Oil prices set for first annual decline since 2015

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Oil prices climbed on the last trading day of the year on Monday, taking a cue from firmer stock markets, but were on track for the first yearly decline in three years amid concerns of a persistent supply glut.

Brent crude futures, the international benchmark for oil prices, rose 42 cents or 0.8 percent to 53.63 U.S. dollars a barrel. Brent declined nearly 20 percent in 2018 following two years of growth.

U.S. West Texas Intermediate (WTI) crude futures were at 45.65 U.S. dollars a barrel, up 32 cents or 0.7 percent, from their last close. WTI is down about 24 percent this year.

Crude prices have been closely tracking equity markets during volatile trading for both asset classes last week.

The current downward pressure on oil prices should likely taper off from January, when OPEC-led supply cuts commence, analysts said.

Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed to curb output by 1.2 million barrels per day starting in January to clear a supply overhang and prop up prices.

The group of producers "may hold out on supplies longer than reasonable in order to see if they can effect a rally similar to September-October this year," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Meanwhile, imports of Iranian crude oil by major buyers in Asia hit their lowest in more than five years in November as U.S. sanctions on Iran's oil exports took effect last month.

Asia's imports from Iran are set to rise again in December after the U.S. granted temporary waivers to some countries, but is not known how much Iran will be able to export once the waivers expire around the start of May.

Source(s): Reuters