Oil rose on Wednesday as the market weighed cold weather in the United States and government data showing drawdowns in U.S. crude and fuel stockpiles.
Data from the U.S. Energy Information Administration showed crude oil stockpiles across the world's top energy consumer fell by 1.5 million barrels in the week to December 25, compared with analyst expectations for a 2-million-barrel drawdown.
Most of that draw came in the isolated West Coast market, with Gulf Coast and East Coast inventories showing crude builds.
Distillate stocks fell by 2 million barrels as cold weather hit the U.S. Northeast, the world's largest heating oil market. Temperatures were expected to remain unseasonably cold for the next 48 hours, according to private forecaster Meteorlogix.
U.S. crude for February delivery rose 69 cents to $79.56 a barrel by 12:43 p.m. EST in thin pre-holiday trade after touching a five-week high the previous day. London Brent crude for February rose 76 cents to $78.40 a barrel.
The dollar gained across the board on Wednesday, hitting its highest since late September against the Japanese yen as it benefited from year-end flows in thin trade and from the view the U.S. economy is on the road to recovery.
Oil prices are now trading at roughly double the levels seen this time last year, when they dipped below $40 a barrel.
Concerns about a potential supply impact due to political developments in OPEC member country Iran have also supported prices this week.
Tens of thousands of government supporters rallied in cities across the country on Wednesday, swearing allegiance to the clerical establishment and accusing opposition leaders of causing unrest in the Islamic state.
(Reporting by Matthew Robinson and Robert Gibbons in New York, Emma Farge in London and Judy Hua in Singapore; Editing by Christian Wiessner)