U.S. West Texas Intermediate (WTI) crude futures were at $55.36 a barrel, up 22 cents. Traders said strong U.S. crude exports were lifting WTI.
Still, crude was set to fall around 2-4 percent for the week on worries about growth in U.S. production and inventories, after both benchmarks touched 2015 highs last week.
“Russian support for a formalized extension of production cuts at the Nov. 30 OPEC meeting appears questionable, even if only to defer the decision to 1Q18,” U.S. investment bank Jefferies said.
Crude markets have received general support in the past months by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-OPEC producers including Russia has been withholding production since January to tighten the market and prop up prices. This has led to an almost 40-percent rise in Brent prices since June.
“The production cut agreement between some OPEC and non-OPEC oil producers led to a drop in inventories and to a recovery of oil prices,” said Dutch bank ABN Amro.
“In the course of 2018 we expect a continuation of the oil price rally towards $75 per barrel,” ABN said.
The deal to restrain output is due to expire in March 2018, but OPEC will meet on Nov. 30 to discuss policy.
Analysts said more production restraint is needed to reduce the supply overhang. “The problem is still that oil stockpiles are above the five-year average,” said William O‘Loughlin, investment analyst at Australia’s Rivkin Securities.
Khalid al-Falih, the energy minister of Saudi Arabia, which is OPEC’s de-facto leader, said on Thursday that “we need to recognize that by the end of March we’re not going to be at the level we want to be which is the five-year average, that means an extension of some sort.”
OPEC’s main obstacle in tightening the market is the United States, where crude oil production C-OUT-T-EIA hit a record of 9.65 million barrels per day (bpd) this month, meaning output has risen by almost 15 percent since their most recent low in mid-2016.
“Let’s assume that U.S. oil production continues its upward trajectory. They could very well be at 10 million bpd by the end of 2017,” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.
Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin