Oil near one-week high on weak dollar, stocks rally
LONDON/TOKYO: Oil prices gained on Friday as the dollar slipped to a three-year low and global stocks headed for their biggest weekly gain in six years.
US West Texas Intermediate crude for March delivery was up 6 cents at $61.40 a barrel by 1110 GMT, after touching a one-week high of $61.89. Activity was subdued as many Asian markets were closed for the Lunar New Year holiday.
For the week, the US crude contract has risen about four per cent after losing nearly 10pc last week.
London Brent crude was up 15 cents at $64.48. Brent is up nearly 3pc for the week after falling more than 8pc last week.
"Oil is getting support from a rebound in global stock markets and a weak dollar, but the upside is limited due to a projection for rising US production," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
The dollar slipped to a three-year low against a basket of currencies on Friday but later regained some ground. A weaker dollar often boosts oil and other dollar-denominated commodities.
World shares were set to post their best week of gains in six years after two consecutive weeks in the red.
Also supporting oil prices was a statement from the United Arab Emirates energy minister late on Thursday saying oil producers led by Saudi Arabia and Russia aimed to draft an agreement on a long-term alliance by the year-end.
OPEC and some non-OPEC producers including Russia have been restraining production by 1.8 million barrels per day (bpd) to prop up prices. The arrangement expires at the end of 2018.
However, surging US production is offsetting those efforts. US crude output hit a record 10.27 million bpd last week, the Energy Information Administration said on Wednesday, making it a bigger producer than Saudi Arabia.
"Drilling activity in the US continues to pick up ... Adding to this, producers appear to be more efficient than they were mid last year," ING said in a note, adding that rising US supplies and the liquidation of speculative longs were likely to keep oil prices under pressure.