Investing.com -- U.S. crude futures rallied off fresh six and a half year lows, as a report Friday showed that U.S. oil rigs rose moderately last week for the fourth consecutive week amid a continuing glut of oversupply on global energy markets.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $41.46 and $42.92 a barrel before settling at $42.33, up 0.10 or 0.22% on the session. For the week, Texas Long Sweet futures fell approximately 2% amid a rough, volatile stretch of trading over the past five days. On three of the five sessions on the week, WTI crude moved in an up or down direction by at least 2.45%. Over the last month of trading, U.S. crude futures are still down by roughly 22%, suffering one of its worst periods in a decade.
On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $48.76 and $49.84 a barrel before closing at $48.91, down 0.73 or 1.47%. The spread between the international and the U.S. benchmarks of crude narrowed to 6.58, down from Thursday's level of 7.36 at the close.
Oil services firm Baker Hughes (NYSE:BHI) said in its Weekly Rig Count on Friday that U.S. oil rigs increased by two to 672 last week for the week ending on August 7, marking the fourth straight week of weekly builds. Oil rigs have gradually moved higher after experiencing builds in six of the last seven weeks, following more than 25 weeks of weekly draws. Last fall, the U.S. oil rig count peaked above 1,600.
Earlier this week, the U.S. Energy Information Administration said U.S. crude inventories for the week fell by 1.7 million barrels, in line with expectations for a 1.6 million decline. The moderate draw extends sharp declines from a week earlier when U.S. crude stockpiles plunged by 4.4 million barrels in the final week of July. At 453.6 million, crude inventories nationwide remain near its highest level at this time of year in at least 80 years.
Investors have been more focused on steady production declines, as U.S. crude output fell below 9.4 million barrels per day last week to its lowest level since early-May. At the same time, OPEC announced that its output increased by 100,000 bpd in July to 31.5 million bpd even as Saudi Arabia experienced a mild dip in production. A surge in Iranian output helped push OPEC production to its highest level in three years.
As crude prices threaten to drop into the low to mid $30s, some of the smaller members of OPEC have called on the world's largest cartel to step in to stabilize prices. On Tuesday, Venezuela president Nicolas Maduro said the nation has advised OPEC leaders to call an emergency meeting to discuss a strategy for combating the rapidly falling prices. Oil sales comprise roughly 45% of the Venezuelan Federal budget and 12% of its GDP.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.2% to an intraday high of 96.69, before falling back to 96.48 in U.S. afternoon trading. By comparison, the index soared to a four-month high at 98.40 late last week.
Dollar-denominated commodities such as crude become more expensive for foreign investors when the dollar appreciates.