Oil. Picture: REUTERS
Oil. Picture: REUTERS

London — Oil prices were set for a second consecutive week of gains on Friday, buoyed by tightening supplies and continued support from oil cartel Opec and its allies on supply cuts.

Brent crude oil futures were at $74 per barrel at 9.58am, up 22 US cents from their last close. US West Texas Intermediate (WTI) crude futures were up 21c at $68.50 a barrel.

Both Brent and WTI hit their highest levels since November 2014 on Thursday, at $74.75 and $69.56 per barrel, respectively.

Saudi oil minister Khalid al-Falih said Opec and its allies were still far away from reaching their target and that a drawdown in oil inventories needed to continue.

Russian energy minister Alexander Novak told his Opec and nonOpec counterparts in a closed-door meeting in the Saudi city of Jeddah on Friday, that Moscow was committed to a deal on cutting oil supplies until the end of 2018, sources said.

The sources spoke after Russia’s TASS news agency cited Novak as saying that Opec and nonOpec countries might ease oil production cuts as early as 2018.

Opec and its allies have been curbing production since 2017, helping push up prices. The deal to cut is currently scheduled to expire at the end of 2018.

A technical Opec and nonOpec committee meeting in Jeddah on Thursday, ahead of Friday’s ministerial meeting, found that a global overhang in oil inventories, which the deal has targeted for eliminating, had virtually disappeared.

"Even if Opec were to reach its target of reducing oil inventories to their recent five-year average by the next official June meeting, Saudi Arabia is driving a strong agenda to maintain cuts for the balance of 2018," BNP Paribas global head of commodity market strategy Harry Tchilinguirian told the Reuters Global Oil Forum.

Firm demand was also giving prices a floor.

"Global oil demand data so far in 2018 has come in line with our optimistic expectations, with Q1 2018 likely to post the strongest year-on-year growth since Q4 2010 at 2.55-million barrels per day," US bank Goldman Sachs said in a note published late on Thursday.

Beyond Opec’s supply management, crude prices have also been supported by an expectation that the US will re-introduce sanctions on Opec-member Iran.

"The first key geopolitical issue is the expiration of the current US waiver of key sanctions against Iran," Standard Chartered Bank said in a note this week.