Investing.com -- Crude futures extended sharp rallies from the previous session on Friday, as investors continued to cover short positions one day after Saudi Arabia energy minister Khalid al-Falih hinted that the kingdom could be open to discussions next month aimed at stabilizing persistently low oil prices.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $43.30 and $44.60 a barrel before closing at $44.48, up 1.01 or 2.32% on the session. For the week, U.S. crude futures surged more than 5% -- enjoying its best weekly gain since April. On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $45.75 and $47.05 a barrel, before settling at $46.95, up 0.91 or 1.98% on the day.
Both the international and U.S. benchmarks of crude ended the session near three-week highs, one day after soaring more than 4% following Al-Falih's comments. Earlier this week, OPEC president Mohammed bin Saleh al-Sada helped spark a rally on global energy markets by remarking that officials from leading oil producers could meet on the sidelines of next month's International Energy Forum (IEF) in Algeria, their first informal meeting since the 14-member cartel left its production ceiling unchanged at a closely-watched meeting in June.
"We are going to have a ministerial meeting of IEF in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilize the market," Al-Falih said in a statement, via Saudi News Agency SPA.
On Wednesday, OPEC said in its August Oil Market report that Saudi Arabia pumped 10.67 million barrels per day last month, the kingdom's highest level on record. As production resumes in Canada, Nigeria and Libya, three regions beset by a variety of slowdowns throughout the spring, market players have increased their short bets in crude futures and options, amid broad signals that the global supply glut could intensify.
Last week, the U.S. Commodity Futures Trading Commission (CFTC) said short positions in WTI rose to 218, 623 for the week ending on Aug. 2, the highest amount since 2006. The CFTC is set to release fresh weekly data on Friday afternoon before the close of U.S. equity markets.
"The large short positioning in the market has caused the oil price to undershoot. However, this is unsustainable," Al-Falih added. "To reverse the declines in investment and output, oil prices have to go up from the current levels."
Elsewhere, investors largely shrugged off a bearish report from Baker Hughes which said that the U.S. weekly oil rig count rose by 15 to 396 last week. The number of oil rigs nationwide has increased in each of the last seven weeks. Following last week's gains, the oil rig count is now at its highest level since February 26.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell by more than 0.35% to an intraday low of 95.19. Since hitting a four-month high at 97.62 in late-July, the Dollar has fallen back by approximately 2%.
Dollar-denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates.