* Market rebounds on bullish second-half positioning
* Weekly rise in U.S. oil rig count ignored
* Brent up 4 pct on week, largest rise in 7 weeks
* Barclays (LON:BARC) cuts 2016 Brent, WTI forecasts by $3/bl
(New throughout, updates market activity, prices and milestones
to settlement)
By Barani Krishnan
NEW YORK, July 1 (Reuters) - Oil prices surged on Friday,
and Brent crude posted its largest weekly gain since mid May, as
investors positioned for the start of third quarter trading
while a weaker dollar boosted prices of most commodities.
The market shook off a closely-followed industry report that
showed a fourth weekly rise in the last five in the number of
U.S. oil rigs operating. According to oil services firm Baker
Hughes, producers added 11 oil rigs this week, the biggest
increase since December, signalling a near-two year rout in
drilling may have ended. RIG/U
"Higher rigs indicate higher production, but we're still
down by more than 300 rigs from a year ago, so no one's really
too worried about it for now," said Phil Flynn, analyst at the
Price Futures Group brokerage in Chicago.
Brent crude futures LCOc1 settled up 64 cents, or 1.3
percent, at $50.35 a barrel. It was down 1 percent early in the
session.
U.S. crude's West Texas Intermediate (WTI) futures CLc1
rose 66 cents, or 1.4 percent, to settle at $48.99.
Investors also bought oil after cashing out in the previous
session on the market's largest quarterly gain in seven years.
Crude prices gained about 25 percent in the second quarter.
Friday's rebound came as the dollar index .DXY fell 0.5
percent, making commodities denominated in the greenback more
affordable for holders of the euro and other currencies. FRX/
Brent's 4 percent rise since last Friday was the biggest in
seven weeks, and was fed by a return of fund buying as the
turmoil sparked by Britain's shock exit from the European Union
receded. WTI gained nearly 3 percent on the week.
Front-month volume in WTI was about three-quarters of
Thursday's level, not typical for the eve of a long weekend.
U.S. financial and commodity markets will be closed on Monday
for the Independence Day holiday.
"There is some pre-holiday market positioning for the second
half that's going on," said David Thompson, executive
vice-president at Washington-based commodities-focused broker
Powerhouse. "People are also moving on from Brexit, accepting
they have to deal with an 'organized divorce' with Britain."
Even so, some were pessimistic of significant price gains in
the second half.
British bank Barclays, for instance, cut its price forecasts
by $3 a barrel for both oil benchmarks, forecasting Brent at $44
and WTI at $43 for the remainder of 2016.
"Markets have experienced only the tip of the iceberg in
terms of the impact of the UK's 'leave' vote," Barclays analysts
said in a note.
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GRAPHIC on commodities in 2016 http://link.reuters.com/reb25t
GRAPHIC on asset performance in 2016 http://tmsnrt.rs/28XmyLd
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