Reuters
Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang
- Oil is set to close 2019 with its biggest yearly gain since 2016, according to data first reported by Bloomberg.
- WTI crude is up nearly 36% year-to-date, driven by geopolitical risk factors and shrinking US inventories.
- American crude inventories fell to their lowest level in two months in the week ended December 20, lifting prices by cutting supply.
- Iran seized an oil tanker in the Strait of Hormuz on Monday and the US initiated air strikes on five Iranian-backed bases in Iraq and Syria on Sunday, according to Bloomberg. The events could prompt new tensions between the two nations and push oil's price even higher.
- Watch WTI crude trade live here.
Oil is set to close out 2019 with a massive price jump, lifted by geopolitical risk factors and waning US inventories.
WTI crude oil is up nearly 36% year-to-date, on track for its best 12-month performance since 2016, according to data first reported by Bloomberg.
American crude inventories fell to their lowest level in two months after shedding 5.47 million barrels in the week ended December 20, according to a Friday release from the Energy Information Administration. The dwindling supply helped prop up the high prices established by news of a "phase-one" US-China trade deal and the Organization of Petroleum Exporting Countries' support of future output cuts.
The December supply cut also eased fears that non-OPEC nations would boost oil production, Bloomberg reported. Such action would add unexpected supply to global markets and likely tank the commodity's price.
A slew of geopolitical risks are also playing into oil's rise through the year. Iran seized an oil tanker in the Strait of Hormuz on Monday, while the US initiated air strikes on five Iranian-backed bases in Iraq and Syria on Sunday, Bloomberg reported. The back-to-back events sparked new fears of increased tension between the nations, as an exacerbated conflict would likely complicate access to the world's oil supply.
Oil prices spiked 20% on September 16 after drone strikes severely crippled two Saudi Aramco oil facilities. The attacks affected nearly 6 million barrels of daily oil production, or about 5% of the world's oil supply.
Saudi Aramco's new status as a publicly traded firm could also affect oil prices in the new year. Saudi Arabia's government still owns most of the world's most valuable company, and officials have previously pledged to protect its share price should it fall beyond a certain point. Any kingdom intervention or changes to the oil firm's relationship with OPEC could quickly affect the state of the world's oil market.
WTI crude traded at $61.59 per barrel as of 3:10 p.m. ET Monday.
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