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US oil ends at $47.75, up about 4 percent for week

Oil prices were steady to softer on Friday as a stronger dollar spurred investors to cash in on a second week of gains, with the focus remaining on the rebalancing of the market as the global glut faced unplanned supply outages.

The dollar was on course for a third straight weekly gain on Friday on hints the United States is getting closer to raising interest rates.

A stronger dollar makes it more expensive for investors to hold greenback-denominated commodities like oil futures.

Global benchmark Brent crude prices traded 11 cents lower at $48.70 a barrel, off a six-month high of $49.85 reached two days ago.

U.S. West Texas Intermediate crude futures settled at $47.75 a barrel, down 41 cents, also falling from a seven-month high of $48.09. That said, it gained about 4 percent for the week.

Also on Friday, oilfield services firm Baker Hughes reported the number of oil rigs drilling in U.S. fields remained unchanged from the previous week at a total of 318.

Oil was still headed for their second straight week of gains, boosted by growing supply disruptions in oil producing countries like Nigeria, Canada and Libya.

"The overall market sentiment remains biased to the upside as a growing contingency of market participants are of the view that the market is already in a rebalancing pattern and the current round of unscheduled production cuts are starting to accelerate the process," said Dominick Chirichella, senior partner at the Energy Management Institute.

In Nigeria, militant activity has cut oil exports to a more than 22-year low of under 1.4 million bpd.

In Canada, production has also been cut as wildfires forced closures of around 1 million bpd, although output is gradually returning.

Libyan output has also been hit by internal conflict.

By some estimates, these outages should undoubtedly lead to a swifter market rebalancing, but ones like in Nigeria are just the start.

"The risks are mounting and Venezuela could be the next shoe to drop," said Michael Tran, director of energy strategy at RBC Capital Markets in New York.

Other analysts, however, expect oil prices to come further off recent highs, correcting their recent upwards trend. Prices have risen for six out the last seven weeks, buoyed by the supply disruptions.

"We feel that markets have moved too high, too far, too soon," Harry Tchilinguirian, lead oil and commodities strategist at French bank BNP Paribas in London, told Reuters' Global Oil Forum.

"The combination of a stronger dollar, still excess supply over demand and ongoing overhang of inventories can be expected to put strong downward pressure on prices."

He said oil prices could fall to the mid to high $30 range.

Still, the chances of joint action among OPEC and non-OPEC producers to balance an oversupplied market remained slim.

Russian Energy Minister Alexander Novak said he saw supply in excess of demand of around 1.5 million bpd.

He poured cold water on expectations of the outcome of the next meeting of OPEC members on June 2.