Investing.com - Oil futures rallied to fresh three-month highs on Friday, after the International Energy Agency provided indications that the prolonged rout in oil may have hit a bottom as low prices were beginning to impact production outside of OPEC.
In a monthly forecast, the Paris-based IEA said that non-OPEC output would decline by 750,000 barrels per day in 2016, compared to a previous estimate of 600,000 bpd. U.S. production alone would decline by 530,000 bpd this year, it said.
"There are clear signs that market forces are working their magic and higher-cost producers are cutting output," the IEA said.
On the New York Mercantile Exchange, crude oil for delivery in April surged to an intraday peak of $39.02 a barrel, the most since December 7, before closing at $38.50, up 66 cents, or 1.74%.
For the week, New York-traded oil futures jumped $2.30, or 7.18%, the fourth straight weekly rise, on signs of slowing U.S. shale production.
Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by six last week to 386, the 12th straight weekly decline and the lowest level since 2009.
There are now nearly 76% fewer rigs of all kinds from a peak of 1,609 in October 2014. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
Since falling to 13-year lows at $26.05 on February 11, U.S. crude futures have rebounded by approximately 35% as a decline in U.S. shale production boosted sentiment and amid the growing view that a 20-month-long market rout is finally coming to an end.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for May delivery tacked on 34 cents, or 0.85%, on Friday to close the week at $40.39 a barrel, not far from a three-month peak of $41.47 hit on March 8.
On the week, London-traded Brent futures rose $1.51, or 4.31%, the third consecutive weekly gain, as continued hopes major oil producers will discuss a potential output freeze lifted prices.
Brent futures are up by roughly 30%, since briefly dropping below $30 a barrel on February 11. Short-covering began in mid-February after Saudi Arabia and fellow OPEC members Qatar and Venezuela agreed with non-OPEC member Russia to freeze output at January levels, provided other oil exporters joined in. A meeting is planned for later this month or early next month in which producers will discuss the details of the proposed action.
Iran's ISNA news agency reported on Sunday that oil minister Bijan Zanganeh said Tehran would join discussions between other producers about a possible freeze only after its own output reached pre-sanction levels of nearly four million barrels per day.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share, driving down prices by more than 70% over the past 20 months.
Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $1.89, compared to a gap of $2.21 by close of trade on Thursday.
In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for further evidence of a slowdown in production.
Developments surrounding a potential deal between OPEC and non-OPEC producers to cap output will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 14
The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.
Tuesday, March 15
The Bank of Japan is to announce its benchmark interest rate and publish its rate statement. The announcement is to be followed by a press conference.
The U.S. is to release reports on retail sales and producer price inflation, while the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Wednesday, March 16
The U.S. is to release reports on building permits, housing starts, consumer price inflation and industrial production. Meanwhile, the U.S. Energy Information Administration is to release its weekly report on crude stockpiles.
Later in the day, the Federal Reserve is to announce its latest interest rate decision and hold a post-policy meeting press conference.
Thursday, March 17
The Swiss National Bank is to announce its benchmark interest rate and publish its monetary policy assessment. The announcement is to be followed by a press conference.
Later, the Bank of England is to announce its benchmark interest rate and publish the minutes of its monetary policy meeting.
The U.S. is to release the weekly report on initial jobless claims as well as data on manufacturing activity in Philadelphia.
Friday, March 18
The U.S. is to round up the week preliminary data on consumer sentiment, while Baker Hughes will release weekly data on the U.S. oil rig count.