Investing.com -- Crude futures surged to near two-month highs as expectations for a delayed interest rate hike by the Federal Reserve weighed heavily on the dollar and a continued decline in U.S. oil rigs eased some concerns related to the historic glut in global oversupply.
On the New York Mercantile Exchange, WTI crude for April delivery wavered between $34.41 and $35.98 a barrel before settling at $35.91, up 1.34 or 3.88% on the day. At session highs, U.S. crude came cents away from clearing $36 for the first time since early-January. WTI crude futures opened the new year with a seven-day losing streak, plunging more than 10% during the period. The rout lasted until mid-February, when Texas light, sweet bottomed at a 13-year low at $26.05 a barrel.
Since then, WTI crude has rallied sharply, soaring by approximately 28% over the last three weeks. U.S. crude futures have closed higher in five straight sessions and nine of the last 10.
On the Intercontinental Exchange, brent crude for May delivery traded between $36.83 and $38.78 a barrel, before closing at $38.73, up 1.66 or 4.46% on the session. After dipping below $30 a barrel in mid-February, North Brent Sea futures have rallied nearly 25%. Brent futures also jumped on Friday to their highest level since the beginning of January.
Oil prices extended previous gains from this week on Friday morning after the U.S. Labor Department reported that average hourly earnings fell by 0.1% last month, representing the first monthly decline in wages in more than a year. Investors responded by lowering their expectations for a Fed rate hike before July, causing the dollar to plummet. Any rate hikes by the Fed this year are viewed as bullish for the dollar, as investors pile into the greenback in order to capitalize on higher yields.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.35% to an intraday low of 97.03, before rallying to 97.37 in U.S. afternoon trading. At session lows, the dollar fell to its weakest level in nearly two weeks.
But as the dollar rebounded, crude held onto gains following a bullish supply report from oil services firm Baker Hughes. Last week, U.S. oil rigs fell by eight to 392 for the week ending on Feb. 26, moving lower for the 11th consecutive week. With the declines, the rig count fell to its lowest level since Dec. 4, 2009 and one away from an all-time record low.
Major reductions in the number of oil rigs nationwide typically provide lagging indications that production is about to level off. U.S. crude production has decreased in each of the last six weeks, falling below 9.1 million barrels per day.
Crude prices have plunged more than 60% since peaking at $115 a barrel 20 months ago. Oil markets worldwide have been awash in an excess of supply, following a strategic decision by OPEC to leave its production ceiling above 30 million barrels per day in November, 2014. It is widely believed the world's largest oil cartel crafted the strategy in an apparent effort to squeeze out high-priced U.S. shale producers.