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Oil prices were advancing on Friday morning in a relatively calm trade, as a weaker dollar was helping oil futures set the stage for a weekly gain after last week’s sharp drop.
As of 9:07AM (ET) on Friday, WTI Crude traded up 0.59 percent at $49.04, while the price of Brent was up 0.50 percent at $52.
On Wednesday this week, oil prices finally looked up after the EIA reported a slim decline in record inventories, but still, a first drawdown in 10 weeks – even if a mere 200,000 barrels.
Also on Wednesday, the International Energy Agency (IEA) said that it sees an implied deficit of 500,000 bpd for the first half at current production levels and supply and demand fundamentals, despite the fact that OPEC’s relentless output increase before their November deal led last month to the first global stocks increase in six months.
This week’s widely expected Fed rate hike also helped lift the price of oil, as the U.S. dollar dropped because of the not-as-hawkish-as-expected Fed statement that it would be looking for two more rate hikes this year, against investors’ expectations for at least four hikes in 2017.
In terms of oil supply and demand, the market is still weighing the impact of the rising U.S. shale production against OPEC’s cuts, and if the growing American output is not upsetting the cartel’s efforts to curb supply, rebalance the market and lift prices.
Related: Why Last Week’s Oil Price Crash Was Inevitable
Reports continue to expect that U.S. output will be rising, with the EIA seeing April production up by 109,000 bpd, while OPEC continues to stick to the tune ‘we’ll extend the deal if need be’, with only hints on what’s brewing in the Middle East, as always.
Later today oil prices may find additional support, or turn lower, when Baker Hughes releases its weekly U.S. rig count report. Last week’s oil rig count increased by eight sites, bringing the total to 617 active oil rigs – the highest since the end of September 2015.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.