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Oil Drifts After December Rally Turns Out To Be Biggest In Nearly a Year

© Reuters. – Oil bulls are trying to ride home with the largest monthly gain in almost a year, but nagging concerns that the market has gone up too much in December alone is weighing on sentiment.

, the U.S. crude benchmark, was down 10 cents, or 0.2%, at $61.62 per barrel by 1:13 PM ET (18:13 GMT), after hitting a seven-month high of $62.34. WTI is up almost 12% for December, heading for its largest monthly gain since January.

, the global oil benchmark, slid by 25 cents, or 0.4%, to $66.62 per barrel, after peaking earlier at $67.57.

Oil prices rose broadly earlier in the session, underpinned by optimism over an expected China-U.S. trade deal and upbeat industrial data. Traders kept a close watch on the Middle East following U.S. airstrikes in Iraq and Syria.

“These are all bulls factors, no doubt, but the market’s top-heavy,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “We’re having serious trouble holding above $62 on WTI as the market’s gone up a lot on a load of suspicious data, which might unravel in the coming weeks.”

One reason for crude’s strong run this week was U.S. Energy Information Administration data for last week pointing to an outsized of 5.47 million barrels, versus a forecast drop of 1.7 million and a previous weekly decline of 1.1 million.

To make matters worse for oil bears, did not see a commensurate rise in stockpiles, growing by just 1.96 million barrels versus a forecast 1.66 million. It was the same story with distillate inventories , which dropped by 152,000 barrels against an expected build of 800,000.

“The numbers simply pointed to an unusually strong consumption in crude for this time of year, which the EIA could revise in the coming week,” said Kilduff said. “We’ve seen them overestimates these numbers at times, so the situation for crude may not be that bullish after all.”

In Monday’s session, oil ran up early after reports that Chinese Vice Premier Liu He, Beijing’s top trade negotiator, will visit Washington this week to likely sign a phase one trade deal with the United States.

Also underpinning the market were reports of a Middle East on the edge after U.S. airstrikes on Sunday against the Kataib Hezbollah militia group.

Protesters in Iraq on Saturday briefly forced the closure of the country’s southern Nassiriya oilfield. Libyan state oil firm NOC also said it was considering the closure of its western Zawiya port and evacuating staff from the refinery due to clashes nearby.

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