By David Gaffen
| NEW YORK
NEW YORK Oil prices rose over 4 percent to a three-week high on Monday, bolstered by growing conviction that major oil producing countries would agree to limit output at a meeting next week.Brent crude oil briefly touched $49 a barrel. The London benchmark has risen 11 percent in a week since Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, started a diplomatic charm offensive to persuade the group's more reluctant members to join its proposed output plan. OPEC members are due to agree a world oil freeze pact with non-OPEC countries on Nov. 30. In recent days, several OPEC members including Iran, along with non-member Russia, have suggested they were leaning toward a deal to limit output."When you’ve got all of the major players on board with a production cut, obviously you're very close to getting a deal done," said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
"You never know with OPEC - sometimes they go to the last minute and there are a lot of false starts." Brent crude futures LCOc1 rose $2.04 to $48.91 a barrel by 1:29 p.m. ET (1829 GMT). U.S. West Texas Intermediate (WTI) CLc1 strengthened by $1.83 to $47.52 a barrel, after climbing as high as $47.80.Goldman Sachs analysts said in a note that chances of an OPEC cut succeeding have increased, and they believe the global oil surplus will shift into a deficit by the middle of next year, which would support prices.
"Our base case now is that an OPEC production cut will be announced and implemented," they wrote. In late September, the brokerage said conditions were not optimal for a cut to work.Russian President Vladimir Putin said he saw no obstacle to freezing oil output, which at more than 11 million barrels per day is at a post-Soviet high. OPEC members last week proposed a deal for Iran to cap, rather than cut, output.
Iran has been one of the main hurdles facing any curtailment, as Tehran wants exemptions to try to recapture market share lost under years of Western sanctions.Libya and Nigeria, whose exports have been hampered by violence, have also asked to be left out of any deal. Nigeria's oil production fell to 1.63 million bpd in the third quarter from 1.69 million in the second quarter.Hedge funds took a more cautious stance on oil prices amid the flurry of OPEC diplomacy, cutting their combined net long position in the three major Brent and WTI futures and options contracts by just 3 million barrels to 422 million barrels in the week ending Nov. 15.[CFTC/] (Additional reporting by Henning Gloystein in SINGAPORE and Amanda Cooper in LONDON; Editing by Marguerita Choy and David Gregorio)
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