Oil prices moved higher on Friday following a larger-than-expected drop in U.S. crude inventories, although gains were capped as Russia downplayed output cuts.

Oil rises following larger-than-expected drop in US crude inventories -oilandgas360

Brent crude futures gained 23 cents to trade at $68.15 per barrel, its highest level since mid-September. The West Texas Intermediate contract gained 6 cents to trade at $61.74.

For the week ending December 20 U.S. crude inventories fell by 5.5 million barrels, the Energy Information Administration said on Friday. According to estimates from Dow Jones analysts had expected a drawdown of 2.1 million barrels.

The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, may consider wrapping up their oil output reduction in 2020, Russian Energy Minister Alexander Novak said on Friday.

“That’s a pretty bearish situation,” said Robert Yawger, director of energy futures at Mizuho in New York, though he added light trading volumes may have contributed to downward pressure.

Brent has jumped more than a quarter in 2019, while WTI is up around 35%, bolstered by the group’s output cuts.

OPEC+ this month decided to prolong an oil output restriction deal until the end of March and to deepen the cuts in order to balance out the oil market.

“Novak’s comments changed the outlook a little bit. But the market has to remember that Russia always talks down the cuts. It’s their way of negotiating with OPEC,” said Phil Flynn, an analyst at Price Futures Group in Chicago.

“But the headline did take away some of the bullishness,” he said.

Earlier in the session, upbeat economic data from China and the United States and optimism over a trade deal between the two major economies had improved investor sentiment.

Profits at China’s industrial firms rose at the fastest pace in eight months in November, data from the National Bureau of Statistics (NBS) showed.

China and the United States cooled their 17-month long trade war earlier this month, announcing a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products.

In the United States, a survey on Thursday showed online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and lifting U.S. stocks to fresh highs.

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