Oil prices rose more than 1 per cent on Friday, climbing further away from five-month lows hit earlier in the week after a report that Washington could postpone trade tariffs on Mexico and amid signs that OPEC and other producers may extend their supply cuts.

Brent crude futures were up 85 cents, or 1.4 per cent, at $62.51 a barrel. They gained 1.7 per cent on Thursday.

U.S. West Texas Intermediate (WTI) crude futures were up 71 cents, or 1.4 per cent, at $53.30 per barrel. They finished the previous session 1.8% higher.

Brent and WTI on Wednesday hit their lowest marks since mid-January at $59.45 and $50.60, respectively, after U.S. crude output reached a record high and stockpiles climbed to their highest since July 2017.

That put both contracts in bear territory, having lost more than 20% from peaks reached in late April.

But on Thursday oil prices followed U.S. equities higher after Bloomberg News reported that the United States may delay tariffs on goods from Mexico as talks continue.

“After prices hit the depth of the sewer this week, and (were) arguably in oversold territory, traders were always going to be predisposed to book profits ahead of the weekend,” Stephen Innes, managing partner at Vanguard Markets said in a note.

Despite the two-day bounce, Brent is heading for a third week of decline, down more than 3 per cent. So too is WTI, which is on track for a decline of about 0.4 per cent.

Sentiment for oil remains dim as fresh signs emerge of a stalling global economy, with the trade war between the U.S. and China intensifying.

Prices had been supported by supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and producing allies, including Russia. Supply has also been limited by U.S. sanctions on oil exports from Iran and Venezuela.

President Vladimir Putin said on Thursday that Russia had differences with OPEC over what constituted a fair price for oil, but that Moscow would take a joint decision on output at a policy meeting in coming weeks.

Also potentially keeping a lid on prices is the unrelenting rise in U.S. crude production.

U.S. oil output rose to a record 12.4 million barrels per day (bpd) in the week to May 31, the Energy Information Administration said on Wednesday, an increase of 1.63 million bpd since May 2018.

U.S. crude oil inventories also surged by 6.8 million barrels over the same week, to 483.26 million barrels, their highest levels since July 2017.

Research firm Rystad Energy has raised its forecast for U.S. crude output by 200,000 barrels bpd, to 13.4 million bpd by the December 2019, it said in a statement on its website.

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