Oil edges up; strong dollar, OPEC doubts make buyers cautious

Fri Jan 6, 2017 3:39pm EST
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By Devika Krishna Kumar

NEW YORK (Reuters) - Oil rose slightly on Friday on futures buying, ending the week higher, but gains were limited by a strong U.S. dollar and lingering doubts about whether OPEC producers would stick to a deal to cut output.

Market players attributed choppy trading to position-squaring at the end of the week and low volumes at the start of the year.

Brent crude futures LCOc1 settled 21 cents higher at $57.10 per barrel, after trading in a range of $56.28 to $57.47. The contract posted gains for the second week in a row.

U.S. West Texas Intermediate (WTI) crude futures CLc1 ended the session up 23 cents at $53.99 a barrel, after swinging between $53.32 and $54.32. WTI notched its third straight weekly gain.

"There's a lot of volatility, or at least changes in direction," ABN Amro senior energy economist Hans van Cleef said. "People think the long-term trend is up, but after a gain of a few dollars, they take profit."

The dollar .DXY gained broadly after the U.S. non-farm payrolls report showed slower hiring in December but an increase in wages, feeding expectations of further interest rate increases from the Federal Reserve this year.

A stronger greenback makes oil more expensive for holders of other currencies.

Top crude exporter Saudi Arabia and fellow Gulf members Abu Dhabi and Kuwait showed signs they were cutting production in line with an agreement by members of the Organization of the Petroleum Exporting Countries and other producers, yet market watchers have doubts about overall compliance.   Continued...

A female employee fills the tank of a car at a petrol station in Cairo, Egypt, February 24, 2016. REUTERS/Mohamed Abd El Ghany