Oil prices rose nearly 3 percent on Friday, after upbeat U.S. jobs data strengthened expectations for higher fuel demand and on signs that U.S. sanctions on Venezuelan exports have helped tighten supply.
Futures extended gains after data showed U.S. energy firms this week cut the number of operating oil rigs for a fourth time in the past five weeks, as some drillers follow through on plans to spend less on new wells this year.
U.S. West Texas Intermediate (WTI) futures ended Friday's session up $1.47, or 2.7 percent, at $55.26 a barrel. WTI posted a weekly gain of nearly 3 percent.
Brent crude oil futures rose $1.91 a barrel, or 3.1 percent, to $62.75 a barrel around 2:30 p.m. EST. The international benchmark was on track for a weekly gain of about 2 percent.
Drillers cut 15 oil rigs in the week to Feb. 1, bringing the total count down to 847, the lowest since May 2018, energy services firm Baker Hughes said in its closely followed report on Friday.
Oil prices earlier got a boost from Wall Street after surprisingly strong U.S. job growth data fed demand for equities.
Washington imposed sanctions on Venezuela's Petróleos de Venezuela SA this week, keeping tankers stuck at ports. On Friday, the U.S. Treasury Department provided details.
"We are beginning to see the impact to crude supplies from the sanctions on Venezuela. It has driven up domestic crude prices, cutting into refiner margins," Andrew Lipow, president of Lipow Oil Associates in Houston, said.
"That, combined with Saudi cuts and Libyan production declines has changed market sentiment as we appear to be moving towards a better balanced supply situation."
Some U.S. refiners have begun reducing crude processing as the sanctions have boosted oil costs and as gasoline margins crashed to their lowest in nearly a decade, market sources told Reuters on Thursday.
In January, Saudi Arabia pumped 350,000 bpd less than in December, a Reuters survey showed. Supply in November had hit a record-high 11 million bpd.
Of the three OPEC members exempted from making voluntary cuts, Libyan production fell the most as unrest kept the country's biggest oilfield, Sharara, offline for a month.
Financial markets also gained support from comments on Twitter by U.S. President Donald Trump on Thursday, saying he would meet Chinese President Xi Jinping soon to try to resolve a trade standoff. But Trump later warned he could postpone talks if a deal remains elusive.
China's trade delegation said the latest round of talks with the United States made "important progress", state news agency Xinhua reported.
"Many traders recognize that sense is likely to prevail and a deal will be struck after the summit - although the shape of any deal will continue to drive a jittery market," Cantor Fitzgerald Europe said in a note.
But a survey showed China's factory activity shrank by the most in almost three years in January, reinforcing fears a deeper slowdown in the world's second-largest economy could hit fuel demand.
Analysts believe the oil market will be more balanced in 2019 after supply cuts from the Organization of the Petroleum Exporting Countries (OPEC). But U.S. output is the highest on record, raising expectations of abundant supply.
U.S. crude production rose to a new high of 11.9 million barrels per day in November, the Energy Information Administration said on Thursday.