Oil rebounds from recent weakness, still rangebound

Oil prices surged on Friday, 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 settled up 82 cents, or 1.5 percent, to $55.90 a barrel, recovering some of Thursday's losses. WTI futures rose 72 cents to $53.33 a barrel, a 1.4 percent gain.
Both benchmarks have traded in a tight range all year. US crude's peak this year was $55.24 on the first trading day of 2017; its low was $50.71 later in January. Oil added to gains late in the session as the dollar weakened modestly after a speech by US Federal Reserve Chair Janet Yellen. The dollar index was down 0.7 percent on Friday, slipping in late trading after Yellen's statement, which suggested a rate increase would come at the close of its two-day meeting on March 15.
US drillers added rigs for the seventh straight week, Baker Hughes said on Friday. Rig counts rose by seven rigs to bring the total to 609, most since October 2015, the energy services company said. "For the large part, an interest-rate hike in the near-term is probably already valued into the dollar," said Sarp Ozkan, DrillingInfo's manager of energy analytics. Dollar strength tends to pressure oil prices, as global trade in petroleum is conducted in dollars.
Oil's gains were capped by lingering concerns over compliance, by producers outside the Organisation of the Petroleum Exporting Countries, 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 cuts from October 2016 levels remaining at 100,000 bpd, or a third of what Moscow pledged in its agreement with OPEC.
Official US 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. Still, 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. 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.