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Oil set for first weekly gain this month as US dollar weakens

Oil prices
Oil prices

Oil headed for its first weekly gain this month as a weaker dollar boosted the allure of commodities priced in the U.S. currency.

Futures in New York rose as much as 0.8 percent Friday after the greenback slumped to a three-year low. Crude prices are on course for a 3.9 percent gain this week, recovering almost half of last week’s losses when a global equity rout spread to other risk assets. A rebound in stocks from the U.S. to Asia is also boosting confidence the markets are stabilizing.

Oil’s recovery this week has helped push up prices for 2018, after year-to-date gains were wiped out in last week’s rout. While the market had started off the year with its best month in more than a decade, a strengthening dollar as well as concerns U.S. shale production will offset the Organization of Petroleum Exporting Countries’ efforts to drain a global glut had dragged on prices.

“A weaker dollar is playing a major role here,” Satoru Yoshida, a Tokyo-based commodity analyst at Rakuten Securities Inc., said by phone. “Coupled with a rise in equities, there is a growing mood in the market to invest in risk assets, which is influencing the crude markets.”

West Texas Intermediate for March delivery added as much as 48 cents to $61.82 on the New York Mercantile Exchange and traded at $61.53 at 4:55 p.m. in Tokyo. The contract is up 3.9 percent this week. Total volume traded was about 96 percent above the 100-day average.

Brent for April settlement climbed 26 cents to trade at $64.59 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $3.19 premium to WTI for the same month.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.1 percent on Friday, on course for the lowest level since Dec. 2014. The index has declined 2 percent this week. In equities, the S&P 500 Index topped 2,700 and the Dow Jones Industrial Average climbed above 25,000 on Thursday, while Japanese stocks extended the global rally.

Other oil-market news:

Oil and gas exploration last year was a money maker for the first time in a more than a decade, said Wood Mackenzie Ltd. America’s booming crude production is bypassing its biggest storage hub, with supplies at Cushing having nearly halved since November to stand at a three-year low. Ecuador’s 2017 crude exports fell for the third consecutive year to the lowest since 2012, according to the country’s Central Bank data compiled by Bloomberg.

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