U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed lower on Friday on relatively low volume, but prices remained within striking distance of their multi-year highs reached earlier in the week.

The market struggled most of the session to gain traction as gains were limited by a stronger U.S. Dollar, which weighed on foreign demand for the dollar-denominated commodity.

However, prices were supported by optimism over a demand recovery as the U.S. continued to increase the number of vaccinations while the number of new COVID-19 cases eased nationally.

The long-term uptrend also remained intact, underpinned by aggressive production cuts by OPEC and its allies, including Russia.

On Friday, May WTI crude oil settled at $65.64, down $0.36 or -0.55% and June Brent crude oil finished at $68.68, down $0.32 or -0.47%.

Strong Dollar Weighs on Foreign Demand

A fresh spike in U.S. Treasury yields sparked a risk-off move in global currency markets on Friday, with the dollar reversing its fall from earlier in the week and riskier commodity currencies taking a hit. The stronger dollar may have helped put a lid on oil prices because it tends to dampen buying interest from foreign traders.

Optimism over Demand Recovery

In the U.S., optimism over a demand recovery increased as President Joe Biden signed his $1.9 trillion coronavirus-relief package and additional positive vaccine headlines. Biden also announced that he will direct states to make all adults ages 18 and up, eligible for the coronavirus vaccines by May 1.

Additionally, OPEC forecast a stronger oil demand recovery this year, weighted to the second half. Last week, OPEC, Russia and its allies decided to maintain its output curbs almost unchanged.

Meanwhile, the Organization for Economic Cooperation and Development (OECD) said the pandemic-hit global economy is set to rebound with 5.6% growth this year and expand 4% next year. Its previous forecast had been for growth of 4.2% this year.

US Oil & Gas Rig Count Falls for First Time since November – Baker Hughes

U.S. energy firms cut the number of oil and natural gas rigs operating for the first time since November even as crude prices soared to their highest since 2018.

The U.S. oil and gas rig count, an early indicator of future output, fell by one to 402 in the week to March 12, according to data on Friday from energy services firm Baker Hughes Co.

That count is 390 rigs, or 49%, below this time last year. The oil and gas rig count, however, has increased for the past seven months since dropping to a record low of 244 in August, according to Baker Hughes data going back to 1940.