By Barani Krishnan
NEW YORK (Reuters) - Oil rose more than 3 percent on Friday as a rally in the dollar faded and as data from Thursday that showed a fourth straight weekly drop in U.S. crude stockpiles helped drive the market.
Crude prices, however, were still on track to finish the week and the month lower on concerns that the world remains awash in oil.
With the Organization of the Petroleum Exporting Countries widely expected not to cut production at its June 5 meeting, prices could see more pressure, especially if the dollar surges again, traders said. Oil is traded in dollars and the greenback's strength helps determine demand for the commodity from holders of other currencies.
Traders are also awaiting the latest weekly reading on the U.S. oil rig count at 1:00 p.m. EDT (1700 GMT) on Friday to try to gauge whether U.S. crude output will rise.
Brent
U.S. crude
The dollar was flat against a basket of major currencies <.DXY> on Friday, after having risen 2.5 percent this month. [USD/]
"The dollar is not standing in front of crude today and that's helping," said Bob Yawger, director of energy futures at
Mizuho Securities in New York.
A rally in gasoline
That aside, the market was driven by U.S. government data on Thursday showing a higher-than-expected decline of 2.8 million barrels in domestic stockpiles last week. [EIA/]
Tensions in the Middle East after the Islamic State claimed responsibility for a mosque bombing in Saudi Arabia that killed four people added to market support.
Still, Friday's rally was not enough to wipe out sharp crude losses earlier in the week.
Brent was showing a decline of 1 percent on the week and 3 percent on the month.
U.S. crude was headed for its first weekly loss of about 0.3 percent after 10 straight weeks of gains. It was down 0.3 percent for May as well.
Analysts say oversupply in oil markets outside the United States offers little room for a continued rally in spot crude.
OPEC is expected to maintain a collective output target of 30 million barrels per day but produce more than 1 million bpd above that. Demand for its oil is lower, leaving an estimated surplus above 2 million bpd. [OPEC/O]
(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy; and Peter Galloway)
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