U.S. West Texas Intermediate and international-benchmark Brent crude oil futures settled little changed on Friday, hovering near technical levels that could stop the rally in its tracks or trigger an acceleration to the upside.

The markets were under pressure early in the session on profit-taking ahead of the weekend, but recovered from those losses after new data showed U.S. crude inventories fell far more than expected.

On Friday, February WTI crude oil settled at $61.72, up $0.04 or +0.06% and March Brent crude oil finished at $66.87, up $0.11 or +0.16%.

U.S. Energy Information Administration Weekly Inventories Report

The EIA reported that U.S. crude supplies fell by 5.467 million barrels for the week-ended December 20. Analysts were looking for a decrease of 1.7 to 3.0 million barrels. Earlier in the week, the American Petroleum Institute (API) report showed a much larger drop.

The EIA data also showed a supply jump of 1.963 million barrels for gasoline stocks and a draw of about 152,000 barrels for distillates.

Traders said refiners were behind the drop in crude inventories, which could be a sign that they are ramping up activity due to expectations of increased demand.

Helping to put a lid on prices was a report signaling that the group known as OPEC+, including members of the Organization of the Petroleum Exporting Countries and allies like Russia, may consider ending the agreement to trim global production next year.

“As far as the production cuts are concerned, I repeat once again, this is not an indefinite process. A decision on the exit should be gradually taken in order to keep up market share and so that our companies would be able to provide and implement their future projects,” said Russian Energy Minister Alexander Novak, according to Reuters on Friday, citing Russia broadcaster Rossiya 24 TV.

The report comes days after Novak was quoted as saying that OPEC+ may consider easing output restrictions at a meeting in March.

Other News

A weekly report from Baker Hughes indicated that the number of active U.S. rigs drilling for oil fell by 8 to 677 this week, marking the first decline of the past three weeks. The total active U.S. rig count also fell by 8 to 805.

Short-Term Outlook

It looks as if Russia could be a problem when it comes to the newly announced production cuts. If you recall, earlier this month, OPEC and its allies agreed to officially cut production by 500,000 barrels per day on top of its current reduction agreement, beginning in January. Those additional reductions were meant to take output cuts of 1.2 million barrels a day from October 2018 levels that was put into place in January 2019.

Recent comments from Russia suggest they may be keen on ending the production after the current deal expires in March. This isn’t particularly bullish news.