Oil prices rose about 3 per cent on Friday on upbeat US jobs data and signs that US sanctions on Venezuelan exports have helped tighten supply, then extending gains after weekly data showed U.S. drillers cut the number of oil rigs.

Brent crude oil futures rose $US1.91 a barrel, or 3.14 per cent, to settle at $US62.75 a barrel

The international benchmark notched a weekly gain of about 1.9 per cent.

US West Texas Intermediate (WTI) futures ended the session at $US55.26, up $US1.47 a barrel or 2.73 per cent and gained about 3 per cent on the week.

Prices climbed to session highs after General Electric Co’s Baker Hughes energy services firm reported that US energy firms cut the number of operating oil rigs for a fourth week in the past five, bringing the count to the lowest in eight months.

Last week’s data showed the rig count in January fell the most in a month since April 2016.

Oil prices got a boost from Wall Street after surprisingly strong US job growth data fed demand for equities.

The US imposed sanctions on Venezuela’s Petroleos de Venezuela SA this week, keeping tankers stuck at ports.

‘We are beginning to see the impact to crude supplies from the sanctions on Venezuela. It has driven up domestic crude prices, cutting into refiner margins,’ Andrew Lipow, president of Lipow Oil Associates in Houston, said.

‘That, combined with Saudi cuts and Libyan production declines has changed market sentiment as we appear to be moving towards a better balanced supply situation.’

Some US refiners have begun reducing crude processing as sanctions have boosted oil costs and as gasoline margins crashed to their lowest in nearly a decade, market sources told Reuters on Thursday.

In January, Saudi Arabia pumped 350,000 bpd less than in December, a Reuters survey showed.

Financial markets also gained support from comments on Twitter by U.S. President Donald Trump on Thursday, saying he would meet Chinese President Xi Jinping soon to try to resolve a trade standoff.

But Trump later warned he could postpone talks if a deal remains elusive.

China’s trade delegation said the latest round of talks with the United States made ‘important progress’, state news agency Xinhua reported.

‘Many traders recognise that sense is likely to prevail and a deal will be struck after the summit – although the shape of any deal will continue to drive a jittery market,’ Cantor Fitzgerald Europe said in a note.

But a survey showed China’s factory activity shrank by the most in almost three years in January, reinforcing fears about fuel demand in the world’s second-largest economy.

Analysts believe the oil market will be more balanced in 2019 after supply cuts from the Organisation of the Petroleum Exporting Countries (OPEC).

Iraq’s oil exports averaged 3.649 million barrels per day (bpd) in January, down slightly from the previous month, the oil ministry said on Friday.