Crude oil markets started the week on a bullish note, with traders responding positively to reports that the U.S. and Chinese governments had signed a trade deal. Their enthusiasm helped push the price of West Texas Intermediate (WTI) oil future above the threshold of $60 per barrel for the first time since mid-September.
Prices were up because the trade agreement is likely to give a lift to the US economy and push oil demand upwards in the process. In turn, higher demand will help prevent a supply overhang next year.
Edward Moya, an analyst at the Oanda currency brokerage, commented in a note on December 16: “West Texas Intermediate crude is currently pushing towards a three-month high, and it could easily target $62.50 if we see rebounds in US manufacturing and industrial data over the next couple of days.”
Higher oil prices should also benefit unconventional oil producers in Texas and other states. If oil remains above $60 per barrel, operators can justify the expense of deploying more drilling rigs in order to boost production.