Oil prices were on track last night for their biggest annual percentage gain in seven years after commodities rebounded during 2016.

Crude has been boosted by an agreement last month brokered by  per cent and Russia to cut output, which is due to take effect starting from tomorrow (January 1).

Stronger-than-expected demand for oil and metals from China and expectations of increased infrastructure spending in the US after Donald Trump’s election victory have also boosted prices. reported The Times.

Benchmark Brent crude futures have risen by more than 50 per cent this year to about $57 a barrel, the biggest gain since 2009, when prices increased by 78 per cent. Last night Brent crude stood at $57.28 in London, up 42 cents on the day.

The annual rise was the first in two years, “and while the market saw a rocky road to get to this point with wild swings and at times historic volatility, the surge into the end of the year may have set a low in oil that could last for years,” said Phil Flynn, senior market analyst at Price Futures Group, in a note to Marketwatch.

Brent crude on London’s ICE Futures exchange declined 22 cents, or 0.4 per cent, to $56.63 a barrel. The global benchmark saw an annual rise of 52 per cent, which was also its largest yearly rise since 2009.

Trading remained tepid ahead of the New Year holiday. Global oil markets will be closed on Monday.

Futures saw little reaction to data from oil-services firm Baker Hughes, which reported that the number of active US oil rigs rose by two in the latest week to 525.

It was a volatile year for oil futures, indeed. The US benchmark extended a rout in the beginning of the year that took it to a nearly 13-year low below $27 a barrel, before beginning a rebound that more than doubled the price of crude.

Energy Information Administration data on Thursday showed that US crude inventories grew 614,000 barrels in the week ended December 23, a moderate rise compared with the 4.2-million barrels increase tipped by the industry group American Petroleum Institute, but still above the 1.2-million barrel contraction forecast by analysts surveyed by The Wall Street Journal.

At 486.1 million barrels, US crude oil inventories are near the upper limit of the average range for this time of the year, the EIA said.

“The main driver behind last week’s build was a slowdown in refinery activity,” said S&P Global Platts, noting that the refinery utilization rate fell 0.5 per cent to 91 per cent of total capacity. This is the time of the year when crude stocks usually fall, as refiners increase production.

Gasoline stocks decreased by 1.6 million barrels, while distillates fuel inventories dropped by 1.9 million barrels in the same week. Oil production also fell by 20,000 barrels from a week earlier, to 8.76 million barrels, roughly 4.4 per cent lower than same period last year.

Analysts say the current downtrend in US oil production could reverse as oil prices rise, frustrating  per cent’s latest effort to lift prices by cutting the group’s overall output.

In November, after more than two years of low prices, the cartel and 11 non- per cent players in a landmark pact agreed to slash production by almost 1.8 million barrels a day. If fully implemented, the move could push oil prices to the $60 a barrel range early next year, and to $70 in 2018.

“The market has more faith that the participating nations will comply with the assigned production quotas this time because everyone is eager to get the prices up,” said Gao Jian, energy analyst at SCI International.

A global crude glut has plagued the oil market since mid-2014, sending prices plunging and weighing on rebound efforts.

Since the inking of the deal, several  per cent members have voiced their commitment to the cut.
However, most market watchers are waiting to see the production reports for the first few months of 2017 to gauge whether producers have really made good on their pledges.

In the past, producers have been known to cheat and produce above their allotted limits.

Nymex reformulated gasoline blendstock for January delivery RBF7, -0.65 per cent —the benchmark gasoline contract—fell 1.69 cents, or 1 per cent, to $1.6651 a gallon.

Gasoline ended a three-year streak of annual declines with a 31.4 per cent rise, its biggest annual percentage jump since 2009.