Oil prices rise on optimism Omicron impact will be limited on fuel demand

Both benchmarks posted gains of about 8 percent last week, their first weekly gain in seven. They have recovered more than half the losses suffered since the Omicron outbreak on November 25.

"Market sentiment has improved as the threat of the Omicron variant has receded," Reuters quoted as saying Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd.

"WTI will probably test its recent high of $73.34 and then try to rise towards $78, the level before the Omicron fears led to a sharp sell-off late last month," he said.

South African scientists see no sign that the Omicron variant is causing more severe illness, they said on Friday, as officials announced plans to roll out vaccine boosters with daily infections approaching an all-time high.

Booster COVID-19 shots significantly restore protection against mild disease caused by the Omicron variant, the UK Health Security Agency said on Friday.

Still, investors remained cautious on the US-led coordinated release of crude reserve by oil consuming countries as well as tensions between Russia and Ukraine.

The US Department of Energy said on Friday it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on December 17, as part of a previous plan to try to reduce gasoline prices.

Meanwhile, Iraq's oil minister said on Sunday he expected the Organisation of the Petroleum Exporting Countries (OPEC) at its next meeting to maintain its current policy of gradual monthly increases in supply by 400,000 bpd.

-With agency inputs