Oil prices rose over last weekend after a report from the Organization of the Petroleum Exporting Countries (OPEC) showed its production fell sharply last month, easing some fears about prolonged oversupply.
International Brent crude oil futures were up 62 cents, or 1.01 percent, at US$61.80 per barrel at. Brent has risen about 2 percent this week, its third straight week of gains.
U.S. West Texas Intermediate (WTI) crude futures were at US$52.64 per barrel, up 57 cents, or 1.09 percent, from their last settlement.
OPEC along with other producers including Russia agreed last year to output cuts effective Jan. 1 to avert a glut.
The producer club’s monthly report showed it had made a strong start in December even before the pact went into effect, implementing the biggest month-on-month production drop in almost two years.
In a sign that global supply could tighten further, a U.S.-based think-tank predicted that the United States may grant waivers on sanctions it imposed on importing Iranian oil to fewer countries.
Political risk advisory Eurasia Group said China, India, Japan, South Korea and Turkey are likely to receive extended waivers, while those for Italy, Greece and Taiwan would likely be removed.
“The combination of production cuts by OPEC (especially the Saudis) and tightening sanctions on Iranian oil exports have brought the market close to balance,” U.S. investment bank Jefferies said.
Tempering support for prices, however, are signs of weakening demand and surging U.S. output.
The International Energy Agency said that U.S. oil production growth combined with a slowing global economy will put oil prices under pressure.
“By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia,” said the IEA, which kept its estimate of oil demand growth unchanged and close to 2018 levels at 1.4 million barrels bpd.
Markets were also buoyed by signs that the United States and China may soon resolve their trade dispute in talks scheduled for Jan. 30