Crude futures settled higher, the first gains in three days, with gains for the benchmarks intensifying late in the day after a report was released that showed that the number of US rigs actively drilling for oil fell for the 26th straight week last week.
Light sweet crude for July delivery ended $1.13 or 2% higher at $59.13 a barrel on the New York Mercantile Exchange. It however fell 1.9% for the week, the first decline for the front month contract since March 13.
Brent Futures, the Global benchmark settled $1.28 or 2.1% higher at $63.31 on the London ICE Futures Exchange.
The global benchmark however settled 3.4% lower for the week weighed down by losses before the OPEC meeting on wagers that the cartel would cut their output levels.
“Leaving production levels as they are does nothing to change fundamentals, yet there will be a lot of talk how the market is facing a changed landscape,” Darin Newsom, DTN senior analyst, told Market Watch.
The drop in active rigs outweighed pressure on the commodity from the meeting by the Organization of Petroleum Exporting Countries and A robust dollar which had limited gains in choppy trading earlier in the day.
OPEC countries, producers of about a third of the world’s crude, agreed in their meeting in Vienna to maintain their production levels for the next six months to maintain their market share despite pressure from other producers citing the ongoing oil glut.
“I guess some people wanted to take their oil shorts off before the weekend and put them on again next week,” Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York, told Reuters.
“Otherwise how do you have a runup on a day like this, when OPEC promises to flood the market with more supply?”
The dollar had limited gains earlier on the day after gaining more than 1% on the better than expected monthly non-farm payrolls data.
A stronger dollar is bullish for the demand of commodities denominated in dollars like oil as it makes them more expensive for holders of foreign currencies.
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