OIL prices edged to new 2016 highs Friday, lifted by a weak dollar and falling production in the United States, although a looming rise in Middle East output capped gains.

    Brent crude futures were trading at US$48.30 a barrel at 0644 GMT, up 16 cents from their last close. U.S. crude was up 24 cents at US$46.27 a barrel, with both contracts hitting fresh 2016 highs.

    “The market is coming into better balance and we maintain the view that the current oversupply will flip into undersupply in the second half of the year,” investment bank Jefferies said Friday.

    “Global spare capacity is now 2 million barrels per day (bpd), or about 2 percent of global demand. This is a precariously low level,” it added.

    Brent and WTI have risen by almost a third from April troughs and are up over 75 percent above their 2016 lows, lifted by falling output and a weakening dollar, which has dropped more than 6 percent against a basket of other leading currencies this year.

    But Deutsche Bank said a looming rise in production by members of the Organization of the Petroleum Exporting Countries (OPEC) — due to climbing Iranian output and following outages in Iraq, Nigeria and the United Arab Emirates — could cap recent oil price rises.

    “A sustainable rise in OPEC production may be just around the corner, and the rally may pause,” the bank said.

    “Maintenance in the UAE is scheduled to end in April, implying a rise from current production of 2.73 million bpd to the previous 2.91 million bpd production rate in May,” Deutsche Bank said.

    (SD-Agencies)