Oil has begun the new year on a high. Early prices had Brent Crude trading at $66.35 a barrel, up 0.5 per cent, while US West Texas Intermediate crude was up 0.4 per cent, at $61.31 per barrel.

Both global benchmark prices (Brent and USWTI) had been higher during 2019 but the new-year rally comes after some indicators had suggested oil might suffer a price dip.

They both posted their biggest annual gains since 2016 last year, boosted by continuing expectations that China and the US are near an agreement over trading relations. A deal would increase demand for oil. President Trump has a the deal will finally be signed on January 15.

On the supply side, last month's announcement by Opec (Organisation of Petroleum Exporting Countries) and Russia to agree a cut in oil production also contributed to the rise.

The oil producers have said output will be cut by 500,000 barrels a day, on top of a 1.2m barrels a day cut imposed this time last year. Political unrest in Iraq, a major producer, is also seen as having a potential impact on oil output levels.

Official data from the US Energy Information Administration (EIA), due on January 3, will give traders another indication of oil price expectations.

FURTHER READING: Oil may struggle to repeat 2019's performance in 2020

FURTHER READING: Oil price predictions for 2020 and beyond