Press "Enter" to skip to content

Trade deal optimism and stock draw keep oil steady as traders keep eye on MidEast

West Texas Intermediate (WTI) crude futures edged up 1 cent to $61.73 a barrel by 0210 GMT. The U.S. benchmark is up about 36% so far this year.

Meanwhile, Brent crude futures were at $68.28 a barrel, up 12 cents. The international benchmark has risen around 27% in 2019.

“There are a couple of catalysts driving up the crude oil prices recently: trade optimism, a large drop in U.S. commercial stockpiles, a plunge in USD and air strikes,” said Margaret Yang, market analyst at CMC Markets.

China’s Commerce Ministry stated on Sunday that it is keeping in close touch with the U.S. on the signing of a long-awaited trade deal.

On Dec. 13, both countries announced a “Phase one” agreement. It reduces some U.S. tariffs in exchange a big jump in Chinese purchases of American farm products and other goods.

Oil prices were also supported by a larger than expected fall in U.S. crude stocks. U.S. stockpiles fell by 5.5 million barrels in the week to Dec. 20, far exceeding a 1.7-million-barrel drop prediction in a Reuters poll.

Unrest in the Middle East also have traders keeping a watch on markets.

However, markets showed few signs of impact after news of U.S. air strikes in Iraq and Syria against the Kataib Hezbollah militia group, even as “additional actions” may be taken by the U.S.

Protesters on Saturday also forced the closure of Iraq’s southern Nassiriya oilfield, while the U.S. carried out air strikes on Sunday in Iraq and Syria against the Kataib Hezbollah, an Iran-backed militia group.

“Traders are keeping an eye on the smoldering powder keg in Iraq, OPEC’s second large producer,” said Stephen Innes, chief Asia market strategist at AxiTrader.

U.S. officials said the air strikes in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base were successful, but warned that “additional actions” may still be taken.

Iraq’s oil ministry have stated that the Nassiriya oilfield production halt will not affect the country’s exports and production operations. It will use additional output from southern oilfields in Basra instead.

Mass protests have gripped Iraq since Oct. 1.

Libyan state oil firm NOC also stated that it is considering the closure of its western Zawiya port and evacuating staff from the refinery located there due to clashes close by.