By Devika Krishna Kumar
NEW YORK (Reuters) - Oil prices rose about 1 percent in choppy trading on Friday, a day after its biggest gains in a month, as a weaker denominating currency, the U.S. dollar, helped support crude.
The dollar weakened after U.S. retail data showed sales were flat for July, against expectations of a modest rise. Against a basket of currencies, the dollar traded 0.3 percent lower.
Brent crude futures were 39 cents a barrel higher at $46.43 a barrel, a 0.9 percent gain, by 10:54 a.m. ET (1454 GMT), up from a three-week high of $46.66 earlier in the day.
U.S. West Texas Intermediate (WTI) crude rose 50 cents to $43.99 after touching its highest level since July 25 at $44.17 per barrel.
Both price benchmarks rose more than 4 percent on Thursday after Saudi Arabia's energy minister Khalid al-Falih said that oil producers would discuss potential action to stabilize oil prices during a meeting next month in Algeria.
"Although we regard such an agreement, let alone its implementation, as unrealistic, it is dampening fears of a continuation of the OPEC price war," Commerzbank said in a note.
Iran slashed its September official selling price for light crude to Asia by $1.30 a barrel, the latest sign that exporters are willing to accept discounts in return for market share.
An outlook published by the International Energy Agency (IEA) that said it expected the supply and demand balance to tighten towards year-end also supported prices.
Traders said a drop of 8.1 percent in China's oil output in July, to a five-year low of 16.72 million tonnes, also lifted prices because it would mean Asia's biggest economy has to import more crude.
"As both a consumer and a refiner of oil - the country's refineries processed 2.5 percent more crude oil than last year in July - China is thus contributing to the tightening of the oil market," Commerzbank said.
Oil prices are still more than 12 percent below their last peak in June, as brimming storage tanks and production that exceeds consumption weighs on markets.
Prices have, however, recovered since U.S. crude fell below the $40 a barrel level early this month.
Traders were also awaiting data on U.S. rig counts at 1 p.m. ET (1700 GMT).
"Despite the recent bounce in prices, we continue to believe that the oil market remains in oversold territory," RBC Capital Markets analysts said in a research note.
"As such, the price path forward will likely remain choppy and non-linear since price moves can and will often be exacerbated in either direction."
(Additional reporting by Julia Payne in London, Henning Gloystein; Editing by Bernadette Baum)
Disclaimer: No Business Standard Journalist was involved in creation of this content
