Oil rises 1 pct on weaker dollar, but U.S. drilling drags

An oil rig drilling a well at sunrise owned by Parsley Energy Inc. near Midland Texas U.S

As the global oil market frets about a stubborn supply glut, faltering demand growth in key Asian crude importers is further hampering efforts to restore market balance.

Meanwhile, Brent crude oil, the global benchmark, was up by 0.3% at $45.87 per barrel and WTI crude, the U.S. benchmark, was up by 0.3% at $45.87 per barrel.

The OPEC and its other countries have been trying to trim global crude oil glut with production cuts.

In China, while vying with the USA as the world's biggest oil importer, imports in May were still at a near record of 9 million bpd, but a looming cut in refinery operations is set to hit demand for crude oil in the third quarter. Opec member Iran was also allowed a small increase to recover market share lost under Western sanctions over its nuclear programme.

U.S. shale oil output has risen almost 10% since last year with the number of USA oil rigs in operation at the highest in more than three years.

Oil ETFs consist of either crude firm stocks or futures and derivative contracts to track the price and performance of oil, or in some cases oil-related indexes.

Crude oil prices on the rise after a governor for the U.S. Federal Reserve says the financial system is in far better shape than it was a decade ago.

This story has not been edited by Firstpost staff and is generated by auto-feed. "We might see a significant pop in short-covering if the USA inventory data turns out to be bullish", said Ric Spooner at CMC Markets.

IN the New York /London market, gold rose last Thursday, rising quietly above the prior session's five-week low as the dollar steadied and the 200-day moving average provided short-term support below the market.

Amid the rise in United States drilling activity, money managers cut net long USA crude futures and options holdings to their smallest long position since November. "We are looking for a 4.5 million-barrel drop in crude supply and a 1.0 million-barrel drop in Cushing, Oklahoma".

"After how much we've fallen, prices are attractive here as a result, so it's not surprising that we're getting some buying, just on a valuation perspective".

Economic momentum could spur demand, which has emerged as a lead indicator for oil prices, with USA figures on gasoline inventory levels offering a clue on consumer sentiment.

"We don't think we're going to go below the low 40s". The production has increased by 922,000 barrels per day since bottoming around last July.

"We have entered a period in which oil prices can dislocate from oil market fundamentals for longer periods of time than historically has been the case", the report read.

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