Oil prices rallied again on Friday after a one-day pause, buoyed by strong US jobs data and technical buying after crude prices breached resistance levels on charts. Prices got an additional boost when data showed the US oil rig count fell by eight this week, an 11th straight week of declines, traders said. Brent futures, the global benchmark for crude, were up $1.55, or 4.2 percent, at $38.62 a barrel by 1:20 pm EST (1820 GMT).
US crude's West Texas Intermediate (WTI) futures rose by $1.23, or 3.5 percent, to $35.80. Brent was on track to rise for a second straight week and US crude a third straight. Both were up about 10 percent from a week ago. Oil rallied the first three days of the week and settled mixed on Thursday. Charts for Brent and WTI showed their Relative Strength Index (RSI) at above 60, heading toward the overbought level of 70.
Prices have spiked nearly 40 percent from 12-year lows hit less than two months ago, rallying after global oil producers began talking three weeks ago of a plan to freeze output at January's highs. An oversupply of 1 to 2 million barrels per day knocked oil off its long-standing perch above $100 a barrel in mid-2014. "We have seen another 12 million barrels arrive in the Gulf of Mexico this week from the Arab Gulf, and another 11.4 million from Central and Latin America," said Matthew Smith, who tracks crude cargoes for New York-based Clipper Data. "All these while we continue to see a backlog of cargoes in the Gulf of Mexico, more than double volumes we usually see." US crude inventories rose last week to a record high of 517.98 million barrels even as output fell for a sixth straight week, the US Energy Information Administration said.
"Despite bearish inventory data, the market is looking for green shoots and reasons to head higher," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.
Oil rose after data from the Labor Department showed a surge in US jobs growth for February. The rally intensified after WTI breached $35 technical resistance. David Thompson at Washington-based commodities broker Powerhouse said WTI had to settle above $35 for the run-up to sustain. "If the bulls fail to muster that strength, I suspect there are many potential sellers hoping to drive it back down," Thompson said. "Friday closes bear extra weight because traders must live with their choices over the weekend.
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