Oil up nearly two percent on weaker dollar, short-covering

Oil up nearly two percent on weaker dollar, short-covering

Oil up nearly two percent on weaker dollar, short-covering

U.S. West Texas Intermediate crude futures were up 17 cents at $43.18 per barrel. US crude drillers added rigs for a 23rd straight week, the longest stretch in at least three decades, according to data Friday from Baker Hughes Inc.

Figures of USA crude inventory are expected later today, which could determine if the market's gains stand to extend further.

The latest inventories data will move back into focus in the short term with the API data on Tuesday and official EIA release on Wednesday.

Brent crude oil futures rose 0.29 dollar or 0.64 percent to close at USD 45.83 a barrel at NYMEX.

Global oil prices have been dropping in recent months despite an agreement between members of the Organization of Petroleum Exporting Countries (OPEC) and nonmembers to cut production. "Just as a floor appears to be coming in near $40, I think there is also a ceiling in the $50-55 area because higher prices encourage more US production and exploration". OPEC nations and 11 other exporters agreed in May to extend cuts of 1.8 million barrels per day (bpd) until March 2018.

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The result has lead markets to assume markets it will now be even harder for OPEC to agree on further cuts in oil production. While inventories have steadily declined since then, American oil production has climbed above 9.3 MMbpd to the highest level since August 2015.

Brent for August settlement was up $0.67 at $46.50/bbl on the Europe exchange, and traded at a $2.57 premium to WTI.

Analysts at Bank of America-Merrill Lynch said demand had not grown quickly enough to absorb excess output.

Iran, which was given a small increase so it could recover market share lost while under Western sanctions, said its production has surpassed 3.8-million bpd and is expected output to reach 4 million bpd by March. "It will depend on the weekly USA inventory data".

OPEC delegates said the cartel will not rush into making a further cut in output or end some countries' exemptions from output limits, although a meeting in Russian Federation next month is likely to consider further steps.

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