Oil prices rose more than 1 percent on Friday after an OPEC report showed its production fell sharply last month, easing some concerns about prolonged oversupply. U.S. West Texas Intermediate (WTI) crude futures were at $52.65 per barrel, up 58 cents, or 1.1 percent, from their last settlement.
International Brent crude oil futures were up 59 cents, or 1 percent, at $61.77 per barrel around 8:50 a.m. ET.
Both benchmarks have risen about 2 percent this week, on pace for their third straight week of gains.
OPEC along with other producers including Russia agreed last year to output cuts effective Jan. 1 to avert a glut.
OPEC’s monthly report showed it had made a strong start in December even before the pact went into effect, implementing the biggest month-on-month production drop in almost two years.
In a sign that global supply could tighten further, a U.S.-based think-tank predicted that the United States may grant waivers on sanctions it imposed on importing Iranian oil to fewer countries.
Political risk advisory Eurasia Group said China, India, Japan, South Korea and Turkey are likely to receive extended waivers, while those for Italy, Greece and Taiwan would likely be removed.
“The combination of production cuts by OPEC+ (especially the Saudis) and tightening sanctions on Iranian oil exports have brought the market close to balance,” U.S. investment bank Jefferies said.
Abhishek Kumar, senior energy analyst at Interfax Energy in London, said factors such as rising U.S. production and its trade dispute with China would cap price gains, “negating much of the benefits from the OPEC+ pact.”
Tempering support for prices, however, are signs of weakening demand and surging U.S. output.
The International Energy Agency said on Friday that U.S. oil production growth combined with a slowing global economy will put oil prices under pressure.
“By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia,” said the IEA, which kept its estimate of oil demand growth unchanged and close to 2018 levels at 1.4 million barrels bpd.
Markets were also buoyed by signs that the United States and China may soon resolve their trade dispute in talks scheduled for Jan. 30.
The Wall Street Journal reported on Thursday that Washington was considering lifting some or all tariffs imposed on Chinese imports.
But U.S. stocks pared some of those gains after a Treasury spokesperson denied the report, adding more uncertainty to the dispute which has kept global markets on edge for months.