Oil futures slumped Tuesday, set to end the strongest calendar year for crude since 2016 on a down note.
West Texas Intermediate crude for February delivery CLG20, -1.05% on the New York Mercantile Exchange fell 74 cents, or 1.2%, to $60.94 a barrel, while March Brent crude BRNH20, -0.94% lost 72 cents, or 1.1%, to trade at $65.95 a barrel.
WTI, the U.S. benchmark, is on track for a 2019 gain of more than 34%, its strongest since a 45% rally in 2016, according to FactSet. Brent, the global benchmark, is up 22.5% this year, which would be its biggest yearly gain since a 52.4% jump in 2016.
Tuesday’s weakness appeared to be driven more by positioning after Commodity Futures Trading Commission data showed speculators with their largest net long position since May, said Robert Yawger, director of energy at Mizuho Securities, in a note. Large net speculative positions can be contrarian indicators, with weak-handed players potentially forced to liquidate positions if the market moves against them.
“It appears that a certain percentage (of speculators) are bailing today despite rather bullish fundamentals dominating the tape,” Yawger said. Those bullish factors include continued mayhem in Iraq, where Iran-backed protesters attempted to storm the U.S. embassy, expectations the U.S. and China could sign the recently agreed phase-one trade deal by this weekend, and upbeat manufacturing data out of China.
“They don’t matter so far today…it’s all about positioning,” Yawger said.
February natural gas RBG20, -0.94% was unchanged at $2.186 per million British thermal units.