Oil prices hike up on Middle East crisis and trade optimism

NEW YORK- Oil value increased on Thursday brought by emerging tensions in the Middle East and upbeat signals of US-China trade relations. However, secured dollar performance capped price earnings.

Brent crude futures LCOc1 acquired 25 cents, equivalent to $66.25 per barrel while US West Texas Intermediate (WTI) crude CLc1 raked in 12 cents or $61.18.

The dollar gained 0.5% .DXY, completely recuperating from its six-month setback after December’s frail performance left the index stagnant. A stronger greenback directly impacted oil making it more expensive for other currency holder.

Anxiety that emerging pressure in the Middle East could affect supply outweighed dollar performance.

Turkish parliament surprisingly passed a legislation regarding battalion deployment in Libya, enabling greater military traction between Ankara and Tripoli. However, it is deemed difficult to deploy troops immediately.

Over the weekend, U.S. troops launched air strikes against Iran’s ally Kataib Hezbollah militia group, which resulted to mass unrest outside U.S. embassy in Baghdad last Wednesday. The protest ceased after the United States dispersed a larger number of the army.

On Thursday, U.S. Defense Secretary Mark Esper said that there are possible attacks planned by Iran and its allies.

“I think everybody is conscious of what’s going on in the Middle East with Iraq and Libya,” said John Kilduff, a partner at Again Capital in New York.

Upbeat signals that United States and China relations will enforce energy demand also assisted oil prices. In line with this, U.S. President Donald Trump informed Jan. 15 as the official date for trade pact signing.

Larger oil output reduction will begin this January according to Organization of the Petroleum Exporting Countries and other parties including Russia. The organization decided to further reduce oil production by 500,000 starting Jan. 01 from its previous reduction of 1.2 million barrels per day.

According to data released by Energy Ministry, Russia recorded a positive oil and gas condensate performance for 2019 with 11.5 million barrels per day, beating its previous performance of 11.16 million bpd.

U.S. crude inventories’ recent decline supported oil prices.  U.S. crude stocks plummeted with 7.8 barrels in the week which ended last Dec. 27, compared to the forecasted 3.2 million decrease as expected by analysts, records from American Petroleum Institute disclosed last Tuesday.