A worker checks the valve of an oil pipe at Al-Sheiba oil refinery in the southern Iraq city of Basra. Picture: REUTERS
A worker checks the valve of an oil pipe at Al-Sheiba oil refinery in the southern Iraq city of Basra. Picture: REUTERS

London — Oil prices rose more than over 1% on Friday after a report from oil cartel Opec showed its production fell sharply in December, easing some fears about prolonged oversupply.

International Brent crude oil futures were up 62 US cents, or 1.01%, at $61.80 per barrel at 9.55 am GMT. Brent has risen about 2% this week, its third straight week of gains.

US West Texas Intermediate (WTI) crude futures were at $52.64 per barrel, up 57c, or 1.09%, from their last settlement.

Opec, along with other producers including Russia, agreed last year to output cuts effective January 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 US-based think-tank predicted that the US 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," US investment bank Jefferies said on Friday.

Tempering support for prices, however, are signs of weakening demand and surging US output.

The International Energy Agency said on Friday that US oil production growth combined with a slowing global economy will put oil prices under pressure.

"By the middle of the year, US 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 per day.

Markets were also buoyed by signs that the US and China may soon resolve their trade dispute in talks scheduled for January 30

The Wall Street Journal reported on Thursday that Washington was considering lifting some or all tariffs imposed on Chinese imports.

But US stocks pared some of those gains after a Treasury spokesperson denied the report, adding more uncertainty to the dispute that has kept global markets on edge for months.