By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices rose about 1 percent on Friday, trading within a narrow range, on hopes that non-OPEC producers meeting in Vienna over the weekend would agree to cut output to bolster the group's own agreement to limit production.
A strong U.S. dollar (DXY) pressured oil, keeping both crude benchmarks nearly 2 percent below the highs reached late last month after the Organization of the Petroleum Exporting Countries (OPEC) announced plans to cut production. [USD/]
On Saturday, OPEC oil ministers will meet non-OPEC producers in Vienna to seek help in curbing a global glut.
U.S. crude's West Texas Intermediate (WTI) futures (CLc1) for January delivery rose 66 cents to $51.50 a barrel, a 1.3 percent gain by 12:35 p.m. EST (1735 GMT). Brent crude (LCOc1) futures for February delivery rose 35 cents to $54.24 a barrel, a 0.7 percent gain.
Brent hit a session high of $54.46 and a low of $53.77 a barrel while WTI traded at a high of $51.66 and a low of $50.86.
Both contracts were on track for their first weekly loss in four weeks.
Oil retreated from session highs as the U.S. dollar rose against a basket of currencies, making crude more expensive to many buyers. (DXY) The market was still watching for U.S. oil rig counts, to be issued by oil services firm Baker Hughes at 1:00 p.m. EST (1800 GMT).
Many market watchers questioned how willing non-OPEC countries could be to cut output. Russia has said it would cut 300,000 barrels per day, meaning other non-OPEC producers combined would need to pledge the same amount to lower output by the 600,000 bpd OPEC wants. Russia's No.2 oil producer Lukoil said it was ready to take part in output cuts.
Azerbaijan and Kazakhstan have also expressed willingness to cut output.
Russia plans to hold more talks on Friday with some OPEC and non-OPEC nations about unresolved issues, two Russian sources told Reuters. However, Energy Minister Alexander Novak said there would be no oil talks with OPEC on Friday night.
"We see event odds as skewing towards a slightly positive price impact," Macquarie Research analysts said in a note.
"That said, we believe a status quo outcome that keeps the November deal intact is the most probable scenario and hinges on a repeated commitment from Russia (300,000 bpd). In addition to potential cuts from Oman, this scenario could also include softer commitments due to natural declines (e.g. Mexico) or other less credible cuts."
Mexico could contribute as much as 150,000 bpd to the Non-OPEC oil cuts, a source told Reuters.
OPEC last week agreed to slash production by 1.2 million bpd in the first half of 2017.
Saudi Arabia and Iraq plan to supply full contracted volumes of crude to Asia in January, in an effort to retain market share in Asia, but Saudi Arabia ordered supply cuts to U.S. and European buyers.