Brent Crude futures were up 0.4% at $66.27 per barrel, while WTI Crude settled up just 0.2% at $61.18 per barrel. The dollar rose 0.5%, recovering from a six-month low after a downbeat December left the index virtually unchanged for 2019. A stronger dollar makes oil more expensive for holders of other currencies. Losses in oil prices were limited by optimism that a trade truce between the world’s two largest economies will support energy demand. U.S. President Donald Trump has said Jan. 15 would mark the signing of the U.S.-China Phase 1 trade deal. “Any delays could put a pullback in the market here,” said Bob Yawger, director of futures at Mizuho in New York. January also marks the scheduled start of deeper output cuts by the Organization of the Petroleum Exporting Countries and its partners, including Russia. The group agreed to cut output by a further 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd. Russia reported record high 2019 oil and gas condensate production <C-RU-OUT> of 11.25 million bpd, beating the previous record of 11.16 million bpd set a year earlier, Energy Ministry data showed.

The U.S. military carried out air strikes against Iran-backed Katib Hezbollah militia group over the weekend. Angry at the air strikes, protesters stormed the U.S. Embassy in Baghdad on Wednesday, although they withdrew after the United States deployed extra troops. “Heightened tensions in the region involving Iranian-backed forces may introduce a certain geopolitical risk,” consultancy JBC Energy said.

A fall in U.S. crude inventories last week also supported prices. U.S. crude stocks fell 7.8 million barrels in the week ended Dec. 27, compared with analysts’ expectations for a decrease of 3.2 million barrels, data from the American Petroleum Institute (API) showed on Tuesday. Official data from the Energy Information Administration (EIA) is due on Friday having been delayed by two days by the New Year’s holiday.

In 2020, Brent is forecast to average $63.07 a barrel, up from December’s estimate of $62.50, while WTI is forecast to average $57.70 per barrel, up from December’s estimate of $57.30, a Reuters poll showed.