Oil rose for a third session as an industry report showed US crude inventories shrunk and optimism over a partial US-China trade deal grew.
Futures rose as much as 0.7 per cent in New York, extending gains as trading resumed after the Christmas break. Prices are up more than 11 per cent in December, on pace for the largest monthly gain in almost a year. US stockpiles dropped 7.9 million barrels last week, Reuters reported, citing American Petroleum Institute data. China data on Wednesday showed imports of US soybeans surged to the highest in about two years, while President Donald Trump said a trade pact between the two nations is “done.”
Oil has surged 35 per cent so far this year as the world’s two largest economies made a breakthrough on an initial trade deal. Opec and its allies also extended their agreement to reduce output, while oil production growth in the US tapered off and stabilised at a lower level.
“Oil prices continue to show year-end strength supported by a combination of definitive progress on the US-China trade deal, the Opec+ output-cut agreement and slowing shale activity,” said Stephen Innes, chief Asia market strategist at AxiTrader.
“All of these factors are pointing to a stronger performance for oil in the beginning of next year, more than anyone had thought only a few months back.”
West Texas Intermediate for February delivery climbed as much as 43 cents on the New York Mercantile Exchange, and traded 16 cents higher at $61.27 per barrel as of 1:29pm UAE time. Markets were closed on Wednesday for the Christmas holiday.
Brent for February settlement rose 17 cents to $67.37 per barrel. The contract closed 81 cents higher at $67.20 on Tuesday, increasing about 8 per cent so far this month.
API’s reported draw in American crude stockpiles last week would be the largest since August if confirmed by government data on Friday. A median forecast of nine analysts in a Bloomberg survey showed a smaller drop of 1.5 million barrels, while inventories in the oil storage hub of Cushing were expected to decline for a seventh week.
China’s inbound shipments of soybeans from the US climbed to 2.6 million tonnes last month, the highest since March 2018. President Trump said the US and China are just working on the translation and paperwork, and suggested that the two sides will sign the deal before a meeting with his Chinese counterpart Xi Jinping.
