West Texas Intermediate futures jumped by 1.2% to $59.1 toward the end of trading on Friday, compared with a close below $56 a week ago, according to data compiled by CNBC/Bloomberg. Brent futures also traded higher by 1.4% to $64.25.
Following a meeting in Vienna, Austria, the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers led by Russia -- also known as OPEC-plus -- on Thursday agreed to expand their joint production cuts by 500,000 barrels a day to 1.7 million barrels per day to the end of March.
Joint cuts have been in play since the end of last year to reduce overall supply globally and support oil prices. Prior to that, OPEC had on its own cut 1.8 million barrels per day.
Goldman Sachs analysts led by Damien Courvalin said in a report the global oil supply-demand balance required an extension of cuts given the "large increase in production from legacy non-OPEC projects and the still uncertain demand growth outlook."
The 1.3 million barrels per day of global surplus expected in Q2 to Q3 2020 "should core-OPEC and Russia return to Q3, 2018, production levels is simply too daunting: on our price modeling, it would bring prices down by $7 per barrel," the report said
Courvalin said a three-month extension would keep inventories at the Organization for Economic Cooperation and Development in the first half of 2020 in line with seasonal builds, implying a floor for prices from supply-related issues.
That forecast, however, assumes Saudi Arabia would continue to over-deliver on its quota commitment, which is reportedly the case, by 400,000 barrels per day, as per media reports. It also presumes improved compliance in countries such as Iraq, Nigeria, and Kazakhstan, which "finally appears to be taking place" as the Kingdom has reportedly warned it would raise production if members fail to meet their quota commitments.
Oil also got a lift on Friday from the jobs data in the US, boding well for crude demand.
The Labor Department said the US economy added 266,000 jobs last month, the most since January and above the 180,000 analyst estimate compiled by Trading Economics. The addition to nonfarm payrolls in October stood at 156,000, revised up from 128,000.
Xinhua News Agency said in a report the State Council in China has kicked off the process that would exempt US exports of soybeans and pork from Chinese import levies, a signal effort is being made to facilitate a partial trade deal and prevent an escalation of the trade row by imposition of new levies by Dec. 15.
Meanwhile, the Energy Information Administration said Wednesday crude stockpiles slumped by 4.9 million barrels during the week that ended Nov. 29, versus a forecast for a 1.7 million-barrel slump as per a Reuters' poll of analysts.
On Friday, data compiled by energy services firm Baker Hughes showed the US weekly oil rig count fell by five to 663, the lowest level since March 2017. The combined oil and gas rig count in the US fell by three to 799 as gas rigs rose by two to 133 during the week that ended Dec. 6.
In Canada, the number of oil rigs in operation jumped by 10 to 87, and gas rigs were up by two to 51 during the week. As a result, the North American total climbed by nine to 937 versus 1,261 a year ago, the data showed.
Price: 22.25, Change: +0.11, Percent Change: +0.47
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