However, volatility is less than half compared to last year: File Image/PixaBay
The good tidings of Christmas Eve influenced the crude market on Tuesday, with benchmarks Brent and West Texas Intermediate enjoying gains thanks to the ongoing optimism over the recent U.S./China trade deal, as well as Russia stating that its cooperation with the Organization of the Petroleum Exporting Countries' (OPEC) output cuts will continue.
Brent settled up 81 cents at $67.20 per barrel, and WTI settled up 59 cents at $61.11 per barrel.
Traders were buoyed by U.S. president Donald Trump announcing on Tuesday he and Chinese president Xi Jinping will have a ceremony to sign the first phase of the trade deal agreed to earlier this month.
Edward Moya, senior market analyst, OANDA
We could see prices remain supported going into the first few weeks of January
They also found favour with Alexander Novak, energy minister for Russia, declaring that the former Soviet Union will continue working with OPEC as long as it is "effective and brings results."
Novak added that "We can consider any options, including gradual easing of quotas, including continuation of the deal."
However, as far as analysts are concerned headwinds lie ahead, this time in the form of Kuwait and Saudi Arabia on Tuesday signing a deal aimed at ending a five-year dispute and reopening oil fields in the Neutral Zone between the two countries - thus presumably adding to global inventories in 2020.
Also cause for concern is a Reuters poll predicting that crude stocks will be reported to have fallen by about 1.8 million barrels last week: while such a drop would be welcomed by many, the concern lies in the fact that the Reuter polling of analysts and other experts is routinely proven wrong.
Still, the market overall maintains its cautiously optimistic stance: Edward Moya, senior market analyst at OANDA, said, "The short-squeeze on oil may be running out of steam, but if WTI and Brent prices can hold $60 and $65 respectively, we could see prices remain supported going into the first few weeks of January."
Bloomberg noted that with prices on the rise since October, "the market is heading into Christmas in a completely different state from a year ago; implied volatility, a measure of how much traders are willing to pay for protection against price swings, is less than half of what it was a year ago."