Oil Prices Up on Trade Deal, Iraq Unrest
Oil prices started the new year on a positive note on Thursday. The upbeat trade relations between the US and China drove prices, while the Middle East unrest prompted oversupply concerns.
Brent crude futures were up 0.4% to $66.28 per barrel. Meanwhile, the West Texas Intermediate (WTI) rose 0.2% to $61.22 per barrel.
Chief Asia market strategist Stephen Innes said back-burner trade truce supported the crude. The uptick in political turmoil in Iraq also contributed.
The US forces carried out airstrikes against the Iran-backed Kataib Hezbollah militia group on Sunday. The move was a response to the killing of a US defence contractor during a rocket attack at an Iraqi military complex.
Responding to the airstrikes, several dozen protesters stormed the US Embassy in Baghdad on Wednesday. But they left the compound after the US employed additional troops.
Elsewhere in the commodities market, the safe-haven gold gained 0.2%% to $1,520.80 per ounce. Gold futures inched up 0.01% to $1,523.25.
Other precious metals including the silver added 0.1% to $17.948. Platinum advanced 0.8% to $986.00 and palladium climbed 0.5% to $1,919.65.
Oil Prices Kick off 2020 with a Bullish Tone
Oil prices lost 1% on Tuesday. But both benchmarks performed strongly in 2019 to record their most considerable annual rise since 2016. It was due to easing US-China trade tensions and further production cuts by the Organization of Petroleum Exporting Countries (OPEC).
The global benchmark advanced by about 23% in the previous year. Meanwhile, WTI surged by 34%, marking their most significant yearly increase in three years.
With the OPEC output reductions and optimism over the trade deal, analysts see the Brent averaging $63.07 a barrel. This was higher than last month’s forecast of $62.50.
WTI is averaging $57.70 in 2020, also higher than December’s estimate of $57.30 a barrel.
The Phase 1 trade agreement will receive signatures on January 15 at the White House, US President Donald Trump announced on Tuesday.
The OPEC, along with its allies, including Russia, is also due to implement deeper production cuts this month.
The OPEC and its partners have agreed to reduce output further by 500,000 barrels per day (BPD) from January 1, in addition to their prior cut of 1.2 million BPD that started on January 1 last year.
The decline in US crude supplies last week kept the energy commodities in the green as well.
Data from the American Petroleum Institute (API) showed on Tuesday that US inventories were down by 7.8 million barrels in the week to December 27, surpassing analysts’ forecast of a 3.2 million barrel-fall.
Official figures from the Energy Information Administration (EIA) will be revealed on Friday as the New Year’s holiday postponed the release by a couple of days.
Analyst Benjamin Lu said traders would look toward Friday’s EIA report for forwarding guidance on oil prices.
