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Oil up 3 as dollar rally stalls US inventories ease
(MENAFN- Arab News) NEW YORK: Oil rose more than 3 percent on Friday as a rally in the dollar faded and as data from Thursday that showed a fourth straight weekly drop in US crude stockpiles helped drive the market.
Crude prices however were still on track to finish the week and the month lower on concerns that the world remains awash in oil.
With the Organization of the Petroleum Exporting Countries widely expected not to cut production at its June 5 meeting prices could see more pressure especially if the dollar surges again traders said. Oil is traded in dollars and the greenback's strength helps determine demand for the commodity from holders of other currencies.
Traders were also awaiting the latest weekly reading on the US oil rig count to try to gauge whether US crude output will rise.
Brent was up $2.10 or 3.4 percent at $64.68 a barrel at 12:05 p.m. US crude was up $1.90 or 3.2 percent at $59.58.
The dollar was flat against a basket of major currencies n Friday after having risen 2.5 percent this month.
'The dollar is not standing in front of crude today and that's helping' said Bob Yawger director of energy futures at Mizuho Securities in New York.
A rally in gasoline and ultra-low sulphur diesel before the expiration of their prompt contracts also helped crude's gains traders said.
That aside the market was driven by US government data on Thursday showing a higher-than-expected decline of 2.8 million barrels in domestic stockpiles last week.
Friday's rally was not enough to wipe out sharp crude losses earlier in the week.
Brent was showing a decline of 1 percent on the week and 3 percent on the month.
US crude was headed for its first weekly loss of about 0.3 percent after 10 straight weeks of gains. It was down 0.3 percent for May as well.
Analysts say oversupply in oil markets outside the US offers little room for a continued rally in spot crude.
OPEC is expected to maintain a collective output target of 30 million barrels per day but produce more than 1 million bpd above that. Demand for its oil is lower leaving an estimated surplus above 2 million bpd.
Crude prices however were still on track to finish the week and the month lower on concerns that the world remains awash in oil.
With the Organization of the Petroleum Exporting Countries widely expected not to cut production at its June 5 meeting prices could see more pressure especially if the dollar surges again traders said. Oil is traded in dollars and the greenback's strength helps determine demand for the commodity from holders of other currencies.
Traders were also awaiting the latest weekly reading on the US oil rig count to try to gauge whether US crude output will rise.
Brent was up $2.10 or 3.4 percent at $64.68 a barrel at 12:05 p.m. US crude was up $1.90 or 3.2 percent at $59.58.
The dollar was flat against a basket of major currencies n Friday after having risen 2.5 percent this month.
'The dollar is not standing in front of crude today and that's helping' said Bob Yawger director of energy futures at Mizuho Securities in New York.
A rally in gasoline and ultra-low sulphur diesel before the expiration of their prompt contracts also helped crude's gains traders said.
That aside the market was driven by US government data on Thursday showing a higher-than-expected decline of 2.8 million barrels in domestic stockpiles last week.
Friday's rally was not enough to wipe out sharp crude losses earlier in the week.
Brent was showing a decline of 1 percent on the week and 3 percent on the month.
US crude was headed for its first weekly loss of about 0.3 percent after 10 straight weeks of gains. It was down 0.3 percent for May as well.
Analysts say oversupply in oil markets outside the US offers little room for a continued rally in spot crude.
OPEC is expected to maintain a collective output target of 30 million barrels per day but produce more than 1 million bpd above that. Demand for its oil is lower leaving an estimated surplus above 2 million bpd.
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