By Georgi Kantchev
LONDON--Global oil prices rose on Friday, supported by bullish
market sentiment and a weaker dollar ahead of key U.S. oil drilling
data.
The gains extended a recent rally which prompted some
forecasters to raise their projections for oil prices this year.
Some analysts, however, continue to warn that the recent rise in
prices might not be sustainable given the large glut of oil on the
global market.
Brent crude for delivery in June rose 1% to $65.55 a barrel on
London's ICE Futures Exchange. Brent is up around 40% since its low
in January this year.
On the New York Mercantile Exchange, June-dated light, sweet
crude futures were little changed at $57.75 a barrel. Nymex crude
has risen for 10 of the past 14 sessions to its highest levels
since December.
"Many explanations can be found for the latest oil price
increase: the weak U.S. dollar, the problems faced by investors due
to low interest rates, ongoing fighting in Yemen and the (slight)
decline in U.S. oil production," analysts at Commerzbank said in a
note.
The dollar fell on Friday, providing a boost for dollar-priced
commodities like oil which become more attractive for holders of
other currencies as the greenback depreciates. The Wall Street
Journal Dollar Index, which tracks the dollar against a basket of
other major currencies, was down 0.4%.
Oil-field-services firm Baker Hughes will release its weekly
U.S. oil rig count, a proxy for activity in the industry. The
number of oil drilling rigs has declined for 19 straight weeks and
stood at 734 last week, half the number just six months ago.
"On closer inspection, however, these factors ultimately reveal
themselves to be 'soft' reasons," Commerzbank cautioned.
According to the bank, investors are discarding the risk of Iran
and Libya returning to the oil market. If both countries were to
regain their respective precrisis production quotas, the bank said,
an increase in production of up to 2 million barrels a day would
almost entirely offset the global demand growth over the next two
years and increase the oversupply.
Still, the recent rally in oil prices prompted some analysts to
upgrade their forecasts for oil prices.
Société Générale raised its Brent crude forecast for the year by
$4.33 to $59.54 a barrel. It also raised its Nymex crude forecast
for the year by $4.28 to $53.62 a barrel.
"We also have evidence that the global rebalancing process,
taking place on the back of U.S. shale oil, is finally getting
under way," SocGen's head of commodities research Michael Wittner
said in a report.
However, it said oil prices in May and June will still be under
pressure due to U.S. oil stockpiles rising by 1.9 million barrels a
day in the second quarter.
Nymex reformulated gasoline blendstock for May--the benchmark
gasoline contract--rose 0.6% to $2.0083 a gallon, while ICE gas oil
for May changed hands at $589.50 a metric ton, up $3.75 from
Thursday's settlement.
Eric Yep in Singapore contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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