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 Oil also drew support from firmer stock markets, lifted by weak U.S.
gross domestic product growth data that raised hopes the Federal
Reserve may slow any planned interest rate hikes.
The oil market rallied for four straight sessions after a renewed
call from the Organization of the Petroleum Exporting Countries for
joint efforts with rival producers to cut supply triggered a volley
of comments from Russia on a deal with the cartel, something it had
been refusing to do for 15 years.
Brent March futures <LCOc1>, which expired on Friday, closed at
$34.74 a barrel, 85 cents or 2.5 percent higher. On Jan. 20, it hit
$27.10, its lowest since November 2003.
U.S. crude <CLc1> settled up 40 cents or 1.2 percent, at$33.62 per
barrel, having hit a high of $34.40 in the session.
For the week, Brent was 7.9 percent higher and U.S. crude 4.4
percent higher, paring their monthly losses to 6.8 percent and 9.3
percent respectively.
Both contracts briefly turned negative after the Wall Street Journal
cited an Iranian oil official as saying the country would not join
an immediate OPEC production cut.
Moscow has sent mixed signals, eventually saying veteran minister
Sergei Lavrov, who almost never comments on oil policies, would
visit the UAE and Oman to discuss oil markets.
Cash-strapped Venezuela is also sending its oil minister to Russia
on a tour beginning on Saturday of non-OPEC and fellow OPEC states.
"The market has rewarded these statements about the possibility of a
deal, even though I think it's ridiculous," said John Kilduff,
partner at Again Capital LLC in New York.
He noted that Iran and Iraq were determined to boost production, and
were unlikely to come together with Saudi Arabia to cut OPEC output.
The Saudis have made no official statement on a deal.
"This is a rally on false hopes, unfortunately"
Other analysts said prices may have found a bottom and could rally
as high as $45 by year-end as non-OPEC supply is reduced and global
demand improves.
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U.S. oil production fell in November for the second straight month
and U.S. shale producers, who have helped add to the glut, have
slashed 2016 capital spending plans more than expected.
Meanwhile, the U.S. oil drilling rig count fell for the sixth
straight week with more cuts seen, oil services company Baker Hughes
Inc <BHI.N> said.
"With more energy companies announcing cuts and OPEC contemplating a
cut, it looks like oil is forming a bottom," said Phil Flynn, an
analyst at Price Futures Group in Chicago.
"Now the question becomes how high can they go. The charts look like
a test near $40 is on the cards."
In a sign that the market sentiment was improving, hedge funds
raised their bullish bets on U.S. crude oil for the second straight
week, the U.S. Commodity Futures Trading Commission (CFTC) said.
"It's something that sub-$30 oil does. It makes some traders
inclined to think that we are have reached or are near a bottom, so
they want to be positioned ahead of it," said Gene McGillian, Senior
Analyst at Tradition Energy in Stamford Connecticut.
(Additional reporting Simon Falush and Dmitry Zhdannikov in London,
Meeyoung Cho in Seoul and Henning Gloystein in Singapore; Editing by
Marguerita Choy and David Gregorio)
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