Crude oil prices fell roughly 1% Monday as Middle East tensions lessened and investors focused more on lackluster seasonal demand following last week's USA report showing large fuel inventories, Kallanish Energy learns.
Global benchmark Brent touched $71.75 per barrel last week before ending on Friday below $65.
The outlook for oil demand was supported by the expected signing of a Phase 1 U.S. In Tuesday trading, February WTI added 32 cents, or 0.6%, to $58.40 a barrel and March Brent rose 63 cents, or 1%, to $64.83 a barrel.
Backwardation in Brent LCoC1-LCOc2, a market structure where prices for near-term contracts are higher than those for later contracts, is now at 72 cents per barrel, from 84 cent a week earlier, whereas the WTI backwardation CLc1-CLc2 is at 4 cents a barrel from 23 cents last week.
The eighteen-month trade spat according to experts has disrupted global economic growth which has dampened demand for oil among consumers.
"Oil prices are modestly rebounding, following four days of intense selling", Edward Moya, analyst at brokerage OANDA, said pointing to trade-deal optimism and fading concerns over the U.S. -Iran conflict.
China has pledged to buy more than $50 billion in energy supplies from the United States over the next two years, according to a source briefed on the trade deal.
The recent declines followed investors unwinding bullish positions built following the killing of a senior Iranian general in a US air strike in Iraq on January 2 which sent oil prices to a four-month high, global oil strategist at BNP Paribas in London Harry Tchilinguirian said.
China's crude oil imports in 2019 surged 9.5% from a year earlier, setting a record for a 17th straight year, as demand growth from refineries built last year propelled purchases by the world's top importer, data showed on Tuesday.
U.S. gasoline stocks rose by the most in one week in four years, surging by 9.1 million barrels in the week to January 3, the U.S. Energy Information Administration reported last week.
U.S. crude oil inventories were expected to have fallen last week, while stocks of refined products likely continued to rise, with gasoline stockpiles seen gaining for a tenth straight week, a preliminary Reuters poll showed on Monday.
Hedge funds have gambled heavily on an oil price recovery this year, pricing in accelerating global growth, restrictive output policy by Saudi Arabia and continued tension short of war between the United States and Iran.