WTI, Brent Prices Rebound

Oil prices closed 1.5% higher on Friday, rebounding from five-month lows, following positive US jobs data and assurances by Saudi Arabia that Russia is ready to join OPEC in extending supply cuts to reduce a persistent glut.

The market, however, remained in technically oversold territory with futures trading down as much as 19% from highs in mid April, prompting some speculators to exit their long positions, Reuters reported.

Brent futures gained 72 cents, or 1.5%, to settle at $49.10 a barrel, while US West Texas Intermediate crude climbed 70 cents, or 1.5%, to close at $46.22 per barrel.

After falling almost 5% on Thursday, both contracts continued to collapse overnight with WTI falling to $43.76, its lowest since Nov. 15, and Brent down to $46.64, its lowest since Nov. 30 when the Organization of Petroleum Exporting Countries agreed to cut production during the first half of 2017.

Both benchmarks pared losses after Saudi Arabia's OPEC Governor Adeeb al-Aama told Reuters that OPEC and non-OPEC nations were close to agreeing to extend a deal to curb production by 1.8 million barrels per day for six months from Jan. 1.

OPEC sources said on Thursday that OPEC is likely to extend cuts when it meets on May 25 but that a deeper cut is unlikely.

In the United States, meanwhile, job growth rebounded sharply in April and the unemployment rate dropped to 4.4%, near a 10-year low, according to government data.

"The jobs report is extremely positive for the US economy...and should help boost oil demand," said Mark Watkins, regional investment manager for US Bank’s private client group in Park City, Utah.

Despite gains on Friday, both benchmarks declined for a third week in a row—Brent by about 5% and WTI by 6%—in their longest losing streak since November.

"The energy complex is slowly succumbing to an opinion that this year’s OPEC production cuts have been ineffective," Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a note.

"We feel that OPEC has come to a fork in the road in which the current agreement will be abandoned or steps will need to be taken to double down on current efforts by increasing production curtailments," Ritterbusch said.