Wall Street Gains Boost Crude Prices As Approval Over Trade Deal Continues

However, one analyst is worried that the deal could derail: File Image/PixaBay

Crude trading the day after Christmas was a virtual repeat of the day before, with positive sentiment towards U.S./China relations and news of decreased U.S. inventories resulting in more gains for two key benchmarks.

Brent on Thursday settled up 72 cents to $67.92 per barrel, while West Texas Intermediate settled up 57 cents to $61.68 per barrel.

On Wednesday, China said it was in close touch with the U.S. on a trade deal signing ceremony, corroborating earlier remarks made by U.S. president Donald Trump; this in turn boosted equity trading on Wall Street (which saw global equity markets hit a record high) and helped support crude on Thursday.

Also, the American Petroleum Institute reported that U.S. crude stocks fell by 7.9 million barrels last week, much more than forecast by analysts.

And while much has been made by media of the negative impact caused by the 17 month trade war between Washington and Beijing, Reuters noted that Brent has rallied 25 percent in 2019.

Phil Flynn, senior market analyst at Price Futures Group Inc., remarked, "The stock market being strong coupled with the big drawdown that we had from the API is giving us the momentum that we have right now.

"And with the OPEC production cuts, you're running out of reasons to be short," he added, referring to the Organization of the Petroleum Exporting Countries agreeing earlier this month to extend and deepen their output in the New Year.

Flynn also went on to note that "Like the stock market, a lot of economic optimism is getting priced in; with a lot of things happening come the 1st of January, you really don't want to be short."

However, stating the obvious and putting a damper on the Christmas good cheer was Ellen Wald, president of Transversal Consulting, who warned on Bloomberg radio that oil prices may plunge if the China/U.S trade deal derails.