US light crude CLc1 was expected to average $55.78 a barrel next year, up from last month's forecast of $54.78.
Refiners have profited in recent months as the spread widened between U.S. crude and Brent futures prices. By comparison, production is now only higher in Russian Federation and Saudi Arabia.
WTI prices were supported by data from the U.S. Energy Information Administration late on Thursday showing domestic oil production C-OUT-T-EIA declined last week to 9.75 million barrels per day (bpd) from 9.79 million bpd the previous week.
In November, the Organization of the Petroleum Exporting Countries, along with a group of other major producers outside the cartel including Russian Federation, agreed to extend a deal to cap production through 2018. USA stockpiles declined for the sixth consecutive week last week, according to EIA data.
Trading was typically thin at year end, with many traders on vacation.
Activist Erica Garner declared brain dead
Garner suffered a heart attack over the weekend, which had been triggered back an asthma attack. "She's not gone, she's brain dead", Garner's heartbroken mother explained early Thursday.
Oil prices rose on Friday, nearing their highest levels in more than two years, supported by rising global demand and physical prices and continuing expectations that OPEC and other producing countries will extend a deal to cut output. Concern that Opec's efforts weren't enough and would end abruptly in March 2018 led short-sellers to dominate the scene for several months, with WTI plunging to the low-US$40s in June.
The data come on heels of a bullish USA oil inventory report that showed lower crude oil supplies as well as a dip in production, according to the weekly Energy Department data released Thursday. Inventories are down by nearly 20 percent from historic highs last March, and well below this time a year ago or in 2015. Supportive equities, with DOW hitting another record high also kept oil elevated.
As for the threat of USA shale, Ashley Petersen, lead oil market analyst at Stratas Advisors, said, "We see USA supply continuing to grow next year but are less concerned about a sudden supply glut re-emerging, as rising drilling and completion costs will likely slow production growth".
Another possible risk for oil prices in the new year: President Donald Trump's trade agenda.