SINGAPORE: Oil edged higher on Friday as the dollar weakened, capping a volatile week marked by concern about the euro zone's debt, the US deficit and speculation of further economic stimulus.
US crude, up 15 cents at $95.84 a barrel at 0042 GMT, is poised to end the week little changed after falling below $94 on Tuesday and topping $99 Wednesday.
Brent crude for September added 6 cents to $116.32 after the expiry of the August contract on Thursday at $118.32.
There is plenty of oil to satisfy global demand and no need to increase production, Iran's caretaker oil minister said on Thursday, reiterating the Islamic Republic's hawkish stance on price and disapproval of Saudi Arabia's output increase.
Britain's largest oilfield, Buzzard, should return to full output in August, its operator Nexen said on Thursday, boosting supply of the North Sea crude that helps to set the global Brent oil benchmark.
Brent's premium over US crude, also known as West Texas Intermediate, stood at $22.29 on Thursday after earlier soaring to a record $23.54, erasing the previous high of $23.34 hit on June 15, according to Reuters data.
The number of Americans claiming initial unemployment benefits dropped last week but remained elevated and retail sales barely rose in June, suggesting the economy will struggle to regain speed in the second half.
Mid-week comments by Federal Reserve Chairman Ben Bernanke raised hopes that the US central bank would embark on a third round of economic stimulus, but in testimony to the senate on Thursday he said the Fed was not yet ready to take action because inflation was higher than in late 2010.
President Barack Obama concluded a round of US debt talks on Thursday by sending lawmakers back to Congress to gauge support for a deal, saying a package to cut the deficit by $2 trillion was within reach.
The US Treasury has warned that it will run out of money to pay the country's bills after Aug. 2 if the $14.3 trillion borrowing limit is not raised. Failure to seal a deal by then could cause turmoil in global financial markets and plunge the US into another recession.
Bernanke warned on Thursday that overzealous cuts to government spending in the short term could derail a shaky recovery and said a US debt default could wreak financial havoc.
Moody's Investors Service also rattled markets late on Wednesday by putting the credit rating of top oil consumer the United States under revision for a possible downgrade.
Alarmed by a worsening of the euro zone debt crisis, policymakers and bankers are examining radical proposals to rescue Greece that include a sharp cut in its debt burden, ways to prop up banks and a new emphasis on boosting Greek growth, official and banking sources say.
Copyright Reuters, 2011