SEOUL (Reuters) – Oil prices edged lower on the final day of the year on Tuesday, but were on track for their biggest annual rise since 2016, supported by a thaw in U.S.-China trade dispute and ongoing supply cuts.
FILE PHOTO: FILE PHOTO: Grandpuits oil refinery southeast of Paris, France, February 29, 2016. REUTERS/Christian Hartmann/File Photo
Brent crude futures for March delivery LCOc1, the new front month contract, were down 11 cents, or 0.2%, to 66.56 a barrel by 0158 GMT, while U.S. West Texas Intermediate (WTI) crude for February CLc1 was down 11 cents, or 0.2%, at $61.57 per barrel. Brent for February delivery LCOG0 closed on Monday at $68.44.
Brent has gained about 24% in 2019 and WTI has risen roughly 36% for the year. Both benchmarks are set for the biggest yearly gain in three years, backed by a breakthrough in U.S.-China trade talks and output cuts pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies.
The White House’s trade adviser said on Monday that the U.S.-China Phase 1 trade deal would likely be signed in the next week.
“Oil prices have followed the general de-risking drift into year-end despite a rise in Middle East tensions and last week’s bullish-for-oil-price inventory draws as the broader markets appear to be losing some of that holiday cheer,” said Stephen Innes, chief Asia market strategist at AxiTrader.
Tensions remain high in the Middle East after U.S. air strikes on Sunday against the Katib Hezbollah militia group in Iraq and Syria. Operations resumed at Iraq’s Nassiriya oilfield resumed on Monday after protesters briefly halted production.
Looking ahead, U.S. crude inventories are expected to fall by about 3.2 million barrels in the week to Dec.27, heading for a third consecutive weekly fall, a preliminary Reuters poll showed on Monday. U.S. stockpiles fell by 5.5 million barrels in the week to Dec. 20. The figures will be released on Friday.[EIA/S]
Innes said traders would also closely watch the EIA’s U.S. October crude production figures, set to come out later on Tuesday.
“It’s expected to show robust continuous growth in the agency’s short-term outlook,” he said.
The United States is on track to become a net petroleum exporter on an annual basis for the first time in 2020, with its oil output expected to rise by 930,000 barrels per day (bpd) to a record 13.18 million bpd next year, the EIA said earlier this month.
Brokers and analysts expect the growing U.S. supplies to offset cuts from OPEC in 2020 amid weakening worldwide demand, keeping oil prices rangebound.
Reporting By Jane Chung; editing by Richard Pullin