Investing.com -- U.S. Crude futures surged to fresh 2016 yearly highs on Friday before paring gains in U.S. afternoon trading, after reports indicated that U.S. oil rigs rose last week for the first time in three months providing signals that domestic production could be on the verge of breaking out.
On the New York Mercantile Exchange, On the New York Mercantile Exchange, WTI crude for April delivery traded in a broad range between $39.52 and $41.20 a barrel, before settling at $39.60, down 0.60 or 1.49% on the session. At session-highs, U.S. crude futures hit their highest level since the first week of December. Since plummeting to 13-year lows in mid-February at $26.05 a barrel, WTI crude has rebounded approximately 40%.
On the Intercontinental Exchange (ICE), brent crude for May delivery wavered between $41.08 and $43.53 a barrel, before closing at $41.70, down 0.34 or 0.82% on the session. North Sea crude futures have also rallied sharply over the last month and a half after falling below $30 a barrel for a single session in mid-February.
Crude fell mildly on Friday afternoon after oil services firm Baker Hughes said U.S. oil rigs rose by one to 387 for the week ending March. 11, halting a 12-week streak of weekly declines. At the same time, the combined rig count fell to 476 last week, as four gas rigs went offline. The total amount of oil and gas rigs throughout the U.S. fell to its lowest level in more than 65 years for the second consecutive week.
Major reductions in oil rigs typically provide lagging indications that output is about to level off. Last week, production nationwide fell by 10,000 barrels per day to 9.068 million bpd, its lowest level since November, 2014. U.S. output is considerably below June highs of 9.604 million bpd, when it surged to its highest level in more than 40 years.
Despite the rally over the last five weeks, crude prices are still down by more than 60% from their peak of $115 a barrel in June, 2014. U.S. crude has also fallen more than 40% over the last 15 months since OPEC roiled global energy markets with a strategic decision to ramp up production in an effort to regain market share.
Earlier this week, Qatar confirmed that OPEC and Non-OPEC members will resume discussions in mid-April in Doha in their latest attempt to stabilize oil prices. The meeting will commence weeks after Saudi Arabia, Russia and two other OPEC members agreed on a deal in principle to freeze production at their respective levels from January.
Elsewhere, the Dow Jones Industrial Average rose steadily on Friday to reach fresh 2016 yearly highs. U.S. stocks are on pace for their fifth consecutive weekly gain, their longest winning streak in two years. The massive rally in global equities bolstered oil prices, as a host of top energy stocks approached three and a half month highs on Friday.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.30% to an intraday high of 95.14.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.