Investing.com - In the week ahead, oil traders will continue to monitor developments in U.S.-China trade talks while supply levels will also continue to capture market attention after signs of falling supply last week supported prices.
The Organization of the Petroleum Exporting Countries cut crude output in December, a Reuters survey showed, and the American Petroleum Institute reported a 4.5 million-barrel drop in crude inventories.
Sentiment was also boosted when China confirmed that trade talks with the U.S. would be held in Beijing on Jan. 7-8 and after a survey showed China's services sector expanded in December, bucking a trend of downbeat economic data.
"Recent Chinese data is not confirming the doom-and-gloom trend," said Olivier Jakob, oil analyst at Petromatrix. "And you've got OPEC cutting."
West Texas Intermediate crude rose $1.22 cents, or 2.59%, on Friday to settle at $48.31 a barrel by close of trade on the New York Mercantile Exchange. For the week, the U.S. benchmark gained 6.57%.
Global benchmark Brent crude was up $1.46, or 2.61% to end at $57.41 a barrel. It jumped 9.98% for the week.
Both oil benchmarks posted solid gains in the first week of 2019 trading despite rising concerns that the China-U.S. trade war will lead to a global economic slowdown.
The two nations have been locked in a trade war for much of the past year, disrupting the flow of hundreds of billions of dollars’ worth of goods and raising concern of slowing growth.
Despite the demand-side worries, oil has received some support as supply cuts announced by the global coalition of producers known as OPEC+ kick in.
OPEC, Russia and other non-members agreed in December to reduce supply by 1.2 million barrels per day (bpd) in 2019. OPEC's share of that cut is 800,000 bpd.
The Reuters survey on Thursday found OPEC supply fell by 460,000 bpd in December, following assessments by Bloomberg and JBC Energy also showing a sizeable decline.
The focus now will be on whether producers deliver further curbs in January to implement the deal fully. Iraq, a laggard in reducing production in the last OPEC cutback, said on Friday it would stick to the new accord.
"The market is likely to take some comfort from the fact that crude oil production from the OPEC+ will continue to drop," said Ole Hansen of Saxo Bank.
"Sentiment, however, is weak with (U.S. President Donald) Trump's trade war with China a major hurdle."
Ahead of the coming week, Investing.com has compiled a list of the main events likely to affect the oil market.
Tuesday, January 8
The American Petroleum Institute is to publish its weekly update on U.S. oil supplies.
Wednesday, January 9
The U.S. Energy Information Administration will release its weekly report on oil stockpiles.
Friday, January 11
Baker Hughes will release weekly data on the U.S. oil rig count.
-- Reuters contributed to this report