Crude oil prices dropped Friday as a stronger dollar weighed on the market and an industry report showed U.S. oil drillers continue to ramp up activity with prices holding above $50 a barrel.
Global benchmark Brent crude fell 6 cents to $51.97 by 2:38 p.m. ET (1838 GMT), having risen as high as $52.55 earlier in the session.
U.S. crude settled down 9 cents at $50.35 a barrel, closing the week up 1.1 percent.
Prices were little changed after Baker Hughes reported U.S. drillers added four oil rigs in the last week, marking the 15th increase in 16 weeks. The total number of oil rigs operating in U.S. fields stood at 432, compared with 595 at this time last year.
The U.S. benchmark saw better support than Brent due to an extended outage on a pipeline capable of delivering 450,000 barrels per day of crude into the Cushing, Oklahoma delivery hub for WTI, traders said.
Both Brent and WTI rose in the previous session, continuing their recent upward momentum, despite the U.S. government reporting the first domestic crude inventory build in six weeks. Market participants focused instead on larger-than-expected drawdowns in diesel, gasoline and other stockpiles reported by the U.S. Energy Information Administration.
But in the latest session, a rallying dollar, which rose nearly 0.5 percent, weighed on the greenback-denominated crude, making it costlier to holders of the euro and other currencies.
Concerns about the near 5 million-barrel crude build reported by the EIA on Thursday also forced crude prices to retreat.
“The fundamental backdrop is still bearish,” said Commerzbank analyst Carsten Fritsch. “Every increase is driven by speculation and optimism,” rather than an actual tightening of supplies, he said.
U.S. crude’s structure gained support from the extended outage of a pipeline capable of delivering 450,000 barrels per day of crude into Cushing, traders said.
Oil prices have trended higher since Sept. 27, with Brent gaining about 13 percent and hitting one year highs above $53, after the Organization of the Petroleum Exporting Countries announced its first planned output cut in eight years.
OPEC plans to rein in a global supply glut that forced crude to crash from mid-2014 highs above $100 and has asked other major producers, including Russia, to join in cutting output.
However, lack of much detail in the initial agreement, such as how much each of the 14 members can pump and the scale of any contributions from non-OPEC countries, has left analysts skeptical.
OPEC itself has been producing at record highs most of this year, making traders and investors skeptical of its target.
“We are doubtful that OPEC’s efforts, even if successful in achieving a targeted 32.5 million bpd in collective output, will prove sufficient to materially alter the global oil balance and deliver a substantial reduction in oil inventories,” BNP Paribas said in a report.
Source: Reuters
