Oil prices ticked up on Friday as U.S. officials appeared close to striking a debt ceiling deal, and as the market weighed conflicting messages on supply from Russia and Saudi Arabia ahead of the next OPEC+ policy meeting.
Brent crude settled 69 cents, or 0.9%, higher at $76.95 a barrel. U.S. West Texas Intermediate closed up 84 cents, or 1.2%, to $72.67 a barrel.
On a weekly basis, both benchmarks posted a second week of gains with Brent climbing 1.7%, while WTI rose 1.6%.
Still, markets remained cautious as debt talks may drag on and there are fresh worries about a Federal Reserve interest rate hike next month that would curb demand after strong US consumer spending data and inflation readings.
While it is possible negotiators will reach a deal on Friday to raise the U.S. government's $31.4 trillion debt ceiling, talks could easily spill over into the weekend, a Biden administration official said.
Benchmarks had settled more than $2 per barrel lower on Thursday after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting in Vienna on June 4.
Russia was leaning towards leaving oil production volumes unchanged because Moscow is content with current prices and output, three sources with knowledge of current Russian thinking told Reuters.
That contrasted with earlier hints of possible output cuts from Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, de-facto leader of the Organization of Petroleum Exporting Countries (OPEC), who warned short sellers to "watch out".
Bets on falling oil prices have risen.
"I think we all are on guard here ahead of next week's OPEC meeting," said John Kilduff, partner at Again Capital.
Meanwhile, U.S. demand for gasoline is expected to remain strong with motorist group AAA predicting the May 27-29 Memorial Day holiday weekend will be the third-busiest for auto travel since 2000.
On the supply side, U.S. oil rigs fell five to 570 this week, according to a report from energy services firm Baker Hughes Co. In May, the oil count fell by 21 rigs, which was the biggest monthly drop since June 2020.
However, slowing economic growth and sticky inflation in Europe has capped price gains, with the Dutch Central Bank chief Klaas Knot saying the European Central Bank needs at least two more 25-basis-point interest rate hikes.