Oil prices up more than $1 a barrel on tighter supply outlook

U.S. West Texas Intermediate (WTI) crude futures for May delivery were up $1.28, or 1.6%, at $82.63 a barrel.

Both benchmarks were up more than 2% on the week and were on track to finish higher for a third consecutive month.

In the prior session, oil prices had come under pressure from last week's unexpected rise in U.S. crude oil and gasoline inventories, driven by an increase in crude imports and sluggish gasoline demand, according to Energy Information Administration data.

However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts noted the increase was lower than expected for the time of year.

"We ... expect U.S. inventories to rise less than normal in reflection of a global oil market in a slight deficit," SEB analyst Bjarne Schieldrop said. "This will likely hand support to the Brent crude oil price going forward."

U.S. refinery utilisation rates, which rose 0.9 percentage points last week, also supported prices.

The U.S. economy, meanwhile, grew faster than previously estimated in the fourth quarter. Gross domestic product increased at a 3.4% annualized rate from the previously reported 3.2% pace, the Commerce Department's Bureau of Economic Analysis said.

"The strength in the stock market suggests strong forward earnings that are, in turn, hinting at a surprisingly strong US economy conducive toward better than expected energy product demand," said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.

data also affirmed the case for the U.S. Federal Reserve to hold off on cutting its short-term target, a Fed governor said on Wednesday, but he did not rule out trimming rates later in the year.

"The market is converging on a June start to cuts for both the Fed and the European Central Bank," JPMorgan analysts said in a note. Lower interest rates typically support oil demand.

Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organization of Petroleum Exporting Countries (OPEC).

Increased geopolitical risk has raised expectations of possible disruption, but OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.

"[We] do not see any indications that the recent run-up in prices due to the heightened Russian infrastructure risk will prompt any policy reversal at next week's JMMC meeting." RBC analyst Helima Croft said.

"Any serious shift will likely have to wait until the June 1 ministerial meeting, and even then, we believe the group will be very judicious when it comes to unwinding any cuts."