On Wednesday, the Federal Reservice said it would accelerate the pace of its tapering of bond purchases so that the program would end in March, sooner than previously planned. The Fed kept its benchmark federal funds rate between near zero, and penciled in three quarter-percentage point interest-rate increases next year. Following the news, “risk assets are benefitting as the Fed has turned attention to inflation early,” Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, told MarketWatch. “Oil is benefiting from hopes for continuing demand growth,” Haworth said. “The Fed attention on inflation should help the economy continue to grow, benefiting cyclical assets, at the expense of defensive assets like gold.”

West Texas Intermediate crude for January delivery tacked on 14 cents, or 0.2%, to settle at $70.87 a barrel on the New York Mercantile Exchange after spending part of the session trading below $70. February Brent crude, the global benchmark, rose 18 cents, or 0.2%, to end at $73.88 a barrel on ICE Futures Europe.

U.S. petroleum inventory numbers Wednesday leaned to the “bullish side,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. “The balance between the bullish EIA numbers and the risk of demand destruction will play out in the up coming weeks,” he said. “Volatility is front and center  going into yearend in all asset classes.” Crude oil saw a much larger draw than expected, while gasoline supplies marked a modest decline despite expectations for an increase, said Zahir. “The only bearish number was the good-size build” in crude inventories at the Cushing, Okla., delivery hub, he said. The Energy Information Administration reported Wednesday that U.S. crude inventories fell  by 4.6 million barrels for the week ended Dec. 10. That followed more modest declines in each of the previous two weeks. On average, analysts had forecast a fall of 1.7 million barrels, according to a poll conducted by S&P Global Platts. The American Petroluem Institude on Tuesday reported an 815,000-barrel decrease.

Also Wednesday, the EIA reported weekly inventory declines of 700,000 barrels for gasoline and 2.9 million barrels for distillates. The S&P Global Platts survey expected a supply climb of 200,000 barrels for gasoline and an inventory decline of 400,000 barrels for distillates. The EIA data also showed crude stocks at the Cushing, Okla., Nymex delivery hub edged up by 1.3 million barrels for the week. Crude stocks in the Strategic Petroleum Reserve edged down by 2 million barrels last week to 598.9 million barrels.

A report by the International Energy Agency on Tuesday cut the demand outlook for crude in the first quarter of 2022 as a result of the spread of the omicron variant, but said the effect would be short-lived. Nonetheless, the monthly update projected a market that would be substantially oversupplied in the first half of 2022. The cut to the demand outlook contrasted with the monthly update from Organization of the Petroleum Exporting Countries a day earlier, which boosted the outlook for demand growth in the first quarter of 2022 while leaving its full-year forecasts for 2021 and 2022 unchanged.

Meanwhile, new modeling analyzed by the Centers for Disease Control and Prevention warns of an imminent surge in cases driven by the omicron variant, according to a report in The Washington Post.  The report comes after the World Health Organization warned that omicron was spreading faster than any prior variant and could overwhelm health systems, even if cases remain milder. The WHO, in its weekly epidemiological update, also said preliminary evidence “suggests that there may be a reduction in vaccine efficacy and effectiveness against infection and transmission associated with omicron, as well as an increased risk of reinfection.”