Oil prices settled at their highest in nearly two months on Jan. 26, their second weekly gain, as positive U.S. economic growth and signs of Chinese stimulus boosted demand expectations, while Middle East supply concerns added further support.

Brent crude futures rose $1.12 or 1.36%, to settle at $83.55/bbl, its highest close since Nov 30. U.S. West Texas Intermediate crude climbed 65 cents or 0.84% to $78.01/bbl, also the highest close since November.

"Economic stimulus from China, stronger-than-expected 4Q GDP growth in the U.S., cooling U.S. inflation data, ongoing geopolitical risks, and the larger-than-expected 9.2 million barrel drop in U.S. commercial crude stocks for last week have all combined to wedge prices higher," said Tim Evans, an independent oil market analyst.

Brent crude and the U.S. benchmark made weekly gains of more than 6%, marking their biggest weekly increase since the week ending Oct. 13 after the start of the Israel-Hamas conflict in Gaza.

The Houthi military spokesperson said naval forces carried out an operation targeting an oil tanker in the Gulf of Aden, causing a fire to break out, adding to worries of supply disruptions.

Oil was also boosted this week by a larger than expected drawdown in U.S. crude stockpiles. The depletion in inventories, especially around the NYMEX futures delivery point at Cushing in Oklahoma and across the Midwest, could create a squeeze on nearby futures prices.

Supply concerns are evident in the structure of Brent futures. The premium of the first-month contract to the sixth on both Brent and WTI rose to the highest since November, indicating a perception of tighter prompt supply.

A potential fuel supply disruption after a Ukrainian drone attack on an export-oriented oil refinery in southern Russia also supported prices.

On the demand side, the U.S., the world's biggest oil consumer, registered faster than expected economic growth in the fourth quarter, data showed on Jan. 25. Sentiment was also buoyed this week by China's latest measures to boost growth.

Traders, however, bet the U.S. central bank is more likely to start its round of rate cuts in May, rather than March, weighing on crude futures.

Also curbing gains, Baker Hughes said U.S. energy firms this week added two oil rigs, pushing the figure up to 499.

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