Oil up on Russia-OPEC hopes; U.S. rig count jump limits gains

Fri Oct 21, 2016 4:59pm EDT
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By Ethan Lou

NEW YORK (Reuters) - Oil settled up on Friday on hopes Russia and OPEC will reach agreement at the weekend on market support initiatives to keep crude above $50 a barrel, although traders cautioned about pressure from a double-digit rise in the U.S. oil rig count.

Russian Energy Minister Alexander Novak said he would make proposals to his counterpart from OPEC leader Saudi Arabia this weekend on price-supportive measures that could include an oil production freeze.

Some traders were skeptical about Russia's commitment after Novak also said the country might produce up to 11 million barrels per day next year to hit a new post-Soviet record. OPEC, led by Saudi Arabia, has also been pumping crude at or near record levels. [OPEC/M]

"Market bulls are counting on Russia's credibility to seal a deal with OPEC to take prices to new levels above $50," said Phil Flynn, analyst at the Price Futures Group in Chicago.

Also pressuring the market, oil services firm Baker Hughes reported that U.S. oil rigs rose by 11 this week, the first double-digit growth since August. [RIG/U]

Brent LCOc1 settled up 40 cents, or 0.8 percent, at $51.78. For the week, it ended flat.

U.S. West Texas Intermediate crude settled up 22 cents, or 0.4 percent, at $50.85 a barrel. WTI hit a July 2015 high of $51.93 on Wednesday and ended the week 1 percent higher.

Oil prices, which in February hit 12-year lows of around $26, have risen more than 13 percent since Sept. 27, when the Organization of the Petroleum Exporting Countries announced plans to curb production for the first time in eight years to rein in a global crude glut that has halved prices from mid-2014 highs above $100 a barrel.   Continued...

A worker checks the valve of an oil pipe at an oil field owned by Russian state-owned oil producer Bashneft near the village of Nikolo-Berezovka, northwest of Ufa, Bashkortostan, January 28, 2015. REUTERS/Sergei Karpukhin/File Photo