Oil Tops $98 on Dollar, Supply Concerns

Oil rose above $98 per barrel on Friday, still in sight of the $100 milestone, reflecting moves in the U.S. dollar and amid signs some OPEC members have been raising output ahead of their policy meeting next month.

Oil Refinery
Oil Refinery

U.S. light, sweet crude for January delivery was up in thin trading on the Nymex, off early highs of $97.64.

London Brent crude rose.

Traders said the U.S. dollar's recovery from fresh record lows weighed on oil prices, although thin trading volumes exaggerated price movements.

The dollar fell to a record low against the euro on Friday, before the European currency was knocked off its high perch by comments from a euro zone policymaker.

Oil came close to breaching $100 a barrel on Wednesday but fell, after hitting a lifetime high of $99.29 a barrel, on a rise in mid-continent U.S. oil supplies and growing pessimism about the outlook for the U.S. economy.

On Thursday -- a market holiday in the United States because of Thanksgiving -- signs of higher OPEC shipments in early December sent crude lower.

OPEC oil exports, excluding Angola, will rise by 720,000 barrels per day (bpd) in the four weeks to Dec. 8, according to Roy Mason of consultancy Oil Movements.

The increase will be the biggest this year, with most of the extra supply heading to Western refiners. Mason estimated that seaborne exports from the 11 OPEC countries would rise to 24.54 million bpd from 23.82 million bpd to Nov. 10.

OPEC ministers are due to meet in Abu Dhabi on Dec. 5 and discuss raising output, although many members have said more crude would be unlikely to tame a rally fuelled by speculation and political tension.

"The OPEC question is an open one. We may see OPEC increasing production but there is no certainty. The oil market remained fundamentally tight," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

Traders said they expected the market to attempt a fresh assault at $100.

"The market still has $100 written all over it. It wants to... it wants to get there... I do think they will try to get it there before the OPEC meeting," said Rob Laughlin at MF Global.

"Whether it's going to be able to do without all markets open, I think not. It's more on the agenda for next week."