Oil prices rose more than US$1 to settle above US$55 a barrel on Friday on concerns that producers were complying with OPEC's production cuts and on expectations of continued blustery weather in the northeastern US.
Light, sweet crude for March delivery on the New York Mercantile Exchange rose US$1.19 to settle at US$55.42 a barrel. In a volatile week of trading, oil prices have climbed nearly 6.6 percent after dipping below US$50 a barrel last week.
On the ICE Futures exchange in London, Brent crude settled at US$55.29 a barrel, up US$1.17.
Tank tracker Lloyds Marine Intelligence Unit said on Friday that oil exports from OPEC fell to less than 23 million barrels a day last month from just under 24 million barrels a day in November, according to a Dow Jones newswire report.
Saudi Arabia, the world's largest crude oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports last month were 1.1 million barrels a day lower than before the OPEC's October call for production cuts.
"The market has been concerned about the rate of OPEC compliance. Yesterday, it was worried compliance was bad. Today, it's worried that it's good," said Tim Evans, an energy analyst at Citigroup Global Markets. "Overall, the larger story is that OPEC production is declining."
OPEC said it would begin cutting production by 1.2 million barrels a day in November, but some traders speculated that cartel members were not complying. The cartel said late last year it planned to cut production an additional 500,000 barrels a day starting on Feb. 1.
On Thursday, tanker tracker Oil Movements said it expects exports from OPEC to rise in mid-February. The news sent oil prices down to settle at US$54.23 on Thursday, after rising as high as US$55.90 during earlier trading.
"The market has overcome that tracker report," said Phil Flynn, an analyst at Alaron Trading Corp in Chicago. "The market is thinking that OPEC compliance will be better as we go forward. Oil is looking very strong."
Victor Shum, energy analyst with Purvin & Gertz in Singapore, also pointed out that prices are being propped up by cold weather in the US and the announcement on Tuesday that the US government plans to double the size of its Strategic Petroleum Reserve.
"If you look at trading this week, the market has found some support above the US$50-a-barrel price mark. It appears to have found a floor due to a number of factors," Shum said.
Earlier this month, crude fell to US$50 a barrel, but it rose about 10 percent over the past week as cold weather gripped the northeastern US, a major consumer of heating oil.
Natural gas settled at US$7.175 per 1,000 cubic feet (US$0.2534 per cubic meter), up US$0.27, after plunging more than US$0.51 on Thursday. Evans said prices are under some pressure because the February natural gas options contract expires on Friday and the futures contract expires tomorrow.
In other NYMEX trading, February heating oil futures gained more than US$0.04 to settle at US$1.5914 a gallon (US$0.4204 per liter), while gasoline futures rose nearly US$0.04 to settle at US$1.4834 a gallon (US$0.3919 per liter).