More Crude Gains Due To Trade Deal, But Analysts Anxious For More Details

by Ship & Bunker News Team
Thursday December 19, 2019

The double-barrelled influence of improved U.S./China relations and declining U.S. crude inventories on Thursday resulted in oil prices reaching their highest level in three months - but analysts issued their usual warning that sentiments could turn on a dime.

Brent rose 37 cents to settle at $66.54 per barrel, its sixth straight day of gains, while West Texas Intermediate rose 29 cents to settle at $61.22 per barrel.

The commodity was supported not only by the recent Phase One deal between the U.S. and China, but also the latter country's Thursday publication of six American products that will be exempt from tariffs starting on December 26.

It was one step closer to China responding to critics and providing concrete details about their efforts to reach a trade agreement, but Gene McGillian, vice president of market research at Tradition Energy, warned that "Unless we get real granularity, the uncertainty around what's happening on the trade front will start to add more resistance.

"We need to see signs that a real resolution is at hand."

Scott Bauer, CEO of Prosper Trading Academy, said, "Oil is still looking overbought on the exuberance of the trade deal, but when you breakdown fundamentals, there's still a massive amount of supply.

"I'm looking at the build ups that could outweigh the positivity that we've seen."

As for crude's contribution to the overall health of the energy sector, Katie Stockton, founder and managing partner at Fairlead Strategies, expressed a guardedly positive forecast for things to come.

She told CNBC, "We have seen some stabilization, in relative terms, for certain [energy] stocks or segments, but I think it's a little bit too early to suggest that we're seeing a meaningful long-term turnaround; we're not really getting a lot of breakouts on this move, but what I think we can attribute it to, in part, is the fact that crude oil, or WTI, climbed above very key resistance around $60 per barrel."

Stockton added, "That [$60] level, now that it's been surmounted pretty decisively, has ... become support going forward, and it does target longer-term resistance around $75 per barrel; so, that would obviously have an impact and could make the energy sector at least less of a laggard in Q1."