Oil prices rallied Friday as investors bought the dip after previous day's sharp declines.

Oil prices plunged Thursday, with both U.S. oil and Brent crude tumbling over 4 percent, as worries about oversupplies dampened investor sentiment.

Traders were also encouraged by hopes for an oil output cut extension. Saudi Arabia's OPEC Governor Adeeb Al-Aama said Friday that Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC nations were close to agreeing a deal on supply cuts, according to the Reuters.

Meanwhile, the number of rigs operating in U.S. fields increased by 6 to 703 this week, marking a sixteenth straight weekly gains, oilfield service company Baker Hughes reported Friday.

The West Texas Intermediate for June delivery climbed 0.70 U.S. dollar to settle at 46.22 dollars a barrel on the New York Mercantile Exchange, while Brent crude for July delivery increased 0.72 dollar to close at 49.10 dollars a barrel on the London ICE Futures Exchange.

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