Oil near three-month peak as US crude inventories fall

London — Oil prices hovered near three-month peaks on Thursday, buoyed by falling US crude inventories and thawing trade relations between the US and China.

Brent crude futures were down 7c at $66.10 a barrel at 1.21pm GMT, after five straight days of gains. US West Texas Intermediate (WTI) crude fell 1c to $60.83 a barrel. The contract for January delivery expires on December 19.

Trading volume was thin before the Christmas holiday with news of US President Donald Trump’s impeachment by the US House of Representatives failing to stir the oil market.

“A resilient performance in the coming two weeks will flip the monthly technical picture unreservedly positive for next year,” PVM oil market analysts said, though they added that prices were still likely to be volatile.

Oil prices are on track for a third consecutive weekly rise, surfing momentum from this month’s announcements about deeper output cuts by major crude producers and the phase-one deal between Washington and China that has eased trade tensions.

The deal between the world’s two largest economies has improved the global economic outlook, lifting prospects for higher energy demand next year and underpinning oil prices.

In a further sign of thawing relations, China’s finance ministry published a new list of six US products on Thursday that will be exempt from tariffs starting December 26.

A week earlier, oil cartel Opec and non-Opec producers, such as Russia, agreed to deepen production cuts by a further 500,000 barrels per day (bpd) from January 1 on top of previous reductions of 1.2 million bpd.

Offering a further lift to oil prices, weekly data from the US Energy Information Administration (EIA) showed US crude inventories dropped 1.1-million barrels in the week to December 13, while petrol and distillates stockpiles rose.

Reuters

Source: businesslive.co.za