Energy stocks surged to a two-week high on Friday as the number of active oil rigs declined and traders speculated that an Organization of Petroleum Exporting Countries meeting would lead to a production freeze.

West Texas Intermediate, the benchmark gauge for U.S. crude prices, rose 5.7% to $39.37 a barrel while the S&P 500 Energy Index climbed 2.15%, outpacing the broader S&P 500. The energy sector was the day's best performer, with major oilers including Exxon Mobil (XOM - Get Report) , Chevron (CVX - Get Report) , PetroChina  (PTR - Get Report)  and Royal Dutch Shell (RDS.A - Get Report)  were higher, while the Energy Select Sector SPDR ETF (XLE - Get Report)  added 2%.

The number of active U.S. oil rigs dropped by 8, to 354, according to weekly data from Baker Hughes, reflecting a slide in crude oil prices that dipped to nearly $26 a barrel before starting to rebound in March. They remain more than 60% lower than a 2014 peak of more than $107, which has made it tougher for energy companies to repay loans taken out before the drop.

The total number of active U.S. rigs, including natural gas, was 443, down by 545 from a year ago, according to data from the Houston oilfield services company. Among major oil- and gas-producing states, Texas lost seven rigs and North Dakota two. Alaska, California and Kansas each dropped one.

The U.S. rig count peaked at 4,530 in 1981. The previous low of 488 set in 1999 was eclipsed March 11, and has continued to dip.

Oil prices, along with producers stocks, benefited from a statement by Kuwait's OPEC governor earlier this week that members of the oil cartel and other producing countries likely will reach a deal later this month to freeze production. The state-run Kuwait News Agency quoted Nawal al-Fuzai on Tuesday as saying that oil ministers of member nations and several non-OPEC countries showed interest in freezing production at the same rate of February, but that further negotiations are ongoing.

Al-Fuzai says Iran remains a holdout on freezing production levels as it tries to recoup money lost to years of sanctions after its nuclear deal with world powers. Officials will meet April 17 in Qatar.

First-quarter earnings for oil companies, meanwhile, are likely to be dismal, Paul Cheng, an analyst with Barclays, said in a note to clients on Friday. "It was an ugly quarter across the energy sector with nearly nowhere to hide," he wrote. "We expect each of the refiners will report earnings below their current consensus
estimates while the major oil companies will mostly come in below expectations."


This article was written by a staff member of TheStreet.