By Timothy Puko
Oil prices inched lower Wednesday with a surging dollar outweighing a public commitment from Iraq's oil minister to cut production along with OPEC.
Light, sweet crude for January delivery settled down 7 cents, or 0.1%, to $47.96 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 17 cents, or 0.3%, to $48.95 a barrel, snapping a three-session winning streak.
A rising dollar makes dollar-denominated commodities like oil more expensive for traders who are based in countries using other currencies, and those commodities often fall as the dollar rises. Oil and the dollar have had an especially strong tie during large stretches of the past year, and a rising dollar has been one of the biggest factors pulling oil back from the highs it hit in mid-October.
Those highs have come from members of the Organization of the Petroleum Exporting Countries publicly agreeing to push for a deal to cut production when they meet next week in Vienna. But the market has already anticipated that and OPEC has to confront the possibility traders won't keep bidding up the market without something exceptional, said John Saucer, vice president of research and analysis at Mobius Risk Group in Houston.
"No matter what they do, they're going to be facing dollar headwinds. There are going to be more days like today," he added. "We don't know what (the dollar) is going to do. We haven't seen days like these for a while."
Orders for durable goods -- products designed to last longer than three years, such as trucks, computers and metals -- rose 4.8% to a seasonally adjusted $239.4 billion from a month earlier, the Commerce Department said Wednesday. The rise was nearly double what analysts expected.
The Wall Street Journal Dollar Index, which tracks the greenback against a basket of other currencies, climbed about 1% at its peak above 92, hitting its highest level since 2002.
Whether OPEC can strike a deal has been central to oil trading since they first agreed back in September that cutbacks are needed. But many traders have been skeptical about the group's ability to complete a deal, or even cooperate enough to stick to one they do set, with some remaining doubtful even after the Iraqi oil minister's comments Wednesday.
"Iraq is ready to cooperate with OPEC and cut production," Jabbar al-Luaibi told The Wall Street Journal.
Iraq and Iran have been at the forefront of a group of countries claiming they deserve exemptions and that other OPEC members should lead the cuts. If they participate, it makes the cartel more likely to complete a deal significant enough to reduce production so that it starts to fall short of demand by the second half of 2017, said Bart Melek, head of commodity strategy at TD Securities in Toronto. That supply shortage would lead stockpiles to really drain and give bulls the rally they are betting on.
"Whether (Iraq and Iran) are part of the agreement is a pretty important thing," Mr. Melek said. "It suggests there's a consensus building."
U.S. crude stockpiles also fell by 1.3 million barrels in the week ended Nov. 18, a surprise for many analysts who had expected an addition to stockpiles. Analysts surveyed by the Journal had forecast an addition of 800,000 barrels. Many bullish traders are waiting for bloated stockpiles to drain, expecting that could be the tipping point for prices to go on a strong rally.
"It's a step in the right direction," said Scott Shelton, brokerat ICAP PLC. "But I don't think they're significant enough to take our eyes off of OPEC at this point."
Gasoline futures gained 1.19 cents, or 0.8%, to $1.4217, the highest settlement in nearly three weeks after four gains in five sessions. Diesel futures lost 0.94 cent, or 0.6%, to $1.5169 a gallon, snapping a four-session winning streak.
Selina Williams, Eric Morath, Anna Louie Sussman and Chelsey Dulaney contributed to this article
Write to Timothy Puko at email@example.com
(END) Dow Jones Newswires
November 23, 2016 15:43 ET (20:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.