UPDATE 9-Oil rises on report of Saudi proposal to balance market next year

* Saudis to propose 1 mln bpd output cut for 2016 - report
* Saudi oil source tells Reuters report is "baseless"
* Iran oil minister dismisses production limit on Tehran
* Britain starts Syria military action by bombing oil fields

(Adds analyst comment, updates prices)
By Karolin Schaps
LONDON, Dec 3 (Reuters) - Oil prices rose from near-2015
lows on Thursday after a report sourced to a senior OPEC
delegate said Saudi Arabia would next year propose a deal to
balance oil markets with non-OPEC help.
Benchmark Brent crude futures LCOc1 were up $1.01, or 2.4
percent, at $43.50 a barrel by 1320 GMT. U.S. crude CLc1 was
trading 76 cents higher at $40.70 a barrel, after sinking below
$40 on Wednesday.
Saudi Arabia, which has so far resisted any market
intervention to prop up oil prices, has proposed that the
Organization of the Petroleum Exporting Countries (OPEC) cut
output by 1 million barrels per day (bpd) next year, Energy
Intelligence reported.
A Saudi oil source told Reuters the report was "baseless".

An OPEC production cut would only go ahead if non-members
like Russia, Mexico, Oman and Kazakhstan commit to joint action,
the senior delegate was cited as saying. OPEC ministers are
gathering in Vienna for a policy meeting on Friday.
"Oil prices are rising because of the talk that Saudi Arabia
will propose a global deal to balance the market," Frank Klumpp,
oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg,
said.
Iran's oil minister was quick to dismiss the possibility of
limiting Tehran's production ramp-up once Western sanctions are
lifted. Non-OPEC member Russia said it saw no need for Moscow to
cut oil production.
OPEC sources and analysts said the reported Saudi proposal
would be difficult to agree, as Iraq is struggling to balance
its budget despite soaring output and Iran has long argued its
market share was stolen by rivals during the years of sanctions.
"It is very difficult to cut 1 million bpd collectively.
The Saudis do not want to change their previous talk. No cut
without cooperation," a Gulf OPEC source told Reuters.
Bjarne Schieldrop, chief commodities analyst at Oslo-based
SEB, sees the chance for a unified cut agreed between OPEC and
non-OPEC as very low.
"The chance that the oil price crashes to very low levels in
Q1-16 increases, potentially and eventually driving all parties
to the table to act and bring the oil price away from
catastrophic $20-30/b levels," Schieldrop said.
Oil market investors widely expect OPEC to maintain its
strategy of keeping output high in an attempt to defend market
share. "We expect the OPEC meeting ... to be a non-event, and
member countries are unlikely to agree on any production cuts,"
Barclays (L:BARC) said, cutting its forecasts for Brent and U.S. crude
prices by $3 to $60 and $56 per barrel.
Because of low expectations for market-moving decisions in
Vienna on Friday, other analysts said investors will closely
watch the date to be picked for the next OPEC meeting.
"A next meeting in March will be taken as more supportive
than a next meeting in June," said analysts at consultancy
Petromatrix.
Heightened conflict in the Middle East also supported oil,
with the start of British military intervention in Syria against
Islamic State and its jets bombing the al-Omar oil fields.

Despite Thursday's gains, the oil market remains heavily
oversupplied, underscored by an unexpected weekly buildup in
U.S. inventories. USOILC=ECI .
Oil product supplies are increasing as warmer-than-usual
weather in the U.S. northeast, a major market for heating oil,
limits demand.
A strong dollar, lifted by the prospect of a Federal Reserve
rate hike, has kept oil prices weak, as it makes
greenback-dominated contracts such as crude futures more
expensive for those holding other currencies.