Oil headed for its first weekly gain this month as a weaker dollar boosted the allure of commodities priced in the U.S. currency.
Futures in New York rose as much as 0.8 percent Friday after the greenback slumped to a three-year low. Crude prices are on course for a 3.9 percent gain this week, recovering almost half of last week's losses when a global equity rout spread to other risk assets. A rebound in stocks from the U.S. to Asia is also boosting confidence the markets are stabilizing.
Oil's recovery this week has helped push up prices for 2018, after year-to-date gains were wiped out in last week's rout. While the market had started off the year with its best month in more than a decade, a strengthening dollar as well as concerns U.S. shale production will offset the Organization of Petroleum Exporting Countries' efforts to drain a global glut had dragged on prices.
"A weaker dollar is playing a major role here," Satoru Yoshida, a Tokyo-based commodity analyst at Rakuten Securities Inc., said by phone. "Coupled with a rise in equities, there is a growing mood in the market to invest in risk assets, which is influencing the crude markets."
West Texas Intermediate for March delivery added as much as 48 cents to $61.82 on the New York Mercantile Exchange and traded at $61.53 at 4:55 p.m. in Tokyo. The contract is up 3.9 percent this week. Total volume traded was about 96 percent above the 100-day average.
Brent for April settlement climbed 26 cents to trade at $64.59 on the London-based ICE Futures Europe exchange. The global benchmark traded at a $3.19 premium to WTI for the same month.
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.1 percent on Friday, on course for the lowest level since Dec. 2014. The index has declined 2 percent this week. In equities, the S&P 500 Index topped 2,700 and the Dow Jones Industrial Average climbed above 25,000 on Thursday, while Japanese stocks extended the global rally.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.