SINGAPORE: Oil is poised for the biggest yearly gain since 2016 as fresh geopolitical tensions erupted in the Middle East and as US crude stockpiles are forecast to extend declines.
Futures slipped 0.3% in New York after easing slightly Monday from the highest close in three months.
Iran detained a ship carrying smuggled fuel near the Strait of Hormuz following US air strikes on five Iran-backed militia bases in Iraq and Syria.
American crude stockpiles are forecast to fall for a third week, according to a Bloomberg survey before government data on Friday.
Oil has gained about 34% in 2019, buoyed by a recent breakthrough in the US-China trade dispute and an agreement by the Organisation of Petroleum Exporting Countries and its allies to deepen output cuts.
It’s been a tumultuous year for prices, which saw the biggest plunge in four years in August due to tariff threats on Beijing by President Donald Trump, before prices spiked the most in more than a decade in September after strikes on Saudi Arabia.
“The US-China trade war was in the driver’s seat when we entered 2019 and remains there as we exit the year,” said Vandana Hari, founder of industry consultant Vanda Insights in Singapore.
Geopolitical concerns continue to linger, while Opec+ collaboration is going strong. President Trump is “the biggest wildcard for the oil market,” she added.
West Texas intermediate for February delivery lost US$0.20 to US$61.46 a barrel on the New York Mercantile Exchange as of 7.21am London time. The contract fell US$0.04 to close at US$61.68 on Monday.
Brent for March settlement dropped US$0.18 cents to US$66.49 a barrel on London’s ICE Futures Europe exchange.
Front-month prices are up about 23% this year, also set for the biggest annual gain since 2016.
The global benchmark crude was trading at a US$6.93 premium to WTI for the same month.
Iran detained the tanker and its 16 Malaysian crew members near Abu Musa island, state-run Islamic Republic News Agency reported.
The seizure follows a rare direct strike by the US on Iranian-backed militia, aimed at sending a warning to Tehran.
The attack may escalate tensions amid the Trump administration’s crippling economic sanctions on the Opec member.
US crude stockpiles probably declined by 3 million barrels last week, according to the survey before Energy Information Administration data on Friday.
Industry figures are due later on Tuesday.