Continued Oil Rally Likely to Push Second Weekly Gain

Continued Oil Rally Likely to Push Second Weekly GainContinued Oil Rally Likely to Push Second Weekly Gain

Brent crude oil traded almost $2 higher on Friday, on track for its second weekly increase, as fighting in Libya and stronger economic signals from the United States helped futures rebound from near-six-year lows, Reuters reported.

Prices remain roughly 50 percent below their peak from the middle of last year, and no rapid recovery is expected amid rising global inventories and steady OPEC supply.

But further declines in the US oil-rig count, concerns over dented output from Libya, a key Mediterranean oil producer, and the anticipation of stronger US jobs data boosted prices.

The average number of US rigs drilling for oil fell by 199 in January from December, following the largest weekly drop since 1987 last week, Baker Hughes said.

Benchmark Brent crude traded $1.90 higher at $58.47 per barrel by 1155 GMT (06:55 a.m. EST). On Thursday, Brent closed up $2.41.

US crude for March delivery traded at $52.18 per barrel, up $1.70, after trading more than $2 higher. The contract finished with a gain of $2.03 the previous day.

Fighting across Libya, where two governments and parliaments allied to rival armed groups are vying for control, highlighted the threat of a breakup in the country, imperiling the country’s oil exports.

US non-farm payroll data due later on Friday is expected to show firm job growth in the world’s largest oil consumer in January, a positive signal for demand.

These developments helped override worries over a global glut of oil, as well as cuts to the official selling price to Asia from top OPEC producer Saudi Arabia to the lowest level in at least 12 years. The cut highlights Middle Eastern producers’ battle to gain market share in Asia, but increases to official Saudi selling prices to the United States and Europe left a mixed signal.

Still, many analysts forecast price gains to be short-lived, and limited. Growing numbers of OPEC delegates say they expect no rapid recovery in oil prices.

A strike at nine US refineries accounting for 10 percent of US capacity also headed into a sixth day after union leaders rejected the latest contract offer from lead negotiator Royal Dutch Shell Plc.