Oil pared gains on Dec. 1 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% 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 Dec. 1 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.
Brent futures were trading at $63.58 a barrel (bbl) by 12:14 p.m. CST (18:14 GMT). That put the new front-month February contract up just one cent from where January expired on Nov. 30. The lower priced February future was up about 1.5% from where it closed in the previous session.
U.S. West Texas Intermediate (WTI) crude was up 75 cents, or 1.3%, at $58.15/bbl. WTI's January contract does not expire until Dec. 19.
Both benchmarks were on track to decline for the week, down about 1%.
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.
OPEC and some non-OPEC producers led by Russia agreed on Nov. 30 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 bbl/d, 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 CEO 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/bbl to $65/bbl range.
Price rises could fuel more drilling in the U.S., 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 bbl/d in September, its highest monthly output since reaching 9.6 million bbl/d in April 2015, according to federal energy data going back to 2005. On an annual basis, U.S. output peaked at 9.6 million bbl/d in 1970.