Oil prices steadied on Friday from early losses, with traders citing potentially more bullish investor positioning for the second half of the year and after a weaker dollar that boosted most commodities.
The market also recovered after sliding briefly on Baker Hughes’s data showing the fourth weekly rise in five for the US oil rig count. Producers added 11 oil rigs this week, the biggest increase since December, that signaled a near-two year rout in drilling may have ended.
“Higher rigs indicate higher production, but we’re still down by more than 300 rigs from a year ago, so no one’s really too worried about it for now,” said Phil Flynn, analyst at the Price Futures Group brokerage in Chicago.
Brent futures were up 30 cents, or 0.6 percent, at $50.01 a barrel by 1:44 p.m. EDT (1744 GMT). Brent was down 1 percent early in the session, hitting an intraday low of $49.25.
U.S. crude’s West Texas Intermediate (WTI) futures rose 27, or 0.6 percent, to 48.36.
Investors also bought into oil after cashing out in the previous session on the market’s largest quarterly gain in seven years. Crude prices gained 25 percent or more in the second quarter.
Friday’s rebound came as the dollar index fell 0.5 percent, making commodities denominated in the greenback more affordable for holders of the euro and other currencies.
For the week, Brent was on track to a gain of more than 3 percent, helped largely by a return of fund buying in oil this week as financial markets moved on from the liquidation sparked by Britain’s exit vote from the European Union. WTI pointed to a 2 percent rise.
With an hour to settlement, WTI volumes were about two-thirds of Thursday’s levels, versus the hesitation typically common before a long weekend. US financial and commodity markets will be closed on Monday for the Independence Day holiday.
“There is some pre-holiday market positioning for the second half that’s going on,” said David Thompson, executive vice-president at Washington-based commodities-focused broker Powerhouse. “People are also moving on from Brexit, accepting they have to deal with an ‘organized divorce’ with Britain.”
Even so, some were remain pessimistic of significant price gains in the second half.
British bank Barclays, for instance, cut its price forecasts by $3 a barrel for both oil benchmarks, forecasting Brent at $44 and WTI at $43 for the remainder of 2016.
“Markets have experienced only the tip of the iceberg in terms of the impact of the UK’s ‘leave’ vote,” Barclays analysts said in a note.