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Oil Slumps as Some Investors Cash Out

Investing.com – Profit-taking and concerns over how President Donald Trump's impeachment trial could play out is pressuring oil into its biggest selloff in three weeks.

Oil prices fell about 1% on Friday as some investors cashed in after a six-day rally in both U.S. West Texas Intermediate and U.K. Brent crude futures.

NYMEX-traded WTI, the U.S. crude benchmark, settled down 74 cents, or 1.1%, at $60.44 per barrel. WTI hit a three-week high of $61.40 on Thursday.

ICE-traded Brent, the global oil benchmark, settled down 40 cents, or 0.6%, at $66.14. Brent reached $66.78 in the previous session, its highest since Sept. 17.

Also pressuring the market was a surge in the U.S. oil rig count data, which had its first big jump in nearly eight months, showing drillers returning to the well pad after WTI prices were consistently at or near $60 per barrel.

Despite the slide, WTI and Brent remained up modesty for the week. For the year, though, both are showing heavy double-digit gains with the U.S. benchmark rising 33% and its U.K. peer up 26%,

Friday’s selloff was the biggest in oil since Nov 29. Crude prices have risen almost non-stop since December began, spurred largely by promises of deeper output cuts from January by the OPEC+ alliance of world oil producers led by Saudi Arabia and Russia.

Also aiding sentiment was the tentative U.S.-China phase one trade deal, which Trump insisted was on its way to being formally signed after his telephone conversation with Chinese President Xi Jinping on Friday.

“My initial optimism of heavy exports in Q1 due to … the China deal has been replaced with skepticism,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C. “Despite poor products data and soft crude data, the markets (have been) generally making higher highs on a daily basis.”

The U.S. oil rig count published by industry firm Baker Hughes on Friday showed a reading of 685 versus last week’s 667. The 18-rig jump represented the first double-digit rise since April in the rig count, which is down 267 from a year ago.

As for the concerns over Trump’s impeachment trial, markets are unsettled over the decision by Democrats opposed to Trump from submitting straight away to his Republican allies the impeachment action carried out against him on Wednesday.

Trump became only the third president in U.S. history to be impeached as rival Democrats who control the House of Representatives found him guilty of abuse of power and obstruction of Congress after investigations concluding that he invited foreign meddling in the U.S. electoral process.

The president will have to face trial in the U.S. Senate but is unlikely to be removed from power as the higher legislative decision-making body is controlled by members of his Republican party, who have made it clear that they viewed his impeachment a sham.

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