WTI rally extends in six days of consecutive gains, watch for year-end de-risking
- WTI advances +0.44% on the day so far, riding six-day winning streak.
- OPEC+, phase-one trade deal and US supply drop fueling the bid.
The price of a barrel of West Texas Intermediate (WTI) crude continues to climb and has reached a fresh high for the day of $61.38 having travelled from a low of $60.68 following yesterday's decline in US crude inventories.
WTI has been elevated on green-shoots for the energy sector following not only an OPEC+ accord fuelling expectations of lower supply, but a so-called, 'phase-one' trade deal between the US and China, signalling that the 18-month trade dispute could be turning a corner for the better.
US crude supplies fell by 1.1 million barrels
In addition to the positive geopolitical news this month, so far, yesterday's Energy Information Administration showed that US crude supplies fell by 1.1 million barrels for the week ended Dec. 13, well below the 2.5 million-barrel average decline expected by analysts polled by S&P Global Platts. This followed more bearish American Petroleum Institute report the prior day that showed a 4.7 million-barrel climb.
"Crude oil's correlation to global risk assets has been deteriorating over the past few months, but it is now placing a bid under crude," analysts at TD Securities argued.
"The reflation trade is being reflected in energy markets as participants hope that the trade deal will reduce the expected surplus for the next few quarters, as demand gets a boost from its low expectations."
"That being said, traders should be mindful of any signs that risk appetite is waning. After all, much of the commodity rally materialized on sentiment rather than the fundamental after the "phase one" of the US-China trade deal," the analysts at TD Securities warned, where the worries about energy demand resurface could.
Caution into year-end de-risking
Into the year-end, following the six-consecutive day's of the rally so far, and any signs of it petering out, traders may wish to heed caution by de-risking and banking some hard-earned profits which could consequently see the price of oil fall in the final days of the year.
WTI levels