London: Oil rose above $50 on Friday, supported by firmer stock markets and a weaker dollar, but the gains were capped by historically high inventories.
US crude oil futures were up by 57 cents at $50.19 a barrel by 4:40pm, in a relatively narrow trading range between $49.06 and $50.20 so far on Friday.
London Brent crude edged up by 31 cents at $50.42.
For much of the week, oil trade has been influenced by equity markets, viewed as an indicator of future economic strength and the potential for higher oil demand, and fluctuations in the dollar price.
“The dollar weakened yesterday and it is weakening further. Equities are holding well at this moment so that is providing support to oil prices,” said Olivier Jakob with Petromatrix.
European shares opened higher on Friday led by banks, following Thursday’s Wall Street gains, partly lifted by remarks from US Treasury Secretary Timothy Geithner.
Writing in the Financial Times ahead of meetings of G7 and G20 officials in Washington later on Friday, he said there were signs of improvement in global markets and the world economy.
The dollar was weakening against euro, the yen and the basket of currencies. A weaker dollar can make investors keener to buy dollar-denominated oil.
Its impact was offset by the levels of inventories in the United States, the world’s top oil consumer, which are the highest for almost 19 years.
Oil storage tanks are also close to capacity in many other places in the world and, according to some estimates, oil companies have stored about 100 million barrels oil ships floating on the sea. That is more than the world’s daily oil demand of roughly 84 million barrels.
The oil market has stagnated around $50 a barrel for most of this most, nearly $100 below last July’s all-time high of $147.27.