U.S. crude oil surged this month to post its best January performance on record, breaking a three-month losing streak that saw futures lose nearly half of their value.
Crude futures have powered through a steady flow of weak economic data from China, the world's second biggest oil consumer, amid an ongoing trade dispute with Washington. The energy complex has been boosted by OPEC-led production cuts aimed at draining oversupply and U.S. sanctions on Venezuela, which threaten to disrupt global trade flows and bolster prices.
U.S. West Texas Intermediate crude prices ended Thursday's session down 44 cents at $53.79 a barrel, after hitting a two-month high at $55.37. WTI posted an 18.5 percent monthly gain, its biggest jump since April 2016 and its best January since the futures began trading in 1983.
International benchmark Brent crude for March delivery rose 24 cents at $61.89 a barrel, finishing January up 15 percent, also the best monthly gain since April 2016. Brent's more heavily traded April contract was down 1 percent at $60.89 around 2:30 p.m. ET.
Prices tumbled after U.S. Energy Information Administration reported U.S. oil production rose to an all-time high 11.9 million barrels per day in November, up from 11.5 million bpd in October. Preliminary weekly figures have long telegraphed the jump, confirmed by EIA's first monthly reading on Thursday.
The drop also came after President Donald Trump said he wants a big trade deal with China, but may not reach an agreement by March 1, the deadline to prevent a rise in tariffs on hundreds of billions of dollars in goods.
An increase in trade barriers threatens to exacerbate a slowdown in Chinese growth that could dent fuel demand. Negotiators from the two countries are meeting in Washington this week.
"I'm not sure President Trump's comments about the China situation were helpful to the bull case," said John Kilduff, founding partner at energy hedge fund Again Capital.
Kilduff said some traders may be taking profits after WTI jumped above $55 a barrel on Thursday for the first time in over two months.
Despite the strong monthly performance, both benchmarks remain in bear market territory, with WTI down about 30 percent from its 52-week high in October. The crude price collapsed to roughly 18-month lows in the final quarter of 2018 on growing oversupply, weak demand signals and technical trading.
At the end of the January rally, the oil market is on the cusp of another leg higher, according to Craig Erlam, senior market analyst at brokerage OANDA.
"A break through $55 in WTI and $65 in Brent would be a very bullish signal for these and could be the catalyst for more significant upside, with oil having stabilised over the last few weeks following the post-Christmas bounce," Erlam wrote in a briefing.