Oil on Friday erased almost an entire week of advances as chart-watching traders tested a key price barrier.
Futures in New York fell 1.2 percent a day after closing at a three-month high.
Selling accelerated after a foray above US$61 per barrel petered out, a bearish technical signal.
The next key threshold is at the US$60 level, traders said.
On the fundamental front, US-China trade negotiations slogged on against the backdrop of shrinking US crude inventories.
Crude eked out a third consecutive weekly advance with a 0.6 percent increase.
New York futures are on track for the strongest December performance since 2002 as prospects for a trade truce brightened between the world’s two largest economic powers.
An agreement between OPEC and allied producers to deepen supply cuts has also supported prices.
“Brace yourself for US$60,” Mizuho Securities USA LLC futures director Robert Yawger said in New York, adding that a dip to US$60 “would supersize the amount and speed of the exit” by speculators.
West Texas Intermediate crude for February delivery fell US$0.74 to settle at US$60.44 per barrel on the New York Mercantile Exchange.
Brent for February delivery slid US$0.40 to US$66.14 on the London-based ICE Futures Europe Exchange.
Meanwhile, hedge funds boosted bets on rising US crude prices to the highest level in more than seven months, helping support oil’s first full week above US$60 per barrel since May.
Their net-bullish wagers on West Texas Intermediate crude climbed 19 percent in the week ended on Tuesday, data released on Friday showed.
Optimism over the US-China trade truce and OPEC cuts helped push futures to a three-month high, although the rally has fizzled somewhat.
“I expect to see more length in the market as a function of what looks to be the successful negotiation of ‘phase one’ of the US-China trade pact, as well as the OPEC meeting with their pledge to reduce output,” Commodity Research Group senior partner Andrew Lebow said in New York.
The improved outlook for trade and OPEC’s pledge to deepen output cuts are helping US oil head for a rebound of more than 30 percent this year, its best performance since 2016. That is after a 25 percent slump last year.
It also seems that the US’ shale boom is slowing down and several forecasts for the country’s crude output next year have been lowered.
“US production estimates continue to fall,” CIBC Private Wealth Management senior equity trader Rebecca Babin said.
“A likely return of the downside from last year was mitigated by ‘phase one’ of the China-US deal and OPEC staying on [the] price stability theme instead of market share,” she said.
Money managers’ West Texas Intermediate net-long position, or the difference between bullish and bearish bets, climbed to 272,218 futures and options, the highest level since April, US Commodity Futures Trading Commission data showed.
Long-only wagers jumped 13 percent, while shorts declined 24 percent, the data showed.
In other energy trading, wholesale gasoline was unchanged at US$1.71 per gallon and heating oil declined US$0.01 to US$2.02 per gallon, while natural gas rose US$0.06 to US$2.33 per 1,000 cubic feet.
Gold fell US$3.50 to US$1,474.70 per ounce and silver rose US$0.07 to US$17.13 per ounce, while copper fell US$0.02 to US$2.81 per pound.
Additional reporting by AP
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