Oil prices edge up Friday, but are down nearly 4 per cent on week

Oil prices rose in trading on Friday, but are continue to sit near a 10-month low. Shell photo.

Oil prices boosted by weak US dollar

Oil prices rose slightly in trading on Friday as a weaker US dollar helped boost the value of crude, but overall oil remains down for a fifth straight week and hovers near a 10-month low as investors concerns about the global glut outweigh OPEC’s efforts to cut production.

Brent futures were up 15 cents to $45.37/barrel by 1:48 p.m. and US WTI crude was up 11 cents to $42.85/barrel.

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Oil prices pared earlier gains after Baker Hughes released its weekly rig count.  For the week ending June 23, the US rig count was up by 11, the biggest increase in three weeks.

“The higher rig count this week reflects decisions made a couple of months ago when oil prices were higher,” James Williams, president of WTRG Economics told Reuters.  He added that he expects the rig count to fall over the coming months as slump in oil prices continues.

According to Reuters, both Brent and WTI were on track to decline for a fifth straight week, which would be among the longest slumps for the front-month contracts since August 2015.

The US dollar dropped 0.3 per cent against a number of currencies and is on track for its biggest daily percentage decline since early June.  Weaker-than-expected US economic data is blamed for the decline.

The decline in US currency helped boost greenback-dominated crude prices.

Since the beginning of the year, oil prices are down by about 20 per cent, despite OPEC’s supply cut agreement.  This puts the market on track for its biggest first-half percentage fall since the late 1990’s when rising output and the Asian financial crisis led to sharp losses.

Reuters reports analysts at Bank of America Merrill Lynch said in a note on Friday “We doubt that demand growth will accelerate sufficiently to break the current downward price momentum.”  The firm cited surprisingly weak recent economic data in the United States, China and Asia.

Increasing US shale production and rejuvenated output from Nigeria and Libya have frustrated OPEC’s efforts to get a handle on the global crude oversupply.

“Rising U.S. output continues to stress markets, with increasing evidence that improved efficiency and technology makes many of the shale plays profitable below $40 a barrel,” analysts at Cenkos Securities wrote.