Crude prices rallied sharply after Saudi Arabia and Russia said they agreed on the need to extend output cuts into March next year and despite weaker than seen China industrial output for April and as North Korea rattled markets with a statement its latest missile test at the weekend was capable of carrying a large nuclear warhead and investors also fretted over the potential spread of cyberattacks that have already hit 200,000 victims in at least 150 countries.
The U.S. West Texas Intermediate crude June contract jumped 1.71% to $48.66 a barrel, while on the ICE Futures Exchange in London, Brent oil for July delivery soared 1.59% to $51.65 a barrel. China reported industrial production rose a less than expected 6.5%, missing a 7.5% gain seen with April crude throughput the lowest since September 2016 and crude oil output down 3.7% on year to 15.99 million metric tons.
As well, China said retail sales for April rose 10.&% on year, more than the 10.^% seen, and fixed-asset investment gained 8.9%, below the 9.1% expected.
Ahead the market is looking to the latest market overview from the International Energy agency for the month of April.
Russian Energy Minister Alexander Novak amd SSSaudi energy minister Khalid al-Falah told reporters in Beijing they agreed on the need to seek a longer extension of crude oil output cuts, but did not clarify if that was a certain outcome for a a May 25 meeting in Vienna between OPEC and non-OPEC producers part of the pact such as Russia.
"Judging from the current dynamics in the decline of the oil and oil products inventories, the markets will see such decline in inventories by the end of 2017 - early 2018, which will lead to cuts in inventories to a five-year average," Novak told Russian emdia earlier.
Last week, oil futures settled nearly flat on Friday, but still registered the first weekly gain in a month on the likelihood that key crude producers will extend output cuts beyond an agreed-on June deadline when they meet later this month.
OPEC and non-member oil producers are considering extending a global supply cut past the end of the year to give the market more time to rebalance, according to OPEC and industry sources.
Some officials in recent days have also suggested the possibility of deeper production cuts to help clear a supply glut.
In November last year, OPEC and other producers, including Russia agreed to cut output by about 1.8 million barrels per day between January and June, but so far the move has had little impact on inventory levels.
A final decision on whether or not to extend the deal beyond June will be taken by the oil cartel on May 25. Oil futures posted their largest one-day gain since December 1 on Wednesday, rallying more than 3% after the U.S. Energy Information Administration said domestic oil stockpiles fell 5.2 million barrels in the week ended May 5, far exceeding market expectations. The reading marks the biggest weekly drawdown since December.
Crude sank to a five-month low at the start of the week, rattled by concern over increasing U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.
Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 17th week in a row, implying that further gains in domestic production are ahead.
The U.S. rig count rose by 9 to 712, extending an 11-month drilling recovery to the highest level since August 2015.