Oil prices reach 2016 highs
World oil prices struck 2016 high points this week as a weaker dollar attracted buyers to a market struggling to overcome a global supply glut.
Dollar-denominated oil has become more attractive for buyers of rival currencies despite lingering concerns about excess output, thanks to the US unit falling heavily, particularly against the yen.
The dollar’s fall comes as the US Federal Reserve held interest rates unchanged at its policy meeting on Wednesday, signalling it was in no hurry to raise borrowing costs.
The dollar has since fallen sharply against the yen after the Bank of Japan decided against additional stimulus measures for the struggling Japanese economy.
On Friday, the Brent oil contract reached $48.50 a barrel — the highest level since early November.
US benchmark West Texas Intermediate (WTI) hit a near six-month peak at $46.63.
Brent is meanwhile on course for its best monthly gain since May 2009, noted David Cheetham, analyst at trading firm XTB, on the final trading day of April.
“The 22 percent rise so far in April has seen the market move back above the $48 handle for the first time since early November,” he added.
Around 1300 GMT, Brent North Sea crude for delivery in June was slightly off Friday’s high, though still up nine cents compared with Thursday’s close, at $48.23 a barrel.
WTI for June stood at $46.49, up 46 cents.
“Nothing appears capable of stopping the surge in oil prices at the moment,” Commerzbank analyst Carsten Fritsch said this week.
“Attention is paid to any news that fits in with the general picture of rising prices, whereas any news that does not is largely ignored,” he added.
Oil prices has won support in recent days also from speculation that Saudi Arabia is planning to cut back drilling as the market worries about excessive global supplies.
The market “seems to have got an extra boost from a report out of Nabor Industries’ earnings call”, said Bob Yawger of Mizuho Securities.
Yawger said the drilling company claimed that the Saudis have plans to reduce their rig counts by 10 percent.
Earlier this month, major crude producers, including OPEC kingpin Saudi Arabia, failed to agree in Doha to curbing crude output.
Oil prices meanwhile endured brief pressure midweek after the US Energy Department reported that commercial crude stockpiles in the United States jumped by two million barrels last week, slightly more than analysts had expected.
The oil market is recovering after nosediving to 13-year lows of around $27 in February, in the wake of a sustained drop from above around $100 seen two years ago.