On the New York Mercantile Exchange, crude oil for delivery in February tacked on 60 cents, or 1.6%, to close the week at $38.10 a barrel. It earlier rose to $38.28, the most since December 9.
On Wednesday, Nymex prices soared $1.36, or 3.76%, after weekly supply data showed that U.S. oil stockpiles fell 5.9 million barrels last week. Market analysts' expected a crude-stock gain of 1.1 million barrels.
Also Wednesday, industry research group Baker Hughes (N:BHI) said that the number of rigs drilling for oil in the U.S. decreased by three to 538 last week, the fifth decline over the past six weeks.
For the week, New York-traded oil futures surged $3.52, or 9.7%, the biggest weekly rise since early October. The steep gains were likely related to thin year-end trade, which increased volatility and heightened the severity of market moves.
Despite last week's strong gains, U.S. oil futures are still down nearly 26% in 2015 amid worries over ample domestic supplies. Prices fell to $34.29 earlier this month, the lowest since February 2009.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for February delivery inched up 53 cents, or 1.42%, on Thursday to close the week at $37.89 a barrel. Prices touched $38.10 earlier, a level not seen since December 16.
On the week, London-traded Brent futures increased $1.34, or 2.74%, snapping a three-week losing streak.
Brent oil prices are still on track to post an annual decline of 33% this year, as oversupply concerns dominated market sentiment for most of the year. Prices slumped to $35.98 on December 22, a level not seen since July 2004.
Oil futures have fallen sharply this month after the Organization of the Petroleum Exporting Countries failed to agree on output targets to reduce a glut of oversupply on global energy markets.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by OPEC last year not to cut production in order to defend market share.
Meanwhile, Brent's discount to the West Texas Intermediate crude contract stood at 21 cents, compared to a discount of 14 cents by close of trade on Wednesday.
U.S. crude has been firmer relative to Brent recently, on signs that the U.S. oil market is likely to grow tighter following Congress' decision to lift a 40-year old ban on domestic oil exports, while a global glut gets worse in 2016 due to soaring production in Saudi Arabia and Russia.
Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.
Heading into the final week of the year, trading volumes are expected to remain light as many traders already closed books due to the holiday period, reducing liquidity in the market and increasing volatility.
The U.S. is to release key reports on consumer confidence, pending home sales and jobless claims, as market players look for further indications on the strength of the economy and the future path of U.S. rate hikes.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 28
Markets in Australia, New Zealand, the U.K. and Canada will remain closed in observance of Boxing Day.
Tuesday, December 29
The U.S. is to release a report on consumer confidence as well as data on the trade balance. Later in the day, the American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.
Wednesday, December 30
The U.S. is to publish private sector data on pending home sales as well as the weekly government report on crude oil inventories.
Thursday, December 31
Markets in Japan and Germany will remain closed for New Year’s Eve.
The U.S. is to produce weekly data on initial jobless claims as well as a report on manufacturing activity in the Chicago region.
Friday, January 1
China is to publish government data on manufacturing activity for December.
Meanwhile, markets in China, Japan, Australia, New Zealand, Europe, Switzerland, the U.K., Canada and the U.S. will remain closed for the New Year’s holiday.Last modified on Thursday, 25 February 2016