Oil & Gas Prices - Dec 16

[dan_s]

Opening prices (January NYMEX futures):
> WTI crude oil opened at $59.83 and moved quickly over $60.00; at $60.08 as this is being posted.
> Henry Hub natural gas opened at $2.30 and is now $2.36.

Technical Resistance and Support Levels that the Traders are watching for:
> Resistance: The WTI uptrend may be expected to continue higher in case the price rises above resistance level $60.48, which will be followed by reaching resistance level $61.45.
> Support Levels: A downtrend might start if WTI breaks the support level $59.85, which will be followed by moving down to support level $59.10 and if it keeps on moving down below that level, there is very strong support at $58.33.
MY TAKE: Traders will over-react to any comments coming from "Team Trump" or China about the status of the Phase One Trade Deal.

LONDON (Reuters) - Oil prices held near three-month highs on Monday, supported by last week's announcement of an initial trade deal between the United States and China. My comments in blue.

Brent crude oil futures (LCOc1) were up 19 cents, or 0.29%, to $65.41 a barrel by 1305 GMT, while West Texas Intermediate crude (CLc1) was up a cent, or 0.02%, to $60.08 a barrel.

The United States and China announced on Friday a "phase one" agreement that will reduce some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of U.S. farm products and other goods.

"What the market needs now, though, is clarity around exactly what the deal entails," analysts from ING Economics said. "The longer we have to wait for this detail, the more likely market participants will start to question how good a deal it actually is."

The Friday agreement averted additional tariffs on Chinese goods totaling $160 billion that the United States was set to impose over the weekend.

U.S. Trade Representative Robert Lighthizer said on Sunday the deal would nearly double U.S. exports to China over the next two years and was "totally done" despite the need for translation and revisions to its text. < There is still some FEAR that the deal might not get signed. Very slim chance of that happening now, but traders will still fret over the uncertainty.

China's State Council's customs tariff commission said on Sunday it had suspended additional tariffs on some U.S. goods that were meant to be implemented on Dec. 15.

Progress on trade could jump start oil demand and ease fears of a glut which have weighed on prices, said Edward Moya, senior market analyst at OANDA. < As I pointed out in my Dec 14th podcast "THERE IS NO GLUT OF OIL", but those hoping to hold down fuel prices will keep using that word.

"Oversupply concerns driving weaker oil prices over the first half of 2020 is the base case for many investors, but we could finally start to see improved data from the world's two largest economies spearhead calls for a global growth rebound."

Data from China on Monday showing industrial output and retail sales growth accelerating more than expected in November offered some support for oil prices.

But growth in China is expected to slow further next year, with the government likely to set its growth target at about 6% in 2020 compared with 6%-6.5% this year. < Demand for oil based refined products in both China and India will continue to grow and account for 70% to 90% of global demand growth.

Brent has rallied this year, supported by production curbs by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, which this month agreed to lower supply by a further 500,000 barrels per day as of Jan. 1.

The decision, according to Saxo Bank commodity strategist Ole Hansen, "helped trigger a 25% increase in the combined crude long positions to 602,000 lots, the highest since May and the biggest one-week accumulation since December 2016".