(Updates with the EIA/Scotiabank reports and general market commentary from the first paragraph.)
Crude advanced for a second week on speculation Saudi Arabia, the world's second largest producer of oil, will cut production and on hopes progress is being made at the ongoing trade talks between the US and China.
Intraday Friday, oil prices fell as the market seem to be taking a breather following a sharp rebound in Brent and West Texas Intermediate futures, which had fallen to as low as $42 per barrel in the recent 25%-plus sell-off from a peak in October.
US President Donald Trump, who said in a Twitter message that talks with China are progressing "very well", won't be meeting Chinese Vice-President Wang Qishan after he pulled out of the World Economic Forum in Davos.
That's not a missed opportunity as the US expects China's leading trade negotiator may visit Washington later in January, implying top-level discussions could follow this week's trade deliberations in Beijing to resolve a tariff war that has pressured equity markets.
The plunge in global equity markets in late December had put immense pressure on oil prices, as markets feared a prolonged trade row between the world's two largest economies is bound to hit oil demand. Markets were also lower because of the Federal Reserve's hawkish policy stance laid out by Chairman Jerome Powell, who has since backtracked to point out the Central Bank will be patient in removing monetary stimulus.
That assurance from Chairman Powell underpinned equity markets, which provided support to the oil market as well.
Recent strength in oil prices has also come from a report in The Wall Street Journal saying Saudi Arabia, in an effort to boost Brent prices to $80 a barrel, plans to make additional cuts to its crude-oil exports by bringing them down to around 7.1 million barrels a day. Currently, the country's oil production is around 10.5 million barrels per day.
"Oil's breaking above $50 on strong Saudi support," Jay Hatfield, portfolio manager of the InfraCap Active MLP ETF, was cited as saying.
While the market is now pricing in mildly slower global growth, its trade fears won't be realized and commodities are expected to receive a broad boost as the market unwinds those concerns over the coming months, according to a report from Scotiabank.
"Oil prices are currently digesting a bout of bearish sentiment and WTI is expected to rise back into the high-$50s in 2019 and gradually toward $65/bbl in the following years," Rory Johnston, commodity economist at Scotiabank, wrote in a note on Friday.
Given this backdrop, futures ended the week higher despite bearish US inventory data. The Energy Information Administration said Wednesday that stockpiles slumped by 1.7 million barrels over a week to Jan. 4 - that compares with expectations for a 2.8 million-barrel drop in a Reuters' survey of analysts.
Meanwhile, data from the energy services firm Baker Hughes ( BHGE ) showed that the number of oil rigs operating in the US dropped by four to 873 over seven days to Jan. 11. The combined oil and gas rig count in the US was flat at 1,075 as gas rigs rose by four to 202.
In Canada, the number of oil rigs in operation, however, soared by 83 to 103, while the number of gas rigs surged by 25 to 81. As a result, the North American total advanced by 108 to 1,259 in the week and compared with 1,215 a year ago, the data showed.