Oil trades near three-month high on supply and trade optimism
Oil held gains in light trading, with prices set for the biggest monthly gain in almost a year on speculation that supplies are shrinking.
Futures rose as much as 0.9% in New York, gaining for a third straight session as trading resumed after the Christmas break. Prices are up about 11% in December. The American Petroleum Institute reported that U.S. stockpiles dropped 7.9 million barrels last week, while Russia cut crude output.
That inventory decrease would be the largest since August if confirmed by government data on Friday. A median forecast of nine analysts in a Bloomberg survey predicts a smaller drop of 1.5 million barrels. Meanwhile, Russia reduced production by 240,000 barrels a day in the first 24 days of December, Interfax reported, citing Energy Minister Alexander Novak.
Oil has surged 36% so far this year, with prices recently supported by a breakthrough in the trade impasse between the the world's top two economies. Futures have also been boosted by output cuts made by the Organization of Petroleum Exporting Countries and its allies. Production growth in the U.S. has also tapered off.
"A lot of the recent strength in oil prices has been speculative fund flows and short covering in the front months into year-end 2019." said Leo Mariani, an analyst at Keybanc Capital Markets. "We think there is a good chance that oil prices will be higher in several years as non-OPEC production growth slows materially into the next decade."
Hedge funds boosted bets on rising U.S. crude prices to the highest level in more than seven months during the week ended Dec. 17, data released Friday show.
West Texas Intermediate for February delivery climbed as much as 57 cents to $61.68 a barrel on the New York Mercantile Exchange, and traded up 47 cents at $61.58 as of 9:49 a.m. local time. A close at current levels would be the highest since mid-September. Markets were shut Wednesday for Christmas.
Brent for February settlement rose 45 cents to $67.65 a barrel. Prices rose 81 cents to $67.20 on Tuesday, and are up about 8% so far this month. The spread between the global benchmark crude and WTI was at $6.08.
Chinese data on Wednesday showed imports of U.S. soybeans surged to the highest in about two years, while President Donald Trump said a trade pact between the two nations is "done." He added the two sides are working on translation and paperwork, suggesting a deal would be signed before a meeting with his Chinese counterpart Xi Jinping.
