Oil Prices Rise Ahead of OPEC Meeting

Dow Jones Newswires

Oil rose 3 percent on Friday, as a rally in the dollar faded and after data from a day ago showed a fourth straight weekly draws in U.S. crude oil stockpiles.

But crude prices were still on track to finish the week and the month lower on concerns that the world remained awash in oil.

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With the Organization of the Petroleum Exporting Countries widely expected not to cut production at its June 5 meeting, prices could see more pressure, especially if the dollar surges again, traders said. Oil is traded in dollars and the greenback's strength determines demand for the commodity from holders of other currencies.

Brent <LCOc1> was up $2, or 3.2 percent, at $64.58 a barrel by 11:13 a.m. EDT (1513 GMT).

U.S. crude <CLc1> rose by $1.70, or 3 percent, to 59.38.

The dollar was almost flat in Friday's trade against a basket of major currencies <.DXY>, after having risen 2.5 percentthis month. [USD/]

"The dollar is not standing in front of crude today and that's helping," said Bob Yawger, director of energy futures at

Mizuho Securities in New York.

A rally in gasoline <RBc1> and ultra-low sulphur diesel <HOc1> before the expiry of their prompt contracts also helped crude's gains, traders said.

That aside, the market was driven by Thursday's U.S. government data showing a higher-than-expected decline of 2.8 million barrels from domestic stockpiles last week, the fourth week in a row for such draws.

Tensions in the Middle East after the Islamic State claimed responsibility for a mosque bombing in Saudi Arabia that killed four people added to the market's support.

Still, Friday's rally was not enough to wipe out sharp losses in crude from earlier in the week.

Brent was showing a decline of 1 percent on the week and 3 percent on the month.

U.S. crude was headed for its first weekly loss of about 0.4 percent after 10 straight weeks of gains. It has dropped 0.3 percent in May.

Analysts say oversupply in oil markets outside the United States gives little room for a continued rally in spot crude.

OPEC is expected to maintain a collective production target of 30 million barrels per day (bpd).

The cartel's output is more than 1 million bpd above this level and demand for its oil is much lower -- leaving a huge supply surplus, estimated by some analysts at more than 2 million bpd. [OPEC/O]

"That should keep a lid on prices," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy)