Oil edges higher on weaker dollar after sell-off

By Karolin Schaps | LONDON

Oil prices rose on Friday, recouping some of the previous session’s losses, as a weaker dollar encouraged buying but investors remained cautious after Russian production figures showed weak compliance with a global deal to cut output.

Global benchmark Brent LCOc1 was up 36 cents at $55.44 a barrel at 1456 GMT, recovering some of Thursday’s losses that amounted to more than 2 percent.

WTI futures CLc1 traded at $52.97 a barrel, up 36 cents on the previous close.

“The market is range bound, therefore there is nothing surprising in seeing fresh buying after a big sell-off and of course the slightly weaker dollar is also helping oil recover,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.

The dollar .DXY slipped from a seven-week high on Friday ahead of a key speech by Federal Reserve chief Janet Yellen.[USD/]

A weaker greenback makes it more attractive to buy dollar-denominated currencies like oil futures.

“Because prices have failed once again to rise above their trading corridors, there is a growing risk of speculative selling,” said analysts at Commerzbank, suggesting further downside potential.

Oil’s gains were capped after concerns remained over non-OPEC compliance with a global deal to rein in oversupply.

Russia’s February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, with its cuts from October 2016 levels remaining at 100,000 bpd or a third of what was pledged by Moscow under its agreement with the Organization of the Petroleum Exporting Countries.

Official U.S. data also showed crude inventories in the world’s biggest oil consumer rose for an eighth straight week to a record 520.2 million barrels last week. [EIA/S]

But even as U.S. oil production rose and Russian output held steady, OPEC boosted already strong compliance with the group’s six-month deal to 94 percent, cutting output for a second month in February, a Reuters survey found. [OPEC/O]

In a bid to maintain demand for its oil, world top exporter Saudi Arabia has cut the price for its April light crude deliveries to Asia, trade sources told Reuters.

(Additional reporting by Naveen Thukral and Keith Wallis in Singapore; Editing by David Evans and Keith Weir)