Oil Jumps on Pre-holiday Buying, Brent Up 4% on Week

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.

"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.

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