The spot price of WTI crude was up 4.9% in mid-afternoon trading on January 9. Oil prices have spiked after Saudi Arabia announced that it would pursue export and production cuts to push prices upward over the course of 2019.
Reports have also indicated positive developments in trade talks between the United States and China, which has been a boon for prices.
Some investors may want to consider the United States Oil Fund LP (NYSE:USO) as crude makes a comeback in early 2019. The fund was up 5.24% as of this writing. Shares plunged 20% in 2018 on the back of major weakness for oil in the second half of the year.
The United States Oil Fund is designed to track the price movements of West Texas Intermediate (WTI) light, sweet crude oil.
U.S. production is going to continue to put pressure on WTI prices, which is also something to keep in mind for investors.
The Energy Information Administration on Wednesday reported a crude oil inventory draw of 1.7 million barrels for the first week of 2019. This is well below the 6.9 million build in the last week of 2018, but inventories remain over the five-year seasonal average.
Oil prices will likely hinge on continuing talks between the US and China. If sides fail to reach an agreement by March 2 the US will trigger a 15% increase in tariffs on Chinese goods worth $2 billion.
The United States Oil Fund looks like a short-term play as positive reports trickle in from trade talks, but investors should be highly skeptical of a breakthrough by March.
