An oil well is seen near Denver, Colorado. Picture: Reuters
An oil well is seen near Denver, Colorado. Picture: Reuters

Tokyo — Oil prices rose more than 1% on Friday, climbing further away from five-month lows hit earlier in the week after a report that Washington could postpone trade tariffs on Mexico and amid signs that the Organisation of the Petroleum Exporting Countries (Opec) and other producers may extend their supply cuts.

Brent crude futures were up 85c, or 1.4%, at $62.51 a barrel by 3.56am GMT. They gained 1.7% on Thursday.

US West Texas Intermediate (WTI) crude futures were up 71c, or 1.4%, at $53.30 per barrel. They finished the previous session 1.8% higher.

Brent and WTI on Wednesday hit their lowest marks since mid-January at $59.45 and $50.60, respectively, after US crude output reached a record high and stockpiles climbed to their highest since July 2017.

That put both contracts in bear territory, having lost more than 20% from peaks reached in late April.

But on Thursday oil prices followed US equities higher after Bloomberg News reported that the US may delay tariffs on goods from Mexico as talks continue.

“After prices hit the depth of the sewer this week, and [were] arguably in oversold territory, traders were always going to be predisposed to book profits ahead of the weekend,” Stephen Innes, managing partner at Vanguard Markets said in a note.

Despite the two-day bounce, Brent is heading for a third week of decline, down more than 3%. So too is WTI, which is on track for a decline of about 0.4%.

Sentiment for oil remains dim as fresh signs emerge of a stalling global economy, with the trade war between the US and China intensifying.

Prices had been supported by supply curbs by Opec and producing allies, including Russia. Supply has also been limited by US sanctions on oil exports from Iran and Venezuela.

President Vladimir Putin said on Thursday that Russia had differences with Opec over what constituted a fair price for oil, but that Moscow would take a joint decision on output at a policy meeting in coming weeks.

Also potentially keeping a lid on prices is the unrelenting rise in US crude production.

US oil output rose to a record 12.4-million barrels per day (bpd) in the week to May 31, the Energy Information Administration said on Wednesday, an increase of 1.63-million bpd since May 2018.

US crude oil inventories also surged by 6.8-million barrels over the same week, to 483.26-million barrels, their highest levels since July 2017.

Research firm Rystad Energy has raised its forecast for US crude output by 200,000 barrels, to 13.4-million bpd by December 2019, it said in a statement on its website.