Oil prices jumped on Friday with U.S. crude up 4 percent after the dollar fell on interest-rate uncertainty, lifting demand for dollar-denominated commodities from holders of other currencies.
Continue Reading Below
Benchmark Brent oil snapped two straight weeks of losses while U.S. crude had its first positive week in five. Iran's struggle to reach a nuclear deal with world powers also supported oil prices, since it looked as if sanctions on its oil exports would continue.
Contract expiry in U.S. crude added momentum. Traders and investors tried to narrow the price difference between the expiring April contract in U.S. crude and nearby May, which will become front-month from Monday.
"In our view, today’s strength is paper market tightness, unrelated to the physical market," Tim Evans, energy futures specialist in New York for Citi Futures said, referring to the general view that there was too much oil in the world.
Brent's front-month May contract closed up 89 cents, or 4 percent, at $55.32 a barrel. It rose 1.2 percent on the week.
U.S. crude for April settled up $1.76, or 1.6 percent, at $45.72. It gained 2 percent on the week.
Brent's premium over U.S. crude narrowed to below $9 a barrel from a high of nearly $11 the previous week. Technical analysts said the spread, one of the biggest volume trades in the oil market, could eventually blow out to above $30.
The dollar was lower as a Federal Reserve statement on Wednesday fed the view that the U.S. central bank is in no hurry to raise interest rates. [USD/]
The euro was up more than 1 percent against the dollar as leaders of Greece and Germany struck a conciliatory note over efforts to keep Greece in the euro zone, although Athens was told to adhere to strict aid terms.
Oil services firm Baker Hughes reported a new four-year low in the number of rigs drilling for oil in the United States. Still, this week's rig declines were smaller than drops in the past two weeks, and prices barely budged on the data. [RIG/U]
(By Barani Krishnan; Additional reporting by Ron Bousso and Himanshu Ojha in London and Jessica Jaganathan in Singapore; Editing by Ruth Pitchford, David Evans, Peter Galloway and Tom Brown)