Oil prices rose Friday as hopes grew that major oil producers would be able to strike a deal to cut output and stabilize prices.
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Oil markets have been in a tug of war this week amid a flurry of diplomacy among major producers trying to implement production cuts. But several factors have weighed on prices -- persistent skepticism that the Organization of the Petroleum Exporting Countries will reach such a deal by its Nov. 30 meeting, a strengthening U.S. dollar and data showing an unexpectedly large increase in U.S. oil supplies.
"There's a lot of rhetoric out there, but you can't ignore what happened with the inventory numbers, and the dollar is a massive headwind," said Tariq Zahir, managing member of Tyche Capital Partners.
West Texas Intermediate futures wavered between gains and losses during the day, before settling higher, posting a weekly gain for the first time since mid-October. U.S. oil prices rose 27 cents, or 0.59%, to settle at $45.69 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 37 cents, or 0.8%, to $46.86 a barrel on London's ICE futures exchange.
The Wall Street Journal reported Friday that Iraq's oil minister said he is optimistic about the prospects for an agreement, and that some of the country's issues with the deal have been hashed out. The statements signaled a change of tone, as Iraq had seemed to be the cartel's most intransigent member in recent weeks.
Gene McGillian, research manager at Tradition Energy, said he expects prices to stay close to the $45 level until the deal's fate becomes clear.
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"The market is showing it's uncertain about what's going to happen," Mr. McGillian said.
The market has been particularly sensitive to statements coming out of Doha this week, where talks between OPEC members on the sidelines of a gas forum were expected to give some indication of progress toward a deal to cut oil production to between 32.5 million and 33 million barrels a day, from record levels of around 33.83 million barrels a day in October.
Russian Energy Minister Alexander Novak said talks between OPEC and non-OPEC members had proved "positive," according to Interfax news agency.
Saudi Energy Minister Khalid al-Falih told Saudi-owned Al Arabiya television on Thursday that he is "optimistic" that OPEC's members will formalize the tentative deal they reached in September and set production limits for individual countries.
But observers are skeptical about a quick outcome.
"There is a lot of uncertainty on OPEC's ability to reach an outcome," said Peter Lee, Asia oil and gas analyst at BMI Research. "I am personally not optimistic."
The impact of any agreement between OPEC members to lower production could also be offset by surging output from non-OPEC producers, such as Russia, where production hit a post-Soviet high of 11.2 million barrels a day in October.
"Russia has earlier spoken with mixed voices regarding joining OPEC in an output cut or freeze," said Michael Poulsen, oil risk manager at Global Risk Manager.
Worries about growing supplies in the U.S. held prices back this week. Oil-field services firm Baker Hughes Inc. reported Friday that another 19 oil rigs went to work in U.S. fields this week.
Oil markets were also under pressure from a strengthening U.S. dollar after comments from Federal Reserve Chairwoman Janet Yellen raised expectations that the central bank will raise interest rates next month. A stronger dollar makes oil more expensive in other currencies.
The WSJ Dollar Index was up 0.46% Friday, extending its rally.
Gasoline futures fell 0.39 cent, or 0.29%, to $1.3391 a gallon. Diesel futures rose 1.07 cents, or 0.74%, to $1.4577 a gallon.
Selina Williams and Benoit Faucon contributed to this article.