Oil prices rose slightly on Friday, posting a second straight weekly gain, as strong demand led to a larger-than-expected draw in U.S. crude stockpiles, offsetting concerns about higher U.S. interest rates. Brent crude futures rose 20 cents, or 0.3%, to $76.72 a barrel by 03:04 GMT. U.S. WTI crude futures rose 19 cents, also 0.3%, to $71.99 a barrel. Edward Moya, an analyst at OANDA, said the outlook for crude demand is improving as the summer heat peaks in the United States. He also noted that Saudi Arabia has been successful in increasing oil prices to Europe and Asia.

U.S. crude inventories fell more than expected on strong refining demand, the Energy Information Administration said on Thursday. Gasoline inventories also saw a big drawdown after a surge in driving the previous week. That came as major oil exporters, including Saudi Arabia and Russia, announced new production cuts for August. The total production cuts now stand at more than 5 million barrels per day (bpd), which is equivalent to 5% of global oil production.

However, oil price gains were limited by growing expectations that the U.S. central bank is likely to raise interest rates at its July 25-26 meeting, after keeping rates steady in the 5%-5.25% range in June. The number of new claims for unemployment benefits in the United States rose modestly last week, while private-sector payrolls rose significantly in June. The data, released on Thursday, raised the possibility of a Federal Reserve rate hike this month.

Meanwhile, OPEC is likely to maintain its optimistic view on oil demand growth for next year when it releases its first outlook later this month. Sources close to OPEC said that while it is expected to slow compared to this year, it is still above average. Higher interest rates would raise borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. Investors will be looking for clues on interest rate policy from inflation data in the United States and China due next week.

Edward Moya said, "Oil prices have bottomed this week and appear to have the potential to move higher as long as concerns about a global recession do not worsen."

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