Brent oil rises above US$55 as weaker dollar offsets supply woes

[LONDON] Brent crude rose above US$55 a barrel on Friday and the US benchmark rose by 4 per cent after the dollar weakened, causing oil to reverse earlier losses on persistent oversupply concerns.

The leaders of Greece and Germany struck a conciliatory note over efforts to keep Greece in the euro zone, boosting the region's currency and making oil more attractive.

Brent for May delivery was up 75 cents at US$55.18 a barrel by 1407 GMT, after earlier hitting a session low of US$53.55. The contract is set for a near 1 per cent rise this week.

US crude for April delivery rose US$1.69 to US$45.65 a barrel ahead of the contract's expiry later on Friday. "It is not so much a rally off the fundamentals. It is more that oil being supported by a weaker dollar." said Kash Kamal, an oil analyst at Sucden Financial.

"I won't be surprised if we closed higher today but I'd expect us to open lower at the start of next week given the bearish fundamentals of the market," he added.

Both benchmarks fell in early trading on worries of rising supplies from the Organization of the Petroleum Exporting Countries (Opec) and the United States.

"Continuously high Opec supplies, rising US production and inventories" left the market still looking for a floor, said Eugene Weinberg, Commerzbank's head of commodities research.

Mr Weinberg said he would not be surprised if the current month contract dropped to around US$50 in coming weeks.

Intensive efforts to clinch a deal between world powers and Iran over its nuclear programme fed concerns that freeing up its flow of oil exports would pile more pressure on the market.

But Iran was unlikely to be able to raise supplies in the short term even if a deal is struck, according to Amrita Sen, chief oil analyst at London-based consultancy Energy Aspects.

Analysts at Bank of America Merrill Lynch believe oil prices are unlikely to recover in the near term and will average US$52 a barrel in 2015 and US$58 a barrel in 2016.

"This combination of a stronger dollar, a slowing China, and falling commodity prices is not going away any time soon. As the money runs dry and governance issues across emerging markets spring up, expect global oil demand to stay soft," BAML said.

REUTERS