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Oil prices wrap up week with 7th weekly loss as supply surplus concerns continue

Investing.com - Oil prices rallied Friday, as a stronger jobs report lifted optimism about a U.S. soft landing, but that wasn't enough to stave off a seventh-straight weekly plunge as fears about a global supply surplus continues to keep the bears in control.

At 14:30 ET, West Texas Intermediate crude futures rose 2.7% to settle at $71.23 a barrel. The Brent oil futures expiring in February had added 2.4% to $75.81 per barrel. Both contracts, however, ended the week about 4% lower.

OIl prices rise on growing US soft landing bets

Oil prices were pushed higher Friday, a stronger than expected jobs report added to hopes the U.S. will avoid a recession, underpinned the crude demand outlook.

"A soft landing in the US and ongoing structurally accommodative government policy in China could see demand beat expectations," ANZ Research said in a note.

But.. Oversupply concerns remain front and center

Concerns that supply will outstrip demand, leading to supply surplus continued cast a shadow on oil prices at time when markets doubt pledges by OPEC+ to collectively cut production by 2.2 million barrels per day early next year.

"The lack of details in the announcement opens the possibility of producers sidestepping their commitments," ANZ Research said in a recent note.

Saudi Arabia and Russia attempted to restore confidence, calling on fellow members of the Organization of the Petroleum Exporting Countries and its allies -- a group known as OPEC+ -- to adhere to an agreement on output cuts made last week.

Should OPEC+ members honor their pledges to cut that would ease worries about supply surplus concerns despite ongoing non-OPEC output growth.

"Nevertheless, the cuts should see our previously forecast surplus in Q1 2024 turn into a small deficit. .

Rig counts fall

Oilfield services firm Baker Hughes Co (NYSE:BKR) reported its weekly U.S. rig count fell by two to 503.

The fall in rigs, which started at the start of summer, pointing to slowing production comes just as data showed U.S. production rose to record highs.

In the U.S., crude production was near record highs of over 13 million barrels per day in the week to Dec. 1, threatening to exacerbate concerns at the time over slowing American oil consumption.

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