* China struggle to bridge trade gaps, more time seen likely
* U.S. oil output hits 12 mln bpd:
* Output in U.S. to reach 13 mln bpd by end-2019 -Citi
* U.S. oil drillers cut rigs for first week in three -Baker Hughes
(Adds settlement prices, market activity)
By Laila Kearney
NEW YORK, Feb 22 (Reuters) - Oil prices touched their highest
since mid-November on Friday and posted weekly gains for the second
week in a row, boosted by hopes that U.S.-China trade talks would soon
produce a deal, although new record U.S. oil supply limited gains.
Brent crude futures briefly reached $67.73 a barrel, their 2019
high. The global benchmark fell 5 cents to settle at $67.12 a barrel.
Brent gained 1.2 percent on the week.
U.S. West Texas Intermediate (WTI) crude futures gained 30
cents to settle at $57.26 per barrel, after hitting $57.81 earlier on
Friday, also their highest for the year. WTI recorded a 3-percent
weekly rise and reached its strongest settlement price of 2019.
Top U.S. and Chinese trade negotiators met on Friday to wrap up a
week of talks that have seen the two sides struggle to reach a deal by
a March 1 deadline.
U.S. President Donald Trump will meet with Chinese Vice Premier
Liu He at the Oval Office later on Friday.
"Oil prices, as well as the stock market have been rising on
the anticipation that China and the U.S. would agree to a trade
deal," said Andy Lipow, president of Lipow Oil Associates in
Houston. "In addition, we're seeing a tightening of oil supplies
around the world resulting from OPEC and non-OPEC production cuts."
Both oil benchmarks have risen this year after the Organization of
the Petroleum Exporting Countries and its allies, including Russia,
began to cut output to prevent a supply glut from growing.
Surging U.S. crude oil production , is partly offsetting OPEC's
U.S. crude production last week climbed to a record 12 million
barrels per day as stockpiles built for a fifth straight week to their
highest since October 2017 and exports hit an all-time high, the
Energy Information Administration said on Thursday.
"We see total U.S. crude production hitting 13 million bpd by
year-end, with 2019 averaging 12.5 million bpd," U.S. bank Citi
said following the release of the EIA report.
However, U.S. energy firms cut four oil rigs operating this week
after three weeks of adding rigs, General Electric Co's
Baker Hughes energy services firm said in its report on Friday.
Meanwhile, crude inventories in West Texas fell to the lowest in
four months after an additional pipeline started transporting crude
from the largest U.S. shale field to the Gulf Coast, largely for
exports, data from market intelligence provider Genscape showed.
With U.S. supply surging, Goldman Sachs said it expected non-OPEC
supply to grow by 1.9 million bpd this year, more than offsetting the
That means much will depend on demand, which Goldman said it
expected to grow by 1.4 million bpd in 2019. Goldman said it expected
an average Brent price of $60-$65 per barrel in 2019 and 2020.
Money managers cut their net long U.S. crude futures and options
positions in the week to Feb. 5, the U.S. Commodity Futures Trading
Commission (CFTC) said on Friday.
GRAPHIC: U.S. oil production GRAPHIC: U.S. commercial crude oil
(Additional reporting by Julia Payne and Ahmad Ghaddar in London and
Henning Gloystein in Singapore; Editing by Marguerita Choy and James Dalgleish)
((Laila.email@example.com, (917) 809-0054))