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Oil futures extended a December rally to hit a three-month high Monday, buoyed by upbeat expectations around the global economy as traders also kept an eye on developments in Iraq.
West Texas Intermediate crude for February delivery CLG20, +0.76% on the New York Mercantile Exchange rose 47 cents, or 0.8%, to $62.19 a barrel, while March Brent crude BRNG20, +1.01%, that most-active contract, was up 57 cents, or 0.8%, at $67.43 a barrel. Monday marks the expiration day of the February Brent contract CLG20, +0.76%, which was up 69 cents, or 1%, at $68.85.
Both grades traded at their highest levels for most-active futures contracts since mid-September, when a drone attack on Saudi oil facilities caused crude prices to spike.
WTI crude, the U.S. benchmark, and Brent, the global benchmark, are up around 12.5% and 11.4% this month, respectively. That is left WTI on track for a 37% gain so far this year, while Brent is up around 25%.
Gains in December came after the U.S. and China announced an agreement on a “phase one” trade deal that helped soothe worries over the global economic outlook and was credited with sparking a rally in equities and other assets perceived as risky.
Also, the Organization of the Petroleum Exporting Countries and its allies earlier this month agreed to cut output by 500,000 barrels a day on top of its current reduction agreement, beginning in January.
Analysts said investors are also keeping an eye on developments in Iraq after news reports said protesters on Saturday forced the temporary closure of the country’s Nasiriyah oil field.
“Oil prices continue to remain supported near frothy levels as tensions in the Middle East could see key disruptions in the region, shrinking U.S. stockpiles alleviate oversupply concerns and as the U.S. and Chinese look to wrap up the phase-one trade deal and more importantly signal further calm on the tariff front,” said Edward Moya, senior market analyst at Oanda, in a note.
Also, U.S. military forces conducted “precision defensive strikes” against five sites controlled by Kataeb Hezbollah, or Hezbollah Brigades, an Iran-backed Iraqi militia, a Defense Department spokesman said Sunday. The U.S. has blamed the militia for a rocket barrage on Friday that killed a U.S. defense contractor at a military compound near Kirkuk, in northern Iraq.
In other energy trading, February gasoline RBG20, +0.70% rose 0.3% to $1.75 a gallon, while February heating oil HOG20, +1.14% rose 0.8% to $2.0686 a gallon.
February natural-gas futures NGG20, -0.63% were up 0.8% to $2.0682 per million British thermal units.
