FILE PHOTO: Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. REUTERS/Stringer
December 27, 2019
By Collin Eaton
HOUSTON (Reuters) – Oil prices edged down from three-month highs on Friday as investors’ optimism on economic growth was clouded by the Russian energy minister’s comments downplaying oil output cuts next year.
Brent crude <LCOc1> was down 9 cents at $67.83 a barrel at 9:50 a.m. CST (1550 GMT). West Texas Intermediate <CLc1> was down 22 cents at $61.46 a barrel.
Oil trade was thin in the Christmas holidays and New Year breaks.
The Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, may consider wrapping up their oil output reduction in 2020, Russian Energy Minister Alexander Novak said on Friday.
“That’s a pretty bearish situation,” said Robert Yawger, director of energy futures at Mizuho in New York, though he added light trading volumes may have contributed to downward pressure.
Brent has jumped more than a quarter in 2019, while WTI is up around 35%, bolstered by the group’s output cuts.
OPEC+ this month decided to prolong an oil output restriction deal until the end of March and to deepen the cuts in order to balance out the oil market.
“Novak’s comments changed the outlook a little bit. But the market has to remember that Russia always talks down the cuts. It’s their way of negotiating with OPEC,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
“But the headline did take away some of the bullishness,” he said.
Earlier in the session, upbeat economic data from China and the United States and optimism over a trade deal between the two major economies had improved investor sentiment.
Profits at China’s industrial firms rose at the fastest pace in eight months in November, data from the National Bureau of Statistics (NBS) showed.
China and the United States cooled their 17-month long trade war earlier this month, announcing a Phase 1 agreement that would reduce some U.S. tariffs in exchange for more Chinese purchases of American farm products.
In the United States, a survey on Thursday showed online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and lifting U.S. stocks to fresh highs.
U.S. crude oil stockpiles likely declined last week, while inventories of gasoline were set to extend their build for the seventh straight week, an extended Reuters poll showed on Thursday.
The latest poll was conducted ahead of the weekly status report from the Energy Information Administration (EIA), an agency of the U.S. Department of Energy. The EIA report is due at 11:00 a.m. on Friday.
(Additional reporting by Bozorgmehr Sharafedin in London and Aaron Sheldrick in Tokyo, editing by Louise Heavens and Nick Macfie)
