Crude Pauses After Punching Above $54

Crude prices have leveled off on Friday. Crude took advantage of dollar weakness on Thursday, climbing 2.0 percent.
Kenny Fisher
Petroleum, petrodollar and crude oil concept : Pump jack and a black barrel on US USD dollar notes, depicts the money received or earned from sales after investment in the development of oil industry.

Crude oil is trading sideways on Friday. In the European session, WTI is trading at $54.09, down $0.12, or 0.02% on the day. Brent crude is trading at $59.88, down $0.01, or 0.02%.

Brexit Deal Pushes Crude Higher

On Thursday, the EU and the U.K. announced that a Brexit withdrawal agreement had been reached. This news elated investors and crude prices climbed 2.0%. The agreement must still be ratified by the British parliament, and the vote, which will be held on Saturday, is expected to be tight. Under the agreement, there will be a customs arrangement between Northern Ireland and the rest of the United Kingdom, as London as acceded to EU demand of a custom-free border between Northern Ireland and the Republic of Ireland. An orderly Brexit departure will be a boost for the British and eurozone economies, so if the deal sails through parliament, crude prices could increase on Monday.

EIA Inventory Surplus Surges

Oil prices have been under downward pressure due to continuing surpluses of crude inventories. The Energy Information Administration (EIA) posted a huge surplus of 9.3 million barrels on Wednesday. This was up sharply from the previous release of 2.9 million. This marked the highest surplus since May. Another factor weighing on crude prices is the slowdown in China. Chinese GDP dipped to 6.0% in the third quarter, down from 6.2% in Q2. The ongoing trade war between the U.S. and China has hampered the Chinese economy, as the manufacturing sector has contracted and exports are down. The current round of trade talks will be especially important for China, which badly needs an agreement with the U.S., even it is a limited deal. The U.S. has agreed to remove tariffs that were set to take effect this week, but a new 15% tariff is set to commence on December 15, unless the sides can hammer out an agreement prior to that date.

WTI/USD 4-hour Chart

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