Oil climbs in volatile trading, propped up by weaker dollar
Oil prices rose about 1% in choppy trading on Friday, a day after its biggest gains in a month, as a weaker denominating currency, the US dollar, helped support crude.
The dollar weakened after US retail data showed sales were flat for July, against expectations of a modest rise. Against a basket of currencies, the dollar traded 0.3% lower.
Brent crude futures were 39 cents a barrel higher at $46.43 a barrel, a 0.9% gain, up from a three-week high of $46.66 earlier in the day.
US West Texas Intermediate (WTI) crude rose 50 cents to $43.99 after touching its highest level since July 25 at $44.17 per barrel.
Both price benchmarks rose more than 4% on Thursday after Saudi Arabia's energy minister Khalid Al Falih said that oil producers would discuss potential action to stabilize oil prices during a meeting next month in Algeria.
"Although we regard such an agreement, let alone its implementation, as unrealistic, it’s dampening fears of a continuation of the OPEC price war," Commerzbank said in a note.
Iran slashed its September official selling price for light crude to Asia by $1.30 a barrel, the latest sign that exporters are willing to accept discounts in return for market share.
An outlook published by the International Energy Agency (IEA) that said it expected the supply and demand balance to tighten towards year-end also supported prices.
Traders said a drop of 8.1% in China's oil output in July, to a five-year low of 16.72m tonnes, also lifted prices because it would mean Asia's biggest economy has to import more crude.
"As both a consumer and a refiner of oil - the country's refineries processed 2.5% more crude oil than last year in July - China is thus contributing to the tightening of the oil market," Commerzbank said.
Oil prices are still more than 12% below their last peak in June, as brimming storage tanks and production that exceeds consumption weighs on markets.
Prices have, however, recovered since US crude fell below the $40 a barrel level early this month.
Courtesy: gulf-times.com
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