Oil prices climb after US oil output falls for sixth week

Brent nudged up t o$37.10 a barrel, while US crude was trading at $34.70

Oil futures rose in Asian trade on Friday, buoyed by renewed optimism prices may have bottomed out after official US data showed oil production fell to its lowest level since November 2014.

Brent futures nudged up 3 cents to $37.10 a barrel as of 0147 GMT after settling 14 cents higher in the previous session. The crude benchmark is set to end the week with a gain of more than 5%.

US crude futures had climbed 13 cents to $34.70 a barrel, after settling down 9 cents in the previous session.

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While US crude inventories rose to a new record of 517.98 million barrels last week, output fell for a sixth straight week to 9.08 million barrels a day, according to data from the US Department of Energy's Energy Information Administration.

Cuts in US production are providing price support, but investors are also waiting for key US economic data later on Friday to give further direction, said Ben Le Brun, market analyst at Sydney's OptionsXpress.

"A lot of traders are keeping their powder dry in front of non-farm payroll data - it's the number one (indicator) in terms of crude consumers," he said.

Positive numbers for both February payrolls and US jobs data, both due at 1330 GMT on Friday, could maintain the momentum of higher oil prices, Le Brun said

"Investors are a little more confident we've seen a bottom in oil (prices)," he added. Le Brun is forecasting oil prices will hover around $40 by the middle of this year.

Further cuts in US output are possible in the coming months.

"The tight credit market will make it difficult for US shale producers to refinance upcoming debt and we may see an accelerated decline in US oil production in 2016-17," ANZ said in a note on Friday.

The decline in US production will fuel a 1.5-percent drop in oil supply by non-members of oil producers' cartel OPEC this year, the first year of non-OPEC negative supply growth since 2008, Paul Bloxham, chief Australia economist at HSBC said in a report on Friday.

Non-OPEC supply is forecast to fall by 850,000 barrels a day this year, of which 760,000 barrels will be cut from US production.

HSBC, which kept its price forecasts unchanged, assumed an average Brent price of $45 a barrel this year, rising to $60 in 2017 and $75 thereafter.