Oil Futures at Fresh Highs

CRANBURY, N.J. (DTN) -- New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange were trading near fresh 3-1/2 month highs early Thursday following an advance during a holiday shortened trade session Tuesday after U.S. President Donald Trump said the United States and China would sign a phase one trade deal at the White House and industry data showed a steep draw in U.S. crude supply.

In early trading, NYMEX February West Texas Intermediate futures were flat at $61.10 per barrel (bbl) after trading at a $61.54 high, and February Brent firmed to $67.30 bbl, a $0.10 premium to the March contract. January ULSD futures were up 0.44 cent at $2.0407, near a $2.0491 high, and at a 10-point discount to February delivery. January RBOB futures gained 0.6 cent to $1.7330 gallon, trading near a $1.7375 high, with the February contract at near parity.

U.S. President Donald Trump on Tuesday said a phase one trade deal was completed, with Beijing indicating they are in close contact with Washington according to Reuters. The agreement could be signed as soon as the first week of January, with details to be made public once the agreement is signed.

Oil futures have advanced since Washington and Beijing announced an initial agreement regarding their trade relationship was reached earlier this month, de-escalating a trade war between the world's two largest economies. The agreement is seen boosting world trade flow while removing a cloud of uncertainty over global economic growth.

Oil futures have also been buoyed in December on deeper production cuts by the Organization of the Petroleum Exporting Countries and 10 non-OPEC oil producers. OPEC+ in early December agreed to an additional 500,000 barrels per day (bpd) in cuts to 1.7 million bpd through first quarter 2020, with Saudi Arabia volunteering to cut an additional 400,000 bpd.

Domestically, the American Petroleum Institute reported a large 7.884 million bbl draw in commercial crude supply to 444.081 million bbl during the week ended Dec. 20, with U.S. refiners processing 435,000 bpd more crude oil than week prior. Gasoline supply increased a modest 566,000 bbl to 241.365 million bbl, and distillate stocks increased 1.681 million bbl to 126.423 million bbl during the week profiled.

The Energy Information Administration will publish its weekly data set 11 a.m. EST Friday.

Brian L. Milne can be reached at brian.milne@dtn.com

(CZ)

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