NEW YORK (Reuters) - Oil prices rose more than 6 percent on Friday to end with the biggest weekly gain in a month as drawdowns in U.S. crude stockpiles fed hopes that a punishing global oversupply may be approaching a tipping point after nearly two years.
The shutdown of the Keystone crude pipeline to Cushing, Oklahoma supported U.S. crude futures. Oil also drew support after Russia said its crude output fell in April, ahead of a meeting of major oil-producing countries in Doha aimed at freezing output.
U.S. gasoline and diesel prices rallied more than 5 percent each. U.S. crude has mostly gained this year from cheap gasoline pump prices and benign driving weather. Ultra low sulfur diesel, also known as heating oil, rebounded this week on forecasts for seasonably cold weather through late April.
Brent crude futures settled up $2.51, or 6.4 percent, at $41.94 a barrel, hitting a session high above $42.
U.S. crude futures closed up $2.46, or 6.6 percent, to $39.72. Earlier, it rose to nearly $40.
For the week, both benchmarks rose about 8 percent, their most since the week ended March 4.
“We are starting to draw crude inventories in the U.S.” said Scott Shelton, energy broker with ICAP in Durham, North Carolina. “Run rates are rising and U.S. production is falling.”
“This is very different I think than what was expected. The market perceives that these draws may continue as the Keystone outage will increase the likelihood,” Shelton said.
U.S. crude stockpiles fell by nearly 5 million barrels last week versus analysts forecasts for a build of 3.2 million barrels.
The closure of the Keystone pipeline cut 590,000 barrels per day from the market. The pipeline was scheduled to resume operating on Tuesday.
U.S. energy companies cut oil drilling rigs for a third week in a row, adding to improving fundamentals.
In Brent, the front-month contract has been trading at its smallest discount to the second-month since January, indicating more upward potential for the European benchmark.
Aside from planned oilfield maintenance works in Norway and Britain that are supporting Brent, global crude prices have also been helped by last month’s disruptions in Nigerian supplies at a venture operated by Royal Dutch Shell.
“Put Doha on top of it, and your eyes are looking towards the tightening of the market,” said Bjarne Schieldrop, chief commodities analyst at SEB Bank in Oslo.
Additional reporting by Libby George in LONDON; Editing by Andrea Ricci and David Gregorio