×

US crude settles up 1.2% at $51.68, posts biggest weekly gain since Feb 2011

Oil prices edged higher on Friday, with Brent crude on track for its biggest weekly rally since 2009, following OPEC's decision to cut crude output in order to rein in a global glut.

The market's focus now shifts to the implementation and impact of OPEC's first production agreement since 2008, which will be joined by non-OPEC producers.

Crude prices on Friday were pressured by data showing oil output in Russia rose in November to a post-Soviet high and news that Moscow would use its record November oil production as its baseline when it cuts output.

U.S. West Texas Intermediate (WTI) futures settled up 62 cents, or 1.2 percent, at $51.68. The 5-day gain of 12.2 percent was the best weekly performance since February, 2011.

Front-month Brent crude futures were up 41 cents at $54.35 per barrel by 2:37 p.m. ET (1937 GMT). The contract was up about 15 percent this week.


Traders said profit-taking ahead of the weekend kept a lid on any more significant price gains.

A weak dollar, however, helped offset some of that pressure. The greenback slipped against a basket of currencies after the U.S. November jobs report.

"The petroleum markets have settled into quieter mixed flows as the waves created by Wednesday's OPEC announcement gradually dissipate, with some light profit taking emerging in crude oil," said Tim Evans, energy futures specialist at Citigroup.

"A weaker U.S. dollar is typically supportive for commodity prices and may have helped steady crude oil from the lows in today's trade."

Also on Friday, oilfield services firm Baker Hughes reported the U.S. oil rig count rose by 3 to a total of 477. At this time last year, drillers were operating 545 oil rigs.

The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, will reduce production starting in January by 1.2 million barrels per day, or over 3 percent, to 32.5 million bpd.

As part of the OPEC deal, Russia has promised to gradually cut its crude output by up to 300,000 barrels per day in the first half of 2017. Russia and other non-OPEC producer are set to meet with OPEC on Dec. 9.

"There are still several open questions regarding compliance and the role of so-called 'key non-OPEC countries' in deepening the OPEC cut by a further 600,000 barrels per day (bpd)," JBC Energy said in a note.


In addition to Russia, traders also pointed to Iran as being a wild card.

U.S. President-elect Donald Trump's transition team is examining proposals for new non-nuclear sanctions on Iran, the Financial Times reported on Friday.

Iran threatened on Friday to retaliate against the U.S. Senate's vote to extend the Iran Sanctions Act (ISA) for 10 years, saying it violated last year's deal with six major powers that curbed its nuclear program.

U.S. President Barack Obama is expected to sign U.S. legislation extending sanctions against Iran for 10 years into law, the White House said on Friday. The sanctions were first adopted in 1996 to punish investments in Iran's energy industry and deter its pursuit of nuclear weapons.

With cuts being implemented next year only against end-2016 levels, analysts said there was still a possibility that oversupply, which has halved oil prices since 2014, remains a factor next year.

"There are still several open questions regarding compliance and the role of so-called 'key non-OPEC countries' in deepening the OPEC cut by a further 600,000 barrels per day (bpd)," JBC Energy said in a note.