Oil prices jumped around 2 per cent on Friday, heading for a fifth week of gains, as major producers agreed on a compromise to continue some cuts to production to cope with coronavirus-hit demand even though these fell short of expectations.

Brent was up 93 cents, or 1.9 per cent, at $49.64 a barrel by 0748 GMT after gaining around 1 per cent on Thursday. West Texas Intermediate rose 76 cents, or 1.6 per cent, to stand at $46.40 a barrel, having risen nearly 1 per cent in the previous session.

OPEC and Russia on Thursday agreed to ease deep oil output cuts from January by 500,000 barrels per day, but failed to come to a compromise on a broader policy for the rest of next year.

“OPEC+ clearing the hurdle of exiting its current cuts in a coordinated way ... reinforces our conviction in a steady and sustainable rally in oil prices through 2021,” Goldman Sachs said in a report after the decision.

The increase means the Organization of the Petroleum Exporting Countries (OPEC) and Russia, a group known as OPEC+, are set to reduce production by 7.2 million bpd, or 7 per cent of global demand from January, compared with current cuts of 7.7 million bpd.

OPEC+ was expected to continue existing cuts until at least March, after backing down from plans to raise output by 2 million bpd.

Also supporting prices, a bipartisan $908-billion coronavirus aid plan gained momentum in the US Congress on Thursday.

Brent crude futures for nearby delivery are trading at a premium to future months, a structure called backwardation, which usually points to supplies tightening up and suggests receding fears of a glut.

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