Oil prices held near 11-month highs on Friday and were on track for a strong weekly gain as Saudi Arabia’s pledge to cut output continued to buoy market sentiment.
U.S. West Texas Intermediate (WTI) gained 67 cents, or 1.31%, to $51.56.
Brent crude climbed 81 cents, or 1.52%, to $55.22 a barrel.
Both benchmarks are on track for gains of about 5% for this week.
“Saudi’s decision to make voluntary cuts to its output continued to provide support,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Strong global equities, backed by excessive liquidity, also prompted fresh buying in oil,” he added, but warned that oil and stock markets may see a correction soon as their rallies do not reflect the current state of fuel demand and the global economy.
Earlier this week Saudi Arabia, the world’s biggest oil exporter, said it would cut output by an additional 1 million barrels per day (bpd) in February and March.
On Thursday, seven North Sea crude cargoes were bought and sold in the trading window operated by Platts, a record amount that trade sources said may reflect tighter supply after the surprise cut.
UBS raised its forecast for Brent to $60 per barrel by mid-year, following Saudi Arabia’s unilateral cut and expectations of a sharp recovery in demand in the second quarter as coronavirus vaccine rollouts revived travel.
Meanwhile, Asian shares rose to record highs on Friday, with Japan’s Nikkei hitting a three-decade peak as investors looked beyond rising coronavirus cases and political unrest in the United States to focus on hopes for an economic recovery later in the year.
“Oil markets are expected to stay in a bullish tone toward February on the back of Saudi’s surprise promise to cut production,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.
“But concerns over slower demand in gasoline and other fuels in the United States and other parts of the world due to wider restrictions to contain spreading COVID-19 pandemic may limit gains,” he added.
The raging pandemic claimed its highest U.S. death toll yet, killing more than 4,000 people in a single day, while China reported the biggest rise in daily cases in more than five months and Japan may extend a state of emergency beyond the greater Tokyo region.
U.S. fuel inventories rose last week, with gasoline stocks increasing by 4.5 million barrels, the biggest increase since April, the Energy Information Administration said on Wednesday. 29dk2902l