Hopes for a US-China trade deal and an American Petroleum Institute (API) report showing lower US crude inventories pushed oil prices about 1% to the highest in more than three months on 26 December.
Brent crude futures LCOc1 settled at $67.92 a barrel, rising 72 cents, or 1.07%. US West Texas Intermediate (WTI) crude futures CLc1 settled at $61.68 a barrel, up 57 cents, or 0.93%, Reuters reported, noting that both benchmarks were their strongest since 17 September.
“I find it very difficult to see it being sustained much higher than where it is now because of the step back a bit, we see the global economy is slowing and so the level of demand – not just because of the economy but also the blend of energy sources being used – so anything above 70 to me looks a bit strange and if it does it won’t be there for long,” Justin Urquhart Stewart, director at Seven Investment Management in London, told New Europe by phone on 27 December.
He noted that stocks of energy companies are at all time highs. “But be wary of this market now, be very wary because it is the end of the calendar year where greedy fund managers will want to make sure that their funds looks absolutely pristine because it’s bonus time so it’s a bit of a fools market we have to be very careful of,” Urquhart Stewart said.
He noted that the big theme is the trade issue. Beijing on 25 December said it was in close touch with Washington on a trade deal signing ceremony, after US President Donald J. Trump said on 24 December that he and Chinese President Xi Jinping announced a Phase 1 agreement that would reduce some US tariffs in exchange for more Chinese purchases of American farm products.
According to Reuters, Brent has rallied 25% in 2019, supported by production cuts by OPEC+. The Organization of the Petroleum Exporting Countries and allies led by Russia. OPEC+ agreed this month to extend and deepen production cuts up to 2.1 million barrels per day from 1 January, or roughly 2% of global demand.
Also supporting prices, the API, reportedly said late on 24 December that US crude stocks fell by 7.9 million barrels last week.