Investing.com - Investing.com -- Crude oil futures soared on Friday afternoon, amid a weaker U.S. dollar and the release of new standards for fracking on federal lands by the White House.
On the New York Mercantile Exchange, WTI crude oil for April delivery surged more than 5% or 2.21 to $46.17 a barrel, before settling at $45.87 at Friday's close. Future contracts for May delivery of Texas Light Sweet crude also increased 1.16 or 2.54% to 46.69.
Oil prices shot up as the dollar continued to weaken in the wake of relatively dovish comments from Federal Reserve chair Janet Yellen earlier in the week. While the Fed removed its stance of remaining patient on its timing of a potential interest rate hike, Yellen appeared to strike a dovish tone with lower forecasts on inflation and GDP growth. The U.S. central bank also forecasted that interest rates will rise at a slower pace than had previously been expected.
Yellen's comments have sent the dollar spiraling from 11-year highs reached last week. The euro rose nearly 2% against the dollar in U.S. afternoon trading to 1.0867, while the U.S. Dollar Index fell 1.35% to 98.11. Speculative oil traders used the weakening dollar to hedge their positions in crude.
Meanwhile, the U.S. Interior Department on Friday approved the most comprehensive set of rules to date on how to govern drilling on Federal lands using hydraulic fracturing, a process where high-pressured fluid composed of water, chemicals and sand is injected into deep-rock formations creating cracks wide enough in the rocks to allow shale gas to flow more freely. The new regulations could impact approximately 100,000 oil and gas wells on Federally managed land throughout the country.
Among the new standards, the Interior Department will require firms to disclose the chemicals they use in the fracking process, improve standards for storing waste and construct stronger cement barriers to prevent oil leaks. In response two oil industry groups filed a lawsuit to challenge the regulatory changes, Politico.com.
As oil prices have headed on a downward trend in recent months, Saudi Arabia's oil minister last week blamed shale producers in the U.S. for the precipitous drop. On the Intercontinental Exchange (ICE), brent crude for May delivery rose 0.85 or 1.56% to $55.28 a barrel.
It came one day after Ali al-Omair, Kuwait's oil minister, indicated that current market conditions have forced Opec to maintain its production level. While al-Omair said Kuwait "will be very happy if other producers cut output," he added that the world's 10th largest oil producer can't afford to "lose its share in the market." Kuwait currently produces crude oil at a rate of approximately 3 million barrels per day.
Crude oil futures remained relatively unchanged after oil services firm Baker Hughes (NYSE:BHI) released its weekly rig count on Friday afternoon. U.S. oil rigs for the week ending Mar. 6 declined by 41 to 825. The report comes one day after the Energy Information Administration (EIA) said in a report that oil is being pumped in the U.S. at its fastest rate in nearly 30 years.
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