US oil hits one-week high as dollar sags, many Asian markets shut

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FE Team | Published: February 16, 2018 21:09:52

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SINGAPORE, Feb 16 (Reuters): US crude extended gains in subdued trade on Friday as the dollar slipped to a three-year low, with many Asian markets closed for the Lunar New Year holiday.
NYMEX crude for March delivery CLc1 was up 17 cents, or 0.3 per cent, at $61.51 a barrel by 0750 GMT, after earlier touching a one-week high of $61.82. For the week, the contract has risen about 4.0 per cent after losing nearly 10 per cent last week.
London Brent crude LCOc1 was up 25 cents, or 0.4 per cent, at $64.58 after settling down 3.0 cents. Brent is up nearly 3.0 per cent for the week after falling more than 8.0 per cent last week.
"Oil is getting support from a rebound in global stock markets and a weak dollar, but the upside is limited due to a projection for rising US production," said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
"The market is quiet due to a slew of holidays in Asia."
The dollar slipped to a three-year low against a basket of currencies on Friday. A weaker dollar often boosts prices for oil and other dollar-denominated commodities.
Asian shares rose for a fifth straight day on Friday as investor confidence slowly returns after a sharp sell-off earlier in the month.
Oil producers led by Saudi Arabia and Russia aim to draft an agreement on a long-term alliance by the end of this year, United Arab Emirates energy minister Suhail al-Mazroui said on Thursday.
OPEC and non-OPEC producers including Russia have been restraining production by a total 1.8 million barrels per day (bpd) in a bid to prop up prices under a deal that is to expire at the end of 2018.
The move comes at a time when Asian demand is on the rise. India imported a record 4.93 million bpd in January to feed its expanded refining capacity and meet rising demand, data showed.
Oil won support earlier in the week after Saudi Energy Minister Khalid al-Falih said OPEC hopes to keep limiting crude output to leave the market tight.
However, surging US production is offsetting OPEC's efforts to curb supplies. US crude output hit a record 10.27 million barrels per day last week, the Energy Information Administration (EIA) said on Wednesday, making it a bigger producer than Saudi Arabia.
Another report adds from Moscow: A global deal on output cuts between OPEC and non-OPEC countries to shore up oil prices may hit Russia's economy in 2018, the central bank said in statement on Friday.
The Organisation of the Petroleum Exporting Countries (OPEC), along with other large exporters including Russia, have agreed to maintain a joint restriction on crude supply for a second year, to reduce stockpiles and support prices.
Russia has said it will cut 300,000 barrels of oil output per day from its peak production of 11.247 million barrels reached in October 2016.
The central bank said the curbs were likely to impact the overall economy.
It added that fossil fuel consumption by cars was expected to peak in the mid-2020s, which would significantly hit oil prices.
"We assume that the OPEC+ deal... along with weaker demand for natural gas from abroad will temporary curb a growth in (Russian) production which may have a negative impact on economic growth in general," it said.
Russian gas firm Gazprom's exports to countries outside the former Soviet Union fell 10 per cent year on year in January, caused by relatively warm weather in Europe..
The central bank said Russia's GDP was expected to rise by 0.4 per cent quarter-on-quarter in the first quarter, accelerating to 0.5 per cent in the second.
Growth in 2017 would be revised upwards from an initial estimate of 1.5 per cent.