Oil prices extended gains as the ten day dollar rally faded, US inventories declined in the week ending May 22, a report showed a rise in the demand for gasoline and the number of active drilling rigs in the US dropped.
“The dollar is not standing in front of crude today and that’s helping,” Bob Yawger, director of energy futures at Mizuho Securities in New York, told Fox Business.
Light Sweet Crude for July delivery jumped by $2.7 or 4.4% to $60.40 a barrel on the New York Mercantile Exchange. The US benchmark was trading at $59.40 before the weekly inventory data by the US energy Information Administration.
Brent futures, the global benchmark, traded $2.95 or 4.7% higher at $65.53 a barrel on the London based ICE futures Exchange. The contact is in line to record a 0.2% weekly advance.
Data from oilfield services providers on Friday showed that US energy firms cut the number of active drilling rigs by 13 last week showing that a six month slump in activity was yet to end despite a rally in the prices.
Services provider Bakes Hughes Inc reported that this was the 25th straight drop in the number of active oil rigs bringing the total number of active rigs withdrawn from the field to 646-the lowest in five years.
Oil traders have been watching the US oil rig count closely ahead of the Organization of Petroleum Exporting Countries meeting in Vienna next week.
The meeting is widely expected to decide the on the crude output levels for its 12 members with most traders expecting the countries to keep their production levels flat to defend their market share.
Reuters, however, reports that oil prices are set to end the month lower on concerns that the supply glut is still on.
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