Oil prices fell during the European session on Monday to surrender a 3-month high and head to the first daily loss in the last 6 days on profit-taking and slowdown concerns after the release of weak Chinese exports data, but losses are ebbed by a drop in US drilling activities and renewed hopes about a trade deal between the US and China.
West Texas Intermediate (WTI) fell to $58.54, after opening at $59.07, with a session-high $59.17, and Brent fell to $63.64 a barrel, after opening at $64.34, with a high of $64.40.
WTI closed higher by 1.3% and hit a 3-month high of $59.81 on Friday, and Brent futures gained 1.7% and posted the highest since Sept.23 of $64.86.
Those gains were achieved after the OPEC-Plus coalition announced on Friday agreeing on further output cuts by about 500K barrels per day until the end of next March.
In the new agreement the total production cut between OPEC and the independent producers amount to 1.7 million bpd, around 1.7% of global production and will be implemented only within 3 months, and didn't pledge any new measures for after the end of March 2020.
OPEC-Plus also decided to hold an extraordinary general meeting in March 2020, to review the production policy and assess the extent to which the new cut would be more effective.
Goldman Sachs said "this decision reflects an important shift in strategy to managing short-term imbalances rather than trying to correct long-term imbalances through open-ended commitments".
During the last week, oil prices gained 6.5%, their fourth straight weekly gain and the largest weekly since mid-September, after the new OPEC agreement and a surprise drop in US crude inventories.
Chinese government showed that exports fell for the fourth straight month in November, which renewed concerns about the impact of the ongoing trade war between the US and China.
Baker Hughes announced that US drilling rigs declined by about 5 rigs last week, the seventh straight weekly decline.
The total shale oil operating rigs dropped to 663, which is the lowest level since the week ending March 31, 2017.
The US production jumped about 47% since mid-2016 to its all-time high at 12.9 million barrels per day, due to the increased drilling activities.
As for the trade talks between the US and China, officials from the two sides are reportedly trying to find solutions on the main hurdles that block the way of completing the phase one of the trade deal before December 15th.
The Chinese Assistant Minister of Commerce Ren Hongbin said today that Beijing hopes to reach a deal with the US as soon as possible.