On Monday, oil prices held on to its three-month highs. And optimism over an expected U.S. China trade deal and upbeat industrial data underpinned it. On the other hand, traders closely observed in the Middle East following a U.S. airstrike.
Moreover, investors remained careful despite news of the U.S. strikes in Iraq and Syria against an Iran-backed militia group. And this happened even though U.S. officials warned that they might take more action.
Aside from that, West Texas Intermediate (WTI) crude futures increased 4 cents to $61.76 per barrel. The U.S. benchmark rose around 36% so far this year.
Then, Brent crude futures were at $68.33 per barrel. It is up by 17 cents or 0.3%. The international benchmark has risen by about 27% in 2019.
According to analyst Margaret Yang, the trading has been nearly flat because of the lack of market participants during the holiday season.
She stated, “Oil prices have reached their highest level since the Saudi oil field attack in Mid Sep. And thus, traders are also cautious about profit-taking possibilities.”
In addition to that, the tensions in the Middle East have fueled up as the United States carried out airstrikes on Sunday in Iraq and Syria against the Kataib Hezbollah militia group. Then, on Saturday, protesters in Iraq forced the closure of its southern Nassiriya oilfield. Some U.S. officials explained that the airstrikes were in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base were successful. However, they warned that they might have additional actions to take.
Iraq and China
Furthermore, in oil news, Iraq’s oil ministry stated that the production paused at the Nassiriya oilfield will not hurt the country’s exports as it will use the additional output from southern oilfields in Basra.
Moreover, Libyan state oil company NOC revealed it is thinking of the closure of its western Zawiya port and evacuating staff from the refinery located there due to clashes nearby. And the diminishing U.S. crude stocks also supported oil prices. It dropped by 5.5 million barrels in the week to December 20. This surpasses a 1.7-million-barrel drop forecast in a Reuters poll.
Then, in China, its factory activity had somehow expanded again in December on stronger external demand and infrastructure push at home. But the pace of growth is set to ease as markets await for more assurance on a U.S.-China trade deal.
China’s Commerce Ministry said that it is in intimate touch with the United States on the signing of a long-awaited trade deal. On December 13, the world’s biggest economies announced a phase one agreement. This will reduce some of the U.S. tariffs in exchange for the U.S. officials said would be a huge jump in Chinese purchases of American farm products and other goods.
Meanwhile away from oil news, the Agriwatch Agri Commodities Index boosted 0.74 percent to 125.85 during the week ended December 28 from 124.92 last week. Also, it registered its tenth consecutive weekly gain, which it had gained 9.6 percent. The edible oils, oilseeds, cereals and sugar caused the rally.