Oil rises 1% on tightening crude supply, upbeat economic data

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U.S. West Texas Intermediate (WTI) crude futures ended the session up 31 cents, or 0.5 percent, at $63.89 a barrel.

However, global oil markets remain firm, amid Opec+ supply cuts, US sanctions on oil exporters Venezuela and Iran and increased fighting in Opec member Libya.

Output declines in OPEC because of the supply pact, plus the sanctions on Venezuela and Iran, have exceeded expectations.

The perception that analytical worries shift from one extreme to the other as frequently as crude prices rise and fall was not lost on Tamas Varga, senior analyst at PVM Oil Associates, who stated in a research note published Thursday that "There are so many uncertainties surrounding the oil market that it makes it virtually impossible to predict developments for the rest of the week let alone for months or a year ahead".

But the group said that the market remained oversupplied and warned of slowing demand growth, according to S&P Global Platts.

Just last week, the U.S. Energy Information Administration estimated in its weekly supply-demand report that production had reached a new high of 12.2 million barrels per day.

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Current oil demand stands around 100 million bpd.

According to the report, only time will tell if the EIA current demand forecast (1.4 mb/d) proves accurate, but the "risks are now to the downside".

Saudi output dropped to its lowest in over two years, boosting compliance with supply cuts to 153 percent, according to IEA estimates. US drillers added 2 rigs in the latest week, bringing the national count to 833 rigs, oilfield services firm Baker Hughes reported on Friday.

OPEC and its allies are expected meet in June to decide whether to continue withholding supply.

The rig count fell for the past four months as independent exploration and production companies cut spending on new drilling to focus on earnings growth instead of increased output. However, U.S. gasoline stocks fell by a whopping 7.7 million barrels, sending U.S. gasoline futures higher by 3.5 per cent on their close on Wednesday.

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