Investing.com – Oil prices edged lower on the last day of 2019. But it remains on course for the biggest annual rise since 2016, supported by optimism for a U.S.-China trade deal and ongoing supply cuts.
Brent crude futures for March delivery was down 11 cents, or 0.2%, to 66.56 a barrel by 0158 GMT. Meanwhile, the U.S. West Texas Intermediate (WTI) crude for February (CLc1) was down 11 cents, or 0.2%, at $61.57 per barrel. Brent for February delivery closed on Monday at $68.44.
Brent has risen by about 24% in 2019 and WTI has gained approximately 36% for the year. Both benchmarks are set for the biggest yearly gain in three years, buoyed by positive developments in U.S.-China trade talks and output cuts pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies.
On Monday, the White House’s trade adviser announced that the U.S.-China Phase 1 trade deal would likely be signed in the next week.
“Oil prices have followed the general de-risking drift into year-end despite a rise in Middle East tensions and last week’s bullish-for-oil-price inventory draws as the broader markets appear to be losing some of that holiday cheer,” said Stephen Innes, chief Asia market strategist at AxiTrader.
However, tensions are high in the Middle East after U.S. air strikes on Sunday against the Katib Hezbollah militia group in Iraq and Syria. Operations resumed at Iraq’s Nassiriya oilfield on Monday after brief halt in production due to protestors.
Looking ahead, U.S. crude inventories are expected to fall by about 3.2 million barrels in the week to Dec 27. This would be a third consecutive weekly fall, as shown by a preliminary Reuters poll on Monday. U.S. stockpiles fell by 5.5 million barrels in the week to Dec. 20. Figures are expected on Friday.
Innes said traders would also closely watch the EIA’s U.S. October crude production figures, set to come out later on Tuesday.
“It’s expected to show robust continuous growth in the agency’s short-term outlook,” he said.
The United States is on track to become a net petroleum exporter on an annual basis for the first time in 2020. Its oil output is forecasted to rise by 930,000 barrels per day (bpd) to a record 13.18 million bpd next year, the EIA said earlier this month.
Observers expect growing U.S. supplies to offset cuts from OPEC in 2020 amid weakening worldwide demand. This is expected to keep oil prices rangebound.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.