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Oil hovered near US$70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

FILE PHOTO: A sticker reads crude oil on the side of a storage tank in the Permian Basin

FILE PHOTO: A sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant/File Photo

NEW YORK: Oil hovered near US$70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 4 cents, or 0.1per cent, to US$69.59 a barrel by 11:50 EST (1450 GMT) while U.S. West Texas Intermediate crude was at US$66.08 a barrel, rose 6 cents, or 0.1per cent.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

“Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million bpd this year compared with 11.32 million bpd in 2020.

(Additional reporting by Shadia Nasalla, Florence Tan; editing by Jason Neely, David Evans and David Gregorio)

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