* World stocks post best week in 2 years
* Oil pares gains as dollar recovers from three-year low
* For the week, Brent gains more than 3 pct, WTI up 4 pct
* Gains tempered by rise in U.S. rig count
* Soaring U.S. production keeps oil under pressure (Adds settlement prices, CFTC and ICE data, quotes)
NEW YORK, Feb 16 (Reuters) - Oil prices edged up on Friday as a rebound in the global equities market and a weak dollar supported crude's recovery from last week's slide.
Global stocks rallied for a sixth straight session to post their best week in more than two years. The dollar rose on the day but remained on track to post its biggest weekly loss in nine months. A weaker dollar can boost oil and other dollar-denominated commodities.
"I dont want to underestimate what the dollar is doing. The weaker dollar has been extremely supportive to crude," said Bill Baruch, president and founder of Blue Line Futures.
Brent crude futures settled 51 cents, or 0.8 percent, higher at $64.84 per barrel, after touching eight-day highs. The global benchmark ended the week up more than 3 percent, partially recovering from a decline of more than 8 percent last week.
U.S. West Texas Intermediate crude rose 34 cents, or 0.6 percent, to $61.68. WTI gained 4 percent this week after losing nearly 10 percent last week.
Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply.
Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.
"After such a sharp drop that we saw prior to Wednesday, perhaps a recovery was due," said Tony Headrick, an analyst at CHS Hedging LLC.
"However, you look at rig counts ... with the number of U.S. oil rigs increasing by seven, thats a point that should cap an extreme advance in prices," Headrick said.
The U.S. oil rig count, an indicator of future production, rose seven to 798, its highest in three years, according to a weekly report from General Electric's Baker Hughes unit.
Surging U.S. production is offsetting those efforts by the Organization of the Petroleum Exporting Countries and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) till the end of 2018.
U.S. crude output hit a record 10.27 million bpd last week, the Energy Information Administration said, making it a bigger producer than Saudi Arabia.
A little-noticed addition to the U.S. budget deal approved last week was also expected to further boost U.S. crude production by more than tripling a tax credit to producers for injecting carbon dioxide back into the earth to increase output.
(Reporting by Ayenat Mersie, additional reporting by Dmitry Zhdannikov and Osamu Tsukimori; Editing by Marguerita Choy and Chizu Nomiyama)