(Bloomberg) — Oil settled above $73 a barrel for the first time in four weeks as signs that the omicron Covid-19 variant may be less severe than previous strains eased concerns about a demand hit.

West Texas Intermediate futures in New York closed 1.4% higher on Thursday amid thinning liquidity heading into the holiday period. 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. 

Trading volumes are starting to thin before Christmas, while open interest — the total number of oil contracts held by traders — for crude, gasoline and diesel futures combined is at its lowest in almost six years. Both could still leave the market prone to sharp moves.

Oil is heading for an annual gain following a strong rebound from the pandemic, though uncertainties stemming from the evolving nature of the virus may restrain gains. futures appeared to face some resistance as they approached the 100-day moving average of $74.04. Breaking above that level could trigger further buying from speculators, analysts said.

Exxon Mobil (NYSE:) has extinguished a fire at its 561,000 barrel a day Baytown oil-processing facility in Texas, one of the largest in the U.S. 

Exxon spokeswoman Julie King said the company is adjusting operating rates to focus on stabilizing the affected 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 inventories dropped by 4.72 million barrels last week, and have shrunk over 10 million barrels over the past four weeks, according to government data. An energy crunch in Europe and disruptions to supply in Libya and Nigeria have also led to some tightening in oil supplies.

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