Oil Touches 3-Week High

Oil prices rose on Monday to their highest in three weeks, catching a lift from a softer US dollar and from cautious money managers, as OPEC appeared to be moving closer to reaching an agreement to cut output when it meets next week.

Brent crude futures were up 60 cents at $47.46 a barrel, having touched their highest level since Nov. 2, while US West Texas Intermediate futures were up 52 cents at $46.21 a barrel, Reuters reported.

"Oil is already more than 1% higher on the day, helped by (Russian President) Vladimir Putin’s belief that an output deal will be reached later this month," OANDA markets strategist Craig Erlam said.

"While loose terms may be agreed, I remain skeptical that a full detailed agreement can be both achieved and carried out by OPEC given the clear differences that are so evident between certain key members."

Meanwhile, the members of the Organization of Petroleum Exporting Countries last week proposed a deal for Iran to cap, rather than cut, output.

Tehran wants exemptions to try to recapture market share lost under years of international sanctions.

Libya and Nigeria, whose exports have been hampered by violence, have also asked to be left out of any deal. A recovery in production from both countries means the onus to cut rests on Saudi Arabia and its Persian Gulf neighbors.

Barclays analysts said some form of deal was likely, but warned an agreement could have little impact.

"We expect OPEC to agree to a face-saving statement ... (but) US tight oil producers can grow production at $50-$55 (per barrel) and will capitalize on any opportunity afforded to them by an OPEC cut," the bank said.

Hedge funds raised their net holdings of US crude futures and options for the first time in three weeks in the week to Nov. 15, having delivered one of the largest cuts on record the previous week.

The move highlights the nervousness among investors about betting heavily on oil in either direction.