Oil prices continued their rally on Friday, driven by a weakening dollar and concerns that Russia's escalating military involvement in Syria will increase the risks for the world's most important oil region. On Friday, US crude was oscillating around the key $US50 mark, up around 10 per cent from last week. Russia's military foray into in Syria, which began last Wednesday, has increased the odds of more political instability in the Middle East and pushed up prices, long battered by the global oversupply of crude. "Mr Putin is potentially very bullish for oil prices," said David Hufton of PVM brokerage. "Cruise missiles, cluster bombs, the installation of radar jamming devices in Syria and repeated incursions into Turkish airspace is enough to make even the most steely nerved short nervous and tempt others to take on speculative length." The weaker dollar also provided support for oil on Friday. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.2 per cent. Minutes from the last Federal Reserve meeting released on Thursday showed the US central bank held off on raising short-term interest rates at their September policy meeting because of worries about low inflation. "With a slowdown in both the US and the global scene, the US Federal Reserve seems to be growing more dovish...and the market seems to be taking this as a sign that rate increases would be postponed," said Daniel Ang, analyst at Phillip Futures. "Oil prices gain support as a result of a weaker US dollar strength as this makes USD-denoted oil cheaper." Brent crude, the global oil benchmark, rose 0.8 per cent to $US53.83 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.4 per cent at $US50.09 a barrel. Russia's growing role in the Syrian civil unrest increases the geopolitical tensions and the risks of a supply disruption over the long run, said analysts. "Part of this week's rally has been due to some additional geopolitical premium being priced-in," said Olivier Jacob at consultancy Petromatrix. "Crude oil futures are having their best week since the last week of August and have managed a breakout of the September trading range." But even at $US50 per barrel, oil remains down by close to a half from one year ago as the persistent global glut of crude has shown few signs of abating. One of the main reasons for the oversupply, US oil supply has started to decline this year and traders are awaiting the latest production capacity data later on Friday. Oil services firm Baker Hughes Inc. will publish the latest US oil drilling rig count, which many see as proxy for activity in the industry. The number of rigs has fallen sharply since oil prices started falling last year and there are now about 62 per cent fewer rigs working since a peak of 1,609 last October. Nymex reformulated gasoline blendstock -- the benchmark gasoline contract -- rose 0.9 per cent to $US1.42 a gallon. ICE gasoil changed hands at $US492.25 a metric ton, up $US6 from the previous settlement.

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