HOUSTON, Dec. 28 (Xinhua) -- Oil prices continued to extend gains for the week ending Dec. 27, with the price of West Texas Intermediate (WTI) for February delivery up 2.12 percent and that of Brent crude oil for February delivery up 3.05 percent.
WTI closed the week at 61.72 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude finished the week at 68.16 dollars a barrel on the London ICE Futures Exchange, both hitting three-month high.
Oil is set to see one of its best months of the year, mainly driven by the "phase one economic and trade agreement" between the United States and China, as well as consensus among the Organization of Petroleum Exporting Countries (OPEC) and its allies for further output cuts.
As the global economy faces downward pressure, the U.S.-China trade agreement will boost confidence of the global market, stabilize market expectations, and create favorable environment for normal economic, trade and investment activities.
WTI and Brent crude prices have increased 35.92 percent and 26.70 percent, respectively, so far this year, still below their peak levels in April when the growth of WTI hit over 40 percent, and Brent crude over 30 percent.
Markets were closed on Wednesday for the Christmas holiday. Oil increased for all sessions during the week, as optimism about the economy raised hopes of improved outlook for crude demand.
Furthermore, the decline in U.S. crude inventories and falling in U.S. rig count also provided supports to oil prices.
Both the oil industry group American Petroleum Institute (API) and U.S. Energy Information Administration (EIA) reported falls in U.S. commercial crude oil inventories.
According to EIA's data which was released with two-day delay due to the Christmas holiday, U.S. commercial crude oil inventories decreased by 5.474 million barrels in the week ending Dec. 20, much more than market estimated fall of 1.724 million barrels, implying greater demand and bullish for crude prices.
Meanwhile, according to Houston-based oilfield services company Baker Hughes, U.S. rigs classified as drilling for oil were down eight to 677 this week.
Oil prices have kept gaining momentum since the start of the year due to some geopolitical concerns and the OPEC's decision of production cut. But the momentum has once slowed down, mainly because of the concerns over downturn in demand for crude oil.
However, oil prices have been on track for stronger performance recently amid increasing prospects for a trade truce between the United States and China, as well as an agreement between OPEC and its allied producers for further supply cuts.
In the meantime, the falling U.S. Dollar Index also provided floor to oil prices. The index finished the week lower as traders awaited the signing of the "phase one" trade deal between the United States and China. Analysts believed the next supporting level is around 96.70 area.
The downside risks remain. In its year-end Short-Term Energy Outlook, EIA forecast that Brent spot prices will be lower on average in 2020 than in 2019 due to forecast of rising global oil inventories, particularly in the first half of next year.
EIA forecast Brent spot prices will average 61 U.S. dollars per barrel in 2020, down from the 2019 average of 64 dollars per barrel, while WTI prices will average 5.50 dollars per barrel less than Brent prices in 2020.