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Oil futures on Tuesday settled sharply higher as worries about the global economy receded momentarily on the eve of Christmas. However, trading volumes were light due to the holiday.
U.S. crude-oil futures finished an hour earlier than usual at 1:30 p.m. Eastern Time on the New York Mercantile Exchange, and major markets will mostly be closed on Wednesday for Christmas.
Fawad Razaqzada, technical analyst at Forex.com, says crude prices have risen “as concerns over the global economy faded towards the end of 2019.”
“On top of this, the OPEC+ continued to intervene by restricting supply of the stuff,” he said.
“But there were some concerns that the OPEC+ group will not be able to support oil prices for too long given the rising non-OPEC supply and tepid demand growth,” he wrote in a research report on Tuesday.
West Texas Intermediate crude for February delivery US:CLF20, the U.S. benchmark grade, gained 59 cents, or 1%, to trade at $61.11 a barrel on the New York Mercantile Exchange, after picking up 0.1% Monday.
February Brent crude BRNG20, +0.01% picked up 81 cents, or 1.2%, to settle at $67.20 a barrel on ICE Futures Europe, to mark its highest settlement since Sept. 16, according to Dow Jones Market Data.
Markets have been bolstered by a pact by the Organization of the Petroleum Exporting Countries and its allies, which agreed to officially cut production by 500,000 barrels a day on top of its current reduction agreement, beginning in January. Those additional reductions were meant to take total output cuts for OPEC+ to 1.7 million barrels day, including the current cuts of 1.2 million barrels a day from October 2018 levels that was put into place in January 2019.
However, some commodity strategists worry that a lack of compliance among OPEC+ members may nullify the additional cuts.
Reuters reported on Tuesday that Saudi Arabia and Kuwait signed a memorandum of understanding today to return to production in the joint “neutral zone” shared by the two countries. That could eventually add 500,000 barrels a day to supplies, or 0.5% of global supply, experts say. However, market participants say the current production cuts could tamp down supplies in the short term.
In other energy trade, February gasoline futures RBF20, +1.37% added 2.09 cents, or 1.2%, to end at $1.7274 a gallon, after shedding less than 0.1% a day ago, while February heating oil HOF20, +0.85% increased by 1.52 cents, or 0.8%, to settle at $2.0373 a gallon, after losing 0.1% on Monday.
Meanwhile, January natural gas NGF20, -1.40% added 1.4 cents, or 0.7%, at $2.0363 per million British thermal units, after marking its sharpest daily drop since Nov. 29 and its lowest finish since Oct. 11, according to Dow Jones Market Data.
