NEW YORK: Oil prices touched their highest since mid-November on Friday and posted weekly gains for the second week in a row, boosted by hopes that US-China trade talks would soon produce a deal, although new record US oil supply limited gains.
Brent crude futures briefly reached $67.73 a barrel, their 2019 high. The global benchmark fell 5 cents to settle at $67.12 a barrel. Brent gained 1.2 percent on the week.
US West Texas Intermediate (WTI) crude futures gained 30 cents to settle at $57.26 per barrel, after hitting $57.81 earlier on Friday, also their highest for the year. WTI recorded a 3-percent weekly rise and reached its strongest settlement price of 2019.
Top US and Chinese trade negotiators met on Friday to wrap up a week of talks that have seen the two sides struggle to reach a deal by a March 1 deadline.
US President Donald Trump will meet with Chinese Vice Premier Liu He at the Oval Office later on Friday.
"Oil prices, as well as the stock market have been rising on the anticipation that China and the US would agree to a trade deal," said Andy Lipow, president of Lipow Oil Associates in Houston. "In addition, we're seeing a tightening of oil supplies around the world resulting from OPEC and non-OPEC production cuts."
Both oil benchmarks have risen this year after the Organization of the Petroleum Exporting Countries and its allies, including Russia, began to cut output to prevent a supply glut from growing.
Surging US crude oil production, is partly offsetting OPEC's cuts.
US crude production last week climbed to a record 12 million barrels per day as stockpiles built for a fifth straight week to their highest since October 2017 and exports hit an all-time high, the Energy Information Administration said on Thursday.
"We see total US crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd," US bank Citi said following the release of the EIA report.
However, US energy firms cut four oil rigs operating this week after three weeks of adding rigs, General Electric Co's Baker Hughes energy services firm said in its report on Friday.
Meanwhile, crude inventories in West Texas fell to the lowest in four months after an additional pipeline started transporting crude from the largest US shale field to the Gulf Coast, largely for exports, data from market intelligence provider Genscape showed.
With US supply surging, Goldman Sachs said it expected non-OPEC supply to grow by 1.9 million bpd this year, more than offsetting the OPEC cuts.
That means much will depend on demand, which Goldman said it expected to grow by 1.4 million bpd in 2019. Goldman said it expected an average Brent price of $60-$65 per barrel in 2019 and 2020.
Money managers cut their net long US crude futures and options positions in the week to Feb. 5, the US Commodity Futures Trading Commission (CFTC) said on Friday.
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