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Brent crude climbed 83 cents, or 1.5%, to $55.21 a barrel by
1202 GMT, the highest since late February, and U.S. West Texas
Intermediate (WTI) gained 66 cents, or 1.3%, to $51.49, also its
highest level since late February.
Both were on track for weekly gains of more than 6%.
"The surprise Saudi cut is keeping bulls at the helm," said
Stephen Brennock of oil broker PVM. "It will take a brave man to
bet against the current bullish run of play."
Saudi Arabia this week pledged extra, voluntary oil output cuts
of one million barrels per day (bpd) in February and March as
part of a deal under which most OPEC+ producers will hold
production steady in the face of new coronavirus lockdowns.
However, analysts said oil prices could see a correction in
coming months, if their rallies were not backed by stronger fuel
demand.
Severe mobility restrictions around the world to contain a surge
in COVID-19 cases still weighed on fuel sales, weakening the
prospect of energy demand recovery in the first half of 2021.
"Oil markets are expected to stay in a bullish tone toward
February," said Kazuhiko Saito, chief analyst at commodities
broker Fujitomi Co.
"But concerns over slower demand in gasoline and other fuels in
the United States and other parts of the world due to wider
restrictions to contain the spreading COVID-19 pandemic may
limit gains."
The pandemic claimed its highest U.S. death toll yet, killing
more than 4,000 people in a single day, while China reported the
biggest rise in daily cases in more than five months and Japan
may extend a state of emergency beyond the greater Tokyo region.
A rally in global shares also lent some support to oil prices,
with Japan's Nikkei hitting a three-decade peak, as investors
looked beyond rising coronavirus cases and focused on hopes for
an economic recovery later in the year.
As a sign of tighter supply following Saudi Arabia's cut, seven
North Sea crude cargoes were bought and sold in the trading
window operated by Platts on Thursday. Normally, just one or two
cargoes change hands each day.
(Reporting by Bozorgmehr Sharafedin in London, additional
reporting by Yuka Obayashi in Tokyo; Editing by Elaine
Hardcastle and Alexander Smith)
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