- US, global crude prices rebound as US dollar declines.
- US dollar index poised for its biggest weekly drop since 2011.
- Oil prices are forecast to remain low for a while longer, with Brent crude averaging $52 a barrel in 2015.
Global crude prices rallied on Friday, with US crude poised for its first weekly gain in five amid the steepest decline for the US dollar since 2011.
US benchmark West Texas Intermediate (WTI) climbed nearly 4 percent to $45.69 a barrel and is on pace for its first weekly gain in more than a month, according to Bloomberg. The US benchmark had gained as much as 4.5 percent earlier in the day.
The price of Brent crude rose 1.29 percent to $55.13 a barrel at 10:05:13 ET.
Crude’s investment appeal was bolstered after the US dollar resumed its descent on Friday. The dollar index, a trade-weighted average of the dollar against a basket of six currencies, declined 1 percent to 98.28. The key gauge is poised for its biggest weekly decline since 2011, stemming from lukewarm interest rate expectations following the Federal Reserve’s midweek policy statement.
Oil prices are down around 15 percent from this year’s peak. Crude had rallied by around a third between January and February, leading to speculation that prices had finally bottomed. However, with US stockpiles shattering records over the last two months and OPEC exceeding its production target for nine consecutive months as of February, the outlook on prices remains negative.
Earlier this week an OPEC oil minister said the 12-member cartel had little choice to but to keep production elevated in order to keep market share. Iran is also looking to increase oil exports following a deal on its nuclear program.
The Organization of the Petroleum Exporting Countries vowed to keep output at over 30 million barrels a day back in November, sending shockwaves throughout the commodities markets. The global supply glut is expected to push US crude prices below $40 a barrel. The outlook on Brent is also negative, with the global benchmark forecast to average around $52 a barrel in 2015, according to a recent forecast by Bank of America Merrill Lynch.