Oil prices rose by more than 1 percent early on Friday, supported by expectations of a tightening market ahead and a weaker U.S. dollar.
As of 10:02 a.m. ET on Friday, WTI Crude was up 1.09 percent at $52.92 and Brent Crude was trading up 0.95 percent at $56.11.
The Brent Crude March 2021 futures contract expires today, and April is the more actively traded contract.
Oil prices rose on the last trading day before Saudi Arabia begins, as per its unilateral pledge, to cut in February and March an additional 1 million barrels per day (bpd) of its crude oil production beyond its quota under the OPEC+ pact.
The futures curve of the Brent contract is firming into backwardation, the state of the market signaling tighter supplies with the prices of the nearer futures contracts higher than those further out in time.
Expectations that supply will be tighter when global oil demand is uncertain, with the continued spread of the coronavirus and new variants in South Africa and the UK, supported the price of oil early on Friday.
In addition, the U.S. dollar weakened today, making crude buying cheaper for holders of other currencies.
Economic data out of Europe on Friday surprised to the upside, which gave market participants hope that some of the biggest European economies did not contract as feared, despite the lockdowns at the end of last year.
The biggest economy in Europe, Germany, saw slim growth of 0.1 percent in Q4, beating expectations of zero growth, despite the new lockdown.
Spain's economy grew by 0.4 percent in the fourth quarter, compared to expectations of contraction, while France's economy, although shrinking by 1.4 percent in Q4, still beat forecasts of a 4-percent quarterly decline.
Despite the bullish factors combining to lift oil prices early on Friday, analysts continue to warn that the slow vaccine rollout and the still spreading COVID-19 could delay global economic and oil demand recovery.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More