Oil prices swung, swayed by the U.S. dollar and stock market fluctuations amid light trading volume. 

West Texas Intermediate traded near US$78 a barrel, holding onto a more than 5 per cent rally in the week’s first three sessions. Gains were limited by a stronger dollar after U.S. economic growth in the third quarter was firmer than previously estimated and applications for U.S. unemployment benefits were little changed last week, remaining near a historically low level.

The Energy Information Administration reported a 5.9-million-barrel draw in U.S. commercial stockpiles last week, with nationwide holdings at the lowest level for this time of year since 2014. Participation in oil markets has dwindled heading into the Christmas holidays but liquidity has been poor for much of this year, adding to volatility.

“Oil pared gains after the dollar caught a bid after better-than-expected jobless claims data and an upwardly revised final look at Q3 GDP,” said Ed Moya, senior market analyst at OANDA.

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Alongside those forces, traders are monitoring closely China’s reopening from Covid-19. The nation is seeing 1 million infections and 5,000 deaths a day as curbs are eased, but quarantine rules for overseas travelers are being softened — a potential boost for air travel.

“Strong oil inventory draws we had this week in the U.S., Europe and the Middle East are helping crude prices,” said Giovanni Staunovo, a commodities analyst at UBS Group AG. “The market will closely follow a likely-bumpy road of the reopening in China and how much Russian oil exports fall” due to sanctions and trading restrictions.

Oil is poised to end a volatile year modestly higher. Recession risks in the U.S. and Europe as central banks continue to tighten are among key headwinds. Against that, Group of Seven sanctions on Russian flows, and scope for OPEC and its allies to cut supply are boosting prices.

Prices:

  • WTI for February delivery slipped 6 cents to US$78.23 a barrel on the New York Mercantile Exchange at 10:25 a.m. in New York
  • Brent for February settlement added 12 cents to US$82.32 a barrel on the ICE Futures Europe exchange.