Oil rises 2pc on hopes for US-China trade deal

• US says phase one trade deal with China in good shape
• OPEC Oct oil output jumps on Saudi recovery - Reuters survey
• US non-farm payrolls increase 128,000 in October
• Figures show surprising pick-up in Chinese factory activity

NEW YORK: Oil prices rose 2% on Friday on signs of progress in US-China trade talks and stronger-than-expected economic data in both countries, including US employment and Chinese manufacturing activity numbers.

Brent crude was up $1.10, or 2%, at $60.72 a barrel by 11:33 a.m. ET (1533 GMT), but remained on course for a drop of about 2% for the week.

West Texas Intermediate crude rose $1.06, or 1.9%, to $55.24 a barrel, a weekly loss of more than 2.4%.

A Reuters survey showed that oil prices are expected to remain under pressure this year and next. The poll of 51 economists and analysts forecast Brent crude would average $64.16 a barrel in 2019 and $62.38 next year.

Another Reuters survey found output from OPEC members recovered in October from an eight-year low, with a rapid recovery in Saudi production from attacks on its oil infrastructure in September offsetting losses in Ecuador and voluntary curbs under an international supply pact.

Worries about global economic growth, and oil demand, were eased after US Commerce Secretary Wilbur Ross said on Friday the initial "phase one" trade pact with China is likely to be signed around mid-November.

A trade war between the world's two biggest economies has weighed on prices, fanning fears that slowing economic growth could dent demand for oil.

"The market has been driven lower this week on fears of slowing demand growth because of uncertainty regarding US-China trade relations and a sizeable expected build in crude stocks," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

"I think today's action is a reversal of that, and you're probably also seeing some weekend covering."

Prices were also supported by expansion in China's factory activity at the fastest pace since 2017, raising optimism over the health of the world's second-largest economy. US jobs growth also slowed less than expected in October.

"With the positive jobs report and the Fed recently lowering interest rates, I think it definitely eases some concerns around US economic growth," McGillian said. "Worries about economic growth are largely in Europe and Asia."

US crude inventories rose by 5.7 million barrels in the week to Oct. 25, dwarfing expectations for an increase of just 494,000 barrels.

US crude production soared nearly 600,000 barrels per day in August to a record 12.4 million, buoyed by a 30% increase in Gulf of Mexico output, government data released on Thursday showed.