Vincent Kessler Reuters
Brent crude oil rose to trade near $60 a barrel on Friday, recovering from near a 5½-year low as investors squared books ahead of the year-end festive break after six months of falling prices.
Still, oil prices were on track for a fourth straight week of declines after OPEC members last month decided against cutting production despite a huge global overhang of supply.
Brent and the U.S. crude oil benchmark have almost halved in value since June and many investors expect further falls unless supply tightens or demand picks up.
Brent for February was up $1.10 a barrel at $60.37 by 0950 GMT. The contract settled down $1.91 on Thursday, after trading as high as $63.70 a barrel.
U.S. crude was up $1.20 at $55.31.
Tamas Varga, oil analyst at London brokerage PVM Oil Associates, said some investors were covering short sales and preparing to enter the holidays without too much exposure after months of volatile trade.
"We have some technical buying and pre-weekend short-covering," Varga said.
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Ken Hasegawa, commodity sales manager at Newedge, agreed: "Following the long and steep decline in oil prices, we have seen some buying interest in recent days," he said. "But there is still a lot of selling pressure."
Oil companies have been announcing cuts in exploration and capital spending as crude's price decline makes projects uneconomical.
Besides the $9 billion in spending cuts already announced, energy consultancy Wood Mackenzie forecasts that to maintain their debt levels, oil companies will need to reduce spending next year by another $170 billion, or 37 percent, from 2014 if Brent remains around its current level.
At $60 a barrel, only three of the top 40 international oil companies generate sufficient free cash flow to cover spending, including distribution to shareholders, Wood Mackenzie said.
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U.S. oil output is forecast to grow by 800,000 barrels per day (bpd) in 2015, down from 1.6 million bpd this year, Credit Suisse analysts said in a note.
Saudi Arabia's powerful oil minister said on Thursday OPEC could not cut output without the support of other big producers and attempts to get them on board had not worked.
Ali al-Naimi said it was impossible for OPEC to cut alone to reverse the price slump, which he called temporary, when others were pumping more. Doing so could lead to a loss of market share, with no guarantee of supporting prices, he said.