to Opec's provisional output cut deal due to discrepancies between its production figures and those published by the oil cartel.

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