Oil futures ended sharply higher Friday, boosted by expectations U.S. production will continue to decline, signs of solid underlying demand and some renewed optimism about the U.S. economy.
On the New York Mercantile Exchange, West Texas Intermediate crude futures for delivery in May jumped $2.46, or 6.6%, to end at $39.72 a barrel.
June Brent crude on London’s ICE Futures Exchange rose $2.51, or 6.4%, to close at $41.94 a barrel.
Crude maintained gains after oil field services firm Baker Hughes said the number of oil rigs fell for a third straight week. The number of rigs dropped to 354 from 362 a week earlier. Compared with the same time last year, the number of rigs has fallen by 406.
Bullish traders have been cheered not only by data pointing to falling U.S. oil production, but also to expectations that U.S. producers won’t be able to quickly rebuild production even if crude continues to climb, said Phil Flynn, senior market analyst at price Futures Group in Chicago.
West Texas Intermediate, the U.S. benchmark, posted a weekly rise of 8%, while Brent, the global benchmark, advanced 8.5%, according to Bloomberg MarketWatch.
Data earlier this week showed an unexpected drop in crude inventories and a strong rise in demand from refiners.
Iran has refused to curtail production and vowed to keep pumping until production is on par with the levels seen before sanctions. Saudi Arabia, one of the original initiators of the pact, has signaled it would back out of the plan unless Iran is on board.
Despite the recent rally, oil prices remain down more than 20% from a year ago. Most analysts still see the market as oversupplied but some expect that falling U.S. output and rising demand will alleviate some of the glut later this year.
May natural gas fell 2.8 cents, or 1.4%, to close at $1.99 per million British thermal units, but rose 1.7% for the week.
