Oil Prices Drop, Set to Hit 3-week High

Oil prices pared gains on Friday but were still on track to hit their third straight weekly rise, after the easing trade tensions between the US and China boosted business optimism as well as the outlook for the world economy.

Brent crude oil futures shed 0.3% to $66.31 per barrel, while the West Texas Intermediate crude oil futures dropped 0.3% to $60.94 per barrel.

Meanwhile, the precious metals market retreated slightly, with the gold falling by 0.1% to $1,481.65 per ounce, having reached a more than two-week high on Thursday.

Spot gold lost 0.08% to $1,477.85 per ounce.

The 18-month long trade war and the concerns over its impact on the world economy has send the yellow metal up by 15% this year.

Silver declined by 0.3% to $17.093 per ounce, while palladium gained 0.8% to $1,916.90.

Oil Price Outlook for 2020 Remains Optimistic

A world with less uncertainty, according to an Australian bank’s research arm, was the real driver of the commodities market optimism on the 2020 outlook.

Recent developments in the tariff dispute between the US and China has reinforced the view that demand will improve further next year.

China’s finance ministry published on Thursday a list of import tariff exemptions for six oil and chemical goods from the US.

The exemptions will be one year from December 26, the ministry stated, although it did not specify the value for the imports excluded from duties.

The news came days after the two countries announced a phase one trade accord which is due to be signed in the first week January.

Analyst Barbara Lambrecht said the overall energy commodities sector looks set to end 2019 with a solid year-on-year gain. That is solely to the oil market.

In addition to the trade deal developments, lower US crude stockpiles also propped up oil prices to trade near three-month highs.

Data from the Energy Information Administration (EIA) showed on Wednesday that inventories were down 1.1 million barrels to 446.8 million barrels in the week to December 13.

Market strategist Stephen Innes said product demand is up, and with a more constructive global growth outlook than at any time of this year, oil markets remain supported by the fundamental backdrop.

Moreover, a weaker US drilling activity could provide additional strength to oil prices.

A US weekly drilling data by energy services firm Baker Hughes Co. is set to be revealed later in the day.

US drilling companies installed 4 more oil rigs in the week to December 13, raising the total count to 667.