PETALING JAYA: Oil prices are on a rebound, edging closer to US$50 a barrel in the international market, amid renewed optimism about a looming production cut by major producers.

But the higher price of crude oil failed to lift sentiment on the ringgit. The local currency’s exchange rate weakened to 4.421 against the US dollar yesterday.

Malaysia is the only net oil-exporting country in the region, which makes it a beneficiary to the rising price of crude oil.

Brent crude futures, the global benchmark, rose above US$49 in intraday Asian electronic trade, while US benchmark West Texas Intermediate (WTI) traded near US$49 per barrel on high hope that the Organisation of the Petroleum Exporting Countries (Opec), together with Russia, will agree to cap production.

The arguments for crude price gains remain the same, that Opec’s move to cut production will help to support prices more convincingly.

A technical analyst said oil prices have been trending up the past week.

“The immediate resistance is around the US$51 to US$52 levels, that’s about it unless Opec agrees on the production cuts,” he told StarBiz.

There could be strong pressure on Opec to come to an agreement soon, given that president-elect Donald Trump intends to lift restrictions on shale-oil extraction and coal mining on his first day in office.

Already, according to oil-field services company Baker Hughes Inc, US rig counts were up by 20 to 588 for the week ended Nov 18 compared to the prior week.

Also, the US Energy Information Administration will be releasing data on the latest crude stockpile today. US crude oil stockpiles for the week ended Nov 4 released last Wednesday showed that inventories rose more than expected, but despite that, oil prices rose steadily.

An oil analyst warned that prices would start to come off should Opec not reach a deal at the end of the month.

“Prices have risen because of short covering,” he said.

Short covering refers to traders betting that the price of the share or commodity that they bet on will weaken, essentially a hedge. Instead, when prices go up, these traders will have to purchase the same shares or commodities to cover their short positions or lose money.

Opec will meet on Nov 30 in Vienna, Austria, and according to reports, Iran and Russia have said that they may agree to some sort of production limit.

Essentially, analysts said Opec’s strategy to strangle US shale-oil producers by flooding the market and pressuring prices lower have failed. Opec last tried to agree on output limits in June in a meeting also held in Vienna.

Hong Leong Investment Bank Research economist Sia Ket Ee said the uptrend remains intact for oil prices despite the choppy trading and will retest the US$50 to US$52 levels.

He expects WTI to trend higher ahead of the Opec meeting supported by bullish indicators.

He sees the immediate support for WTI at the US$44 to US$47 levels and said in a report that prices may gain traction above US$50 as long as trading does not break below the floor support price of around US$42. However, prices will not rise beyond the July 10 high of US$53.89.