By Shariq Khan
NEW YORK (Reuters) -Oil prices closed more than 1% higher on Friday, posting a weekly gain in low trading volume before the end of the year, buoyed by a bigger-than-expected drop in inventories last week.
futures rose 91 cents, or 1.2%, to settle at $74.17 a barrel. U.S. West Texas Intermediate crude futures rose 98 cents, or 1.4%, to $70.60 a barrel.
On a weekly basis, both Brent and WTI oil rose by around 1.4%.
U.S. crude inventories fell by 4.2 million barrels in the week ended Dec. 20 as refineries ramped up activity and the holidays boosted fuel demand, U.S. Energy Information Administration data showed Friday. [EIA/S]
Analysts polled by Reuters had expected a decline of 1.9 million barrels, while American Petroleum Institute figures published earlier this week estimated a decline of 3.2 million barrels, according to market sources. [API/S]
Optimism about Chinese economic growth has also led to hopes of higher demand next year from the top oil-importing country.
The World Bank on Thursday raised its forecast for Chinese economic growth in 2024 and 2025. Meanwhile, Chinese authorities have agreed to issue special government bonds worth 3 trillion yuan ($411 billion) next year, sources told Reuters this week, as Beijing moves to revive the economy. the sluggish economy.
The war between Russia and Ukraine, which had become a side issue in energy markets due to stagnant global oil demand, appears to be returning to the fore following numerous events this week that could impact supplies next year, the trading desk of fuel distributor TACenergy Friday.
NATO said on Friday it would strengthen its presence in the Baltic Sea, a day after Finland seized a ship carrying Russian oil on suspicion of causing internet and power cable disruptions. Meanwhile, Dutch and British wholesale prices rose as hopes for a new deal for the transit of Russian gas through Ukraine faded.
Tensions have also flared in the Middle East after Israel raided a hospital in northern Gaza on Friday and hit targets linked to the Houthi movement in Yemen on Thursday, but these events are unlikely to have much impact on oil prices ahead of next year, says StoneX analyst Alex Hodes. said.
Instead, the biggest risk in the Middle East comes from the enforcement of sanctions, which is likely to occur under the incoming administration of Donald Trump in the US, he said.
