Oil on track for first weekly loss in five weeks on strong dollar

Oil prices fell on Friday as a strong dollar made it more expensive to hold the dollar-denominated commodity, setting contracts up for the first weekly loss in five weeks.

Global benchmark Brent crude futures were 1 cent lower at $51.37 a barrel by 10:04 a.m. ET (1404 GMT). The contract is down about 1 percent for the week.

U.S. West Texas Intermediate (WTI) crude was trading down 23 cents at $50.40 a barrel, and slightly negative on the week. The November contract expired at the close of trading on Thursday.

As the dollar surged to a seven-month high against a basket of currencies, its third straight week of gains, oil prices slipped to set up the first weekly loss since mid-September.

A stronger dollar means dollar-traded commodities become more expensive to hold, making it less attractive for investors to buy them.

Prices defied initial bullishness fed by Russian comments reiterating its commitment to joining a producers’ output freeze to stem a two-year slide in prices.

Russian Energy Minister Alexander Novak said on Friday an oil production freeze agreement was necessary to prop up prices and that he would make proposals to his Saudi Arabian counterpart this weekend.

The Organization of the Petroleum Exporting Countries will hold a meeting on Nov. 30 to find common ground on capping oil production. The cartel is expected to work out how each member country will contribute to a freeze at the gathering.

“Supply cut discussions have stabilized the prices above $50 a barrel. What we see now is somewhat consolidating in a wait-and-see mood,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.

Oil-producing countries are hoping for higher crude prices to boost their economies. Nigeria’s finance minister said on Friday he hoped oil prices would stabilize in a range of $42-50 a barrel.

“The near term fundamentals in the oil market have turned positive. Demand is stabilizing, OPEC production has peaked (and will fall if cuts are implemented), and global inventory declines imply that the market is more balanced than many believe,” Neil Beveridge of Bernstein Energy said in a note to clients.

But Olivier Jakob, oil analyst at Petromatrix said: “We have been cautious in the current (oil) flat price rally, based on our forecast of an OPEC supply surge in the fourth quarter and a widening of the Brent contango.”