Investing.com – Barely one session after the trade deal the world had been awaiting, investors in oil already seem disillusioned. Bulls had trouble moving the needle on crude prices Monday as oil stayed below the three-month highs hit Friday on the U.S.-China phase one deal.
U.S. West Texas Intermediate drifted around the key $60 per barrel mark, while U.K. Brent rose slightly above the $65 level amid China’s reticence in acknowledging many of the highlights of the phase one deal announced by the Trump administration on Friday.
NYMEX-traded WTI, the U.S. crude benchmark, settled up a small 14 cents, or 0.2%, at $60.21 per barrel. It hit a three-month high of $60.45 on Friday.
ICE-traded Brent, the global oil benchmark, was also up 14 cents, or 0.2%, at $65.36 by 3:37 PM ET (20:37 GMT), after a three-month high of $65.75 in the previous session.
Oil has enjoyed a relatively trouble-free rise since OPEC announced on Dec. 6 that it planned to take as much as 2.1 million barrels, or 2.1%, per day off global oil supplies in the first quarter of 2020.
WTI is up 9% for December, heading its strongest month since June. Year to date, the U.S. crude benchmark has risen nearly 32%.
Brent shows a 4% rise on the month and 22% on the year.
Analysts said there had to be some signs of immediate demand for the market to keep rising.
“We’ve gone up so much from that OPEC announcement that it’s going to take something totally out of blue to deliver another major high for oil prices,” said Gene McGillian, vice president of research at Tradition Energy in Stamford, Conn.
“It explains why the lack of granularity on the phase one is driving up the lack of enthusiasm over the China deal as a whole, even raising disbelief.”
Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C., expressed surprise at how long the oil market had gotten over the past few weeks. Weekly data from the U.S. Commodity Futures Trading Commission on Friday showed the most number of bullish positions in WTI in three years for the week ended Dec. 10.
“The CFTC positioning on the long side is getting more extreme and has likely gotten even longer … which is also a concern as the market tends to punish one-sided markets at some point,” Shelton said. “I am not sure that event happens in 2019 or is a 2020 story.”
McGillian seems to think that punitive event for oil could happen over the next two weeks before the year is out.
While the most optimistic bettors on oil are forecasting a $70 high for Brent before 2019 bows out, some aren’t so sure with pessimism setting in after last week’s brief euphoria.
“We might actually have some volatility instead of more highs,” McGillian said.