This archive report was first published on 3 January 2020.
On January 3, 2020, oil prices began the new year on a positive note, driven by optimism over the US-China trade relations.
Global benchmark Brent crude futures rose 35 cents, or 0.5 per cent, to $66.35 a barrel by 0738 GMT, while US West Texas Intermediate (WTI) crude was up 25 cents, or 0.4 per cent, at $61.31 per barrel.
The oil markets had been closed on Wednesday for New Year’s Day.
Both Brent and WTI crude futures ended higher in 2019, posting their biggest annual gains since 2016, buoyed by a thaw in the prolonged trade dispute between the US and China and a deeper output cut pledged by the Organisation of Petroleum Exporting Countries (Opec) and its allies.
“Oil remains supported by the back-burner trade truce and the uptick in political unrest in Iraq,” said Stephen Innes, chief Asia market strategist at AxiTrader.
US military airstrikes against Iran-backed militia groups in Iraq over the weekend had sparked protests, with demonstrators storming the US Embassy in Baghdad on Wednesday before withdrawing after the United States deployed extra troops.
Analysts forecast Brent to average $63.07 a barrel in 2020, up from December’s estimate of $62.50, while WTI is forecast to average $57.70 a barrel.
These forecasts were higher than previous estimates, driven by expectations of a US-China trade deal and Opec-led supply cuts.
US President Donald Trump announced on Tuesday that the US-China Phase 1 trade deal would be signed on January 15, further boosting optimism.
Additionally, Opec and its partners, including Russia, have agreed to cut an extra 500,000 barrels per day from January 1, on top of their previous cut of 1.2 million barrels per day that started on January 1 a year ago.
