Oil prices edged higher on Friday, reaching new two-month highs and posting the strongest weekly percentage gains this year as investors digested signs of an easing oversupply.
Brent crude futures were up $1.01, or 2%, at $52.50 a barrel, rising more than 9% this week. US West Texas Intermediate crude futures ended Friday's session up 67 cents, or 1.4%, to $49.71. It surged 8.6% on the week, CNBC reported.
The front of the crude oil curve jumped into backwardation, with the month-ahead trading above the subsequent month, showing investors are not expecting recent gains to last. Brent also broke above its 200-day moving average, a key technical level, for the first time since May 30.
US crude and gasoline inventories fell much more steeply than expected this week and the world's biggest oil exporter Saudi Arabia said it would further reduce oil output in August.
"Positive signs came from the draw in gasoline stocks this week, as the US moves into the peak driving season," said Ashley Kelty, oil analyst at Cenkos Securities.
Oilfield services firm Baker Hughes reported the number of oil rigs operating in the United States rose by 2 to a total of 766 last week. The rig count has risen fairly steadily for more than a year, but the growth has recently moderated.
US crude stocks fell sharply by 7.2 million barrels in the week to July 21 due to strong refining activity and an increase in exports, according to data from the Energy Information Administration.
Brimming US crude supplies have been a challenge to production cuts to prop up prices led by the Organization of Petroleum Exporting Countries, meaning weekly US inventory data are closely watched.
US crude oil production has been on the rise since mid-2016, but it dropped to 9.41 barrels per day in the week to July 21, from 9.43 million bpd the week before.
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