Investing.com – Crude oil prices settled higher on Friday as traders continued to cheer the decision from major oil producers to extend cuts in oil output by nine months through 2018 to rid the market of excess supplies.
On the New York Mercantile Exchange crude futures for January delivery rose 1.7% to settle at $58.36 a barrel, while on London's Intercontinental Exchange, Brent rose 1.68% to trade at $63.68 a barrel.
OPEC and some non-OPEC producers who met on Thursday in Vienna, Austria, said they would continue to cut supply by 1.8 million barrels per day (bpd) until the end of 2018, raising expectations for a continued drawdown of inventories as rebalancing in markets gets underway.
The production-agreement has rein in excess supplies, but further cuts are needed as Khalid Al-Falih said a draw of about 150 million barrels were required to bring global crude inventories back to the five-year average.
Goldman Sachs (NYSE:GS) Commodity Research said that it expects the duration of the OPEC extension would help to reduce the risk of a sharp increase in production but noted that the cuts would not target high prices amid fears over a ramp up in US shale output.
"We take away from these [OPEC] comments a strong commitment to normalizing inventories and also to remain data dependent, which reduces the risk of both unexpected supply surprises and excess stock draws," Goldman said.
In the U.S., investors mulled over a report from Baker Hughes showing the number of oil rigs operating in the US rose by 2 to 749, further adding to fears that increased output from US producers would dampened OPEC efforts to rein in excess supplies.
The uptick in rig counts come as data this week showed U.S. domestic output rose 15% to 9.66 million barrels per day (bpd).