Oil prices slid on Friday, dragged by a strong dollar and uncertainty over whether OPEC will agree to cut production at the group’s meeting next week, but benchmark contracts were on track to close the week with gains close to 4 percent.
Brent crude futures were trading at $48.55 a barrel at 1046 GMT (5:46 a.m. ET), down 45 cents.
U.S. crude futures fetched $47.56 a barrel, down 40 cents. Overall activity on both contracts was thin after the U.S. Thanksgiving holiday and ahead of the weekend.
The main drag on prices was the dollar, which this week hit levels last seen in 2003 against a basket of other currencies. A strong dollar could crimp fuel demand due to higher costs for holders of other currencies.
Reports that state oil giant Saudi Aramco would in January increase oil supplies to some Asian customers also cast a shadow on markets, traders said.
A decline in China’s October crude oil imports to their lowest on a daily basis since January added to the bearish tone.
But analysts said fundamentals were little changed – apart from concerns over the fate next week of a Saudi-led plan for the Organization of the Petroleum Exporting Countries and other producers to agree on cuts in crude output.
The market “is taking it easy ahead of a long weekend (in the United States) and uncertainty over OPEC,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank in Oslo. “There is no other big bearish news.”
Schieldrop said prices could rebound if the Nov. 30 meeting succeeded in reaching a targeted production cap of 32.5 million to 33.0 million barrels per day (bpd), from the 33.64 million bpd the group pumped in October.
On Thursday, the oil minister of non-OPEC nation Azerbaijan said OPEC was also pushing oil producers outside the group to make big cuts in output.
Most analysts expect some form of cut, but it is uncertain whether that would be enough to prop up a market dogged by oversupply since 2014.
“Oil market reaction will hinge on the credibility of the proposed action,” U.S. investment bank Jefferies said, adding that recent output increases to record levels in many countries now required a deep cut to lift prices significantly.
“The surge in OPEC output since August has shifted the market back into oversupply and re-balancing will be deferred until the second half of 2017 without a cut of at least 700,000 barrels per day.”