Oil pared gains on Friday with a decline in U.S. stock markets after an ABC News report added to concerns about President Donald Trump`s exposure to a probe into Russian meddling in last year`s campaign
Wall Street`s main indexes all fell by more than 1 percent after the ABC report that former national security adviser Michael Flynn was prepared to tell investigators that prior to taking office, Trump directed him to make contact with Russians.
Flynn, a central figure in a federal investigation into Moscow`s alleged interference in the 2016 U.S. presidential election, pleaded guilty on Friday to lying to the FBI.
"Oil prices have pared earlier gains in tandem with losses seen in the equity market partly because news regarding Michael Flynn," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics in London.
U.S. West Texas Intermediate crude
Both benchmarks were on track to decline for the week, down about 1 percent.
Before the Flynn news, crude prices had been approaching their highest levels since the summer of 2015 after OPEC and other major producers agreed to continue reining in output until the end of 2018 to try to reduce the global oil glut and boost prices.
The Organization of the Petroleum Exporting Countries and some non-OPEC producers led by Russia agreed on Thursday to keep current limits on output in place until the end of next year.
The deal, which has been in place since January and was due to expire in March, has seen producers reduce output by 1.8 million barrels per day (bpd), helping to halve global oil oversupply over the past year.
The latest OPEC agreement, however, included a possible early exit from the deal if the market overheats.
Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market does not flip into a deficit too soon, prices do not rally too fast and rival U.S. shale firms do not boost output further.
"It leaves a question mark about the second half (of 2018) and about the commitment of Russian oil companies, which will be price dependent," Petromatrix strategist Olivier Jakob said.
The chief executive of Russia`s top private producer Lukoil told Reuters he would like to see the price of oil stable at current levels, trading in the $60-65 per barrel range.
Price rises could fuel more drilling in the United States, which is not party to the agreement, Russia warned.
Rising U.S. production has been a thorn in OPEC`s side, undermining the impact of its output curbs. The U.S. rig count data, an indicator of future production, increased for a second week in a row.
U.S. production rose to 9.5 million bpd in September, its highest monthly output since reaching 9.6 million bpd in April 2015, according to federal energy data going back to 2005. On an annual basis, U.S. output peaked at 9.6 million bpd in 1970.