NEW YORK (Reuters) – Oil prices rose about 2 percent on Friday, capping five sessions of losses, on expectations of an OPEC deal to extend curbs on production and the shutting of a major U.S. crude pipeline.
Prices were still on track for their first weekly loss in six as rising U.S. output data was compounded by doubts that Russia would support an OPEC deal.
Brent crude oil was $1.07 higher at $62.43 a barrel by 11:20 a.m. EST (1620 GMT) while U.S. West Texas Intermediate crude (WTI) rose $1.25 to $56.39 a barrel.
Prices trended higher after Saudi Arabia’s energy minister on Thursday signaled a willingness to extend output cuts when OPEC meets on Nov. 30 on whether to extend caps well into 2018.
“Obviously, the comments gave us guarantee that the extension is going to happen and was a driving story overnight,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
“Globally, we’re coming against the backdrop of tightness in distillate inventories and strong global refinery demand. Those catalysts will continue to drive us higher.”
TransCanada Corp’s (TRP.TO) 590,000 barrel per day (bpd) Keystone pipeline remained shut after a leak in South Dakota on Thursday. Traders said the shut-in would add to bullish sentiment due to fewer barrels going into Cushing, Oklahoma, the delivery point of the WTI contract.
But prices were still on track to fall nearly 2 percent this week, as fears of oversupply in the United States weighed after government data showed output hit a record 9.65 million bpd last week.
The International Energy Agency said on Thursday that the United States would account for 80 percent of the global increase in oil production over the next decade.
“Let’s assume that U.S. oil production continues its upward trajectory. They could very well be at 10 million bpd by the end of 2017,” said Matt Stanley, a fuel broker at Freight Investor Services in Dubai.
Last week, U.S. energy companies added the most oil drilling rigs in week since June. This week’s U.S. oil rig count data, an early indicator of future output, is due at 1 p.m..
Signs of rising U.S. output have dampened the impact of the deal restricting output agreed by the Organization of the Petroleum Exporting Countries (OPEC), Russia and several other producers.
The agreement expires in March and was expected to be extended at OPEC’s next meeting on Nov. 30. But signs that Russian support for the deal may be wavering have injected uncertainty and undermined the recent rally.
Earlier this week, Russia’s Rosneft said that an exit from the supply curb deal was a serious challenge, though added that it was committed to a deal.