(Bloomberg: Oil settled higher than $73 per barrel in the last four weeks, as indications that the omicron Covid-19 strain may not be as severe and threatening than other strains raised concerns about the possibility of a spike in oil demand.

The West Texas Intermediate Futures ended 1.4% higher in New York on Thursday due to thin liquidity as the holiday season approaches. A U.K. health agency said Thursday omicron was less likely to lead to hospitalizations than the Delta strain, while U.S. regulators cleared Merck & Co.’s Covid-19 pill, dissipating some of the worst fears about the variant’s effect on oil demand.

“Crude prices stabilized after a rash of mostly positive COVID vaccine/treatment headlines in the fight against omicron,” said Edward Moya, senior market analyst at Oanda Corp. “It seems all the major catalysts that await oil in the New Year lean towards higher prices,” he said. 

The trading volumes have been declining before Christmas and open interest, which is the sum of all oil futures contracts owned by traders, has fallen to its lowest level in nearly six years. These two factors could leave the market susceptible to rapid moves.

The pandemic has seen oil prices rebound strongly, although there is still uncertainty about the future. However, the annual gains are expected to be strong. Futures faced some resistance when they approached $74.04 per day. Analysts stated that breaking this mark could result in further buying by speculators.

Exxon Mobil (NYSE:) extinguished the flames at the 561,000 barrel-per-day Baytown, Texas oil-processing plant. It is one of the biggest in America. 

Julie King spoke on behalf of Exxon and stated that they are adjusting their operating rates to help stabilize the unit. Gasoline’s premium over crude surged as much as 6.1% after the news.

“Today we had some bullish factors to drive up market sentiment,” said Andrew Lebow, senior partner at Commodity Research Group. “The Baytown refinery fire could potentially tighten gasoline supplies in the U.S. and it’s happening while crude stocks are being drawing down domestically.” 

U.S. crude inventory fell by 4.72million barrels last Week and has shrunk to over 10 million barrels in the past 4 weeks according government data. Oil supplies have been tightened due to a European energy crisis and supply disruptions in Libya and Nigeria.

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