U.S. benchmark rises 34.5% in 2019
Oil futures slumped in the final trading session of the year Tuesday, but logged the biggest yearly gains for both major crude benchmarks in three years.
West Texas Intermediate crude for February delivery CLG20, -0.76% on the New York Mercantile Exchange fell 62 cents, or 1%, to end at $61.06 a barrel, while March Brent crude BRNH20, +0.05% lost 67 cents, or 1%, to finish at $66 a barrel on ICE Europe.
WTI, the U.S. benchmark, logged a 2019 gain of 34.5%, its strongest since a 45% rally in 2016. Brent, the global benchmark, advanced 22.7% this year, its biggest yearly gain since a 52.4% jump in 2016.
Tuesday’s weakness appeared to be driven more by positioning after Commodity Futures Trading Commission data showed speculators with their largest net long position since May, said Robert Yawger, director of energy at Mizuho Securities, in a note. Large net speculative positions can be contrarian indicators, with weak-handed players potentially forced to liquidate positions if the market moves against them.
“It appears that a certain percentage (of speculators) are bailing today despite rather bullish fundamentals dominating the tape,” Yawger said. Those bullish factors include continued mayhem in Iraq, where Iran-backed protesters attempted to storm the U.S. Embassy, expectations the U.S. and China could sign the recently agreed phase-one trade deal by this weekend, and upbeat manufacturing data out of China.
“They don’t matter so far today…it’s all about positioning,” Yawger said.
Oil rallied in December, with WTI rising 10.7% and Brent up 5.7% for their biggest monthly gains since April. An agreement by the Organization of the Petroleum Exporting Countries to deepen production cuts and an agreement on a so-called phase one trade deal between the U.S. and China, along with an easing of worries over the global economic backdrop were seen contributing to the positive finish to the year.
In other energy trading, January gasoline US:RBF20 fell 1.8% to $1.6978 a gallon, leaving a 28.3% gain for the year, according to Dow Jones Market Data, the biggest yearly rise since 2016. January heating oil US:HOF20 lost 0.6% on Tuesday to end at $2.0283 a gallon, posting a 20.7% rise for 2019 — the biggest since 2017.
February natural-gas NGG20, -0.14% futures rose 0.1% to end at $2.189 per million British thermal units. Natural gas slumped 25.5% in 2019, the biggest yearly percentage decline since 2014.