Oil edges up on equities rebound, weak dollar

Oil prices rose slightly on Friday, touching eight-day highs before paring gains, as a rebound in the global equities market and a weak dollar supported crude's recovery from last week's slide. Brent crude was up 48 cents, or 0.73 percent, at $64.81 per barrel by 1:53 p.m. EST (1853 GMT). The global benchmark was on track to end the week up more than 3 percent after a decline of more than 8 percent last week.
US West Texas Intermediate crude rose 26 cents, or 0.43 percent, to $61.60 having touched $61.94, the highest price since last Thursday earlier in the session. WTI was set for a weekly gain of more than 4 percent after losing nearly 10 percent last week.
"After such a sharp drop that we saw prior to Wednesday, perhaps a recovery was due," said Tony Headrick, an analyst at CHS Hedging LLC. "However, you look at rig counts like what we saw today with the number of US oil rigs increasing by seven, that's a point that should cap an extreme advance in prices," Headrick said.
Data for the US rig count, an early indicator of future output, was published at 1 p.m. EST. The number of rigs rose by seven to reach 798, the highest in three years.
This week's recovery has been supported by a strong equity market and a weak dollar.
World shares were set for their best week of gains in six years after two consecutive weeks in the red, while the dollar hit its lowest since 2014. A weaker dollar can boost oil and other dollar-denominated commodities.
"I don't want to underestimate what the dollar is doing. The weaker dollar has been extremely supportive to crude," said Bill Baruch of Blue Line Futures.
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 year-end.
The Organization of the Petroleum Exporting Countries and some other producers including Russia have been restraining production by 1.8 million barrels per day (bpd). 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, making it a bigger producer than Saudi Arabia. A little-noticed addition to the US budget deal approved last week was also expected to further boost US crude production by more than tripling a tax credit to producers for injecting carbon dioxide back into the earth to increase output.