Oil prices rose more than 1% on Friday. Posting a weekly gain on a year-end slump that was supported by a bigger-than-expected drawdown of U.S. crude inventories last week.
Brent crude futures rose 91 cents, or 1.2%, to $74.17 a barrel. WTI crude futures rose 98 cents, or 1.4%, to $70.60 a barrel.
Both Brent and WTI gained about 1.4% on the week.
U.S. crude inventories fell by 4.2 million barrels in the week ended Dec. 20 as refineries ramped up activity and the holiday season increased fuel demand, the U.S. Energy Information Administration (EIA) showed on Friday.
According to market sources, analysts had expected a 1.9 million barrel drop, while figures released earlier in the week by the American Petroleum Institute (API) forecasted a 3.2 million barrel drop.
Optimism about China’s economic growth has also raised hopes for higher demand from the largest oil importer next year.
The World Bank on Thursday raised its forecast for China’s economic growth in 2024 and 2025. Meanwhile, Chinese authorities agreed to issue 3 trillion yuan ($411 billion) worth of special treasury bonds next year as Beijing moves to revive a stagnant economy.
The war between Russia and Ukraine is coming to the forefront for energy markets after a series of incidents this week that could affect supply next year. Rising Russia-Ukraine tensions are raising fears of supply shocks in 2025.
NATO said on Friday it would increase its presence in the Baltic Sea after Finland seized a ship carrying Russian oil suspected of causing internet and power outages.
Meanwhile, wholesale natural gas prices in the Netherlands and Britain rose as hopes for a new deal to transport Russian gas through Ukraine faded.
Israel also raised tensions in the Middle East by raiding a hospital in northern Gaza on Friday and striking targets linked to Yemen’s Houthi movement on Thursday.
But these incidents are unlikely to have much impact on oil prices into next year as it could not so far.
The biggest risk in the Middle East is likely to be the imposition of sanctions by the incoming US administration of Donald Trump.
