Brent crude futures were up 44 cents, or 0.57%, to $78.03 a
barrel, while U.S. West Texas Intermediate crude futures rose 57
cents, or 0.79%, to $72.76 at 1032 GMT.
At its intra-day peak, the WTI futures contract traded more than
$1 above previous close.
Both benchmarks are on track to end the first week of the year
higher, having almost recouped their losses from Thursday after
hefty U.S. gasoline and distillate stock builds.
The price rebound serves as "a reminder of the risk that is
rooted in ever-growing tension in the Middle East," PVM analyst
Tamas Varga said in a note.
Israeli forces plan a more targeted approach in the north and
further pursuit of Hamas leaders in the south, its defence
minister said on Thursday.
As the threat of the conflict expanding persists, Blinken was
set to travel to the Middle East for a week of diplomacy, the
State Department said.
"There is still plenty of tension in the Middle East with Houthi
rebels launching a sea drone in the Red Sea, a U.S. airstrike in
Baghdad," ING analysts said in a report on Friday.
Investors also watched macroeconomic data for indications of
when interest rate cuts might commence, as lower borrowing cuts
can spur economic growth and translate to higher oil demand.
Euro zone inflation rose in December and could continue rising
in early 2024, which would ease pressure on the European Central
Bank to start cutting rates.
The latest U.S. Federal Reserve meeting on Thursday gave a
growing sense that inflation is under control and rising concern
about the risks that an "overly restrictive" monetary policy may
hold for the economy.
Investors will also be looking ahead to U.S. payroll and
unemployment data at 1330 GMT.
(Reporting by Robert Harvey in London and Sudarshan Varadhan in
Singapore; editing by Barbara Lewis)
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