Oil little changed near three-month high amid stockpile drop, economic hopes
HOUSTON (Dec 28) - Oil was little changed on Friday, steadying near three-month highs after new data showed U.S. crude inventories fell far more than expected, while upbeat economic data and optimism over a U.S.-China trade deal fueled a year-end stock market rally.
Brent crude LCOc1 was up 15 cents at $68.07 a barrel at 11:53 a.m. CST (1753 GMT). West Texas Intermediate CLc1 was flat at $61.68 a barrel.
U.S. crude stocks fell by 5.5 million barrels in the week to Dec. 20 to 441.4 million barrels, according to the Energy Information Administration, far exceeding analysts’ expectations of a 1.7 million-barrel drop.
“Inventories are bullish almost across the board,” said Josh Graves, senior market strategist at RJO Futures in Chicago.
A year-end stock market rally also helped lift oil prices as consumer sentiment continued to improve, he said.
“It’s a Santa Claus rally. People tend to buy more things that will indirectly drive the price of oil up,” Graves said.
U.S. stock indexes rose slightly on Friday, with the S&P 500 index .SPX close to logging its best year since 1997. The Nasdaq .IXIC crossed the 9,000 point mark for the first time on Thursday.
Oil trade was thin. But oil-market sentiment improved as new data showed profits at China’s industrial firms rose at the fastest pace in eight months in November, according to the National Bureau of Statistics.
In the United States, a survey showed on Thursday online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and lifting U.S. stocks to fresh highs.
China and the United States cooled their 17-month trade war earlier this month, announcing a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products.
The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, this month decided to prolong an oil output restriction deal until the end of March and to deepen the cuts in order to balance out the oil market.
Brent has jumped more than a quarter in 2019, while WTI is up around 35%, bolstered by output cuts.
OPEC+ may consider wrapping up their oil output reduction in 2020, Russian Energy Minister Alexander Novak said on Friday.
“Novak’s comments changed the outlook a little bit. But the market has to remember that Russia always talks down the cuts. It’s their way of negotiating with OPEC,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Reuters
