Oil rallied to the highest since early December as U.S. crude inventories fell more than anticipated.

West Texas Intermediate futures for February settled above US$78 a barrel after a 5.90-million-barrel stock draw reported by the Energy Information Administration helped reverse the selloff earlier this month. Trading volumes sank to the lowest level since May with many participants already gone for the holidays. 

Crude remains on track for the first back-to-back quarterly decline since 2019 as further tightening by leading central banks risks tipping the U.S. and European Union into recession. Traders are also tracking the impact of China’s easing of harsh virus restrictions, and a warning from Saudi Arabia that the Organization of Petroleum Exporting Countries and its allies would remain proactive and pre-emptive in managing the global oil market.

Russia’s seaborne oil shipments collapsed in the first week of Group-of-Seven sanctions targeting Moscow’s petroleum revenues, a potential source of alarm for governments around the world. In North America, meanwhile, TC Energy Corp. pushed back the full return of its Keystone pipeline by a week.

Prices:

• WTI for February delivery gained US$2.06 to settle at US$78.29 a barrel
• Brent for February settlement gained US$2.21 to US$82.20 a barrel.