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Oil dives, sending U.S. crude below $50 for first time in two weeks

REUTERS

By Julia Simon | NEW YORK

NEW YORK Oil prices tumbled more than 2 percent on Friday, notching the biggest weekly decline in more than a month on mounting evidence that U.S. production and inventory growth were offsetting OPEC’s attempts to reduce the global crude glut.

Brent futures LCOc1 settled at $51.96 a barrel, down $1.03, or 2 percent at the market’s close. U.S. crude futures CLc1 ended at $49.62 a barrel, down 2.2 percent, or $1.09.

Volumes were heavy, with more than 665,000 WTI futures changing hands, surpassing the daily average of 525,000 contracts.

For the week, Brent fell 7 percent, while U.S. crude lost 6.7 percent. It was the largest percentage drop for both benchmarks since the week of March 10, when rising concern about the supply glut undermined big bets on an oil rally.

Those speculative bets have been on the rise again. On Friday, the U.S. Commodities Future Trading Commission (CFTC) showed total long positions in U.S. crude rose in the week to April 18 to their highest in more than a month at 355,077 contracts. But oil has sagged in recent days, much as it did in March.

Many in the market still expect the Organization of the Petroleum Exporting Countries (OPEC) to renew its production cuts for another six months. On Friday an OPEC and non-OPEC member technical committee recommended extending cuts of almost 1.8 million barrels per day (bpd) at the upcoming May 25 meeting.

Still, shipment data shows more oil transiting world oceans than when cuts were put in place.

“The reason that we’re seeing the selloff today and really for this week has been related to the fact that we’re seeing higher waterborne imports arriving from the Middle East,” said Matt Smith, director of commodity research at Clipperdata.

“We should continue to remain well supplied at least over the next few weeks.”

In addition, Russia’s Energy Minister Alexander Novak declined to say whether Russia would adhere to an extension, saying global stocks were declining.

Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB, does not expect OPEC to roll over its cuts, saying it could potentially leave the cartel vulnerable to “more stimulus of the U.S. shale oil sector.”

U.S. production, already at its highest since August 2015, looks likely to keep rising. U.S. drillers added rigs for a 14th consecutive week, Baker Hughes said on Friday.

(Additional reporting by Ron Bousso in London, Henning Gloystein in Singapore; Editing by David Gregorio and Chizu Nomiyama)

Oil prices flatten as rise in US production weighs

CNBC

Brent futures were at $52.93 barrel, unchanged from their last close. U.S. crude futures were down 9 cents at $50.50 a barrel.

Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of U.S. trading hours.

OPEC vs US output: What’s driving oil? 

“The U.S. market perhaps doesn’t believe in the oil market balance that OPEC would have us believe,” said Hans van Cleef, senior energy economist with ABN AMRO.

OPEC members Saudi Arabia and Kuwait signaled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut oil output was likely to be extended beyond June.

But bloated inventories weighed. Despite a drop in U.S. crude stocks last week, an unexpected 1.5-million-barrel build in gasoline stocks drove prices more than 3.5 percent lower on Wednesday.

U.S. crude oil production rose to 9.25 million barrels per day, official data showed, up almost 10 percent since mid-2016.

Patrick Pouyanne, the chief executive of French oil and gas giant Total, said on Thursday prices could fall again by the end of the year due to a rapid increase in U.S. shale production.

“The rebalancing in U.S. crude stocks may have got under way, but concerns about further gasoline builds are rife even as the U.S. summer driving season shifts up a gear,” said Stephen Brennock, an analyst with PVM Oil Associates.

“With questions hanging over U.S. gasoline demand, any further product builds will act as a brake on the oil price recovery,” he said.

Global fuel stocks are well above the five-year average, and Saudi Energy Minister Khalid al-Falih was quoted on Thursday as saying inventories remained elevated in part because traders were selling supplies out of tanker storage.

In China, signs emerged that refiners were using record crude imports to produce more fuel such as gasoline and diesel than the country can absorb.

China’s March gasoline output rose 2.5 percent year-on-year to 11.24 million tonnes, the highest level since at least April 2014, China’s National Bureau of Statistics said, adding fuel into an Asian market that is already well supplied.

Oil near flat in strong week for crude

The Economic Times

Energy services firm Baker Hughes said on Thursday that drillers added 11 oil rigs in the week to April 13, bringing the total count up to 683. The number of U.S. rigs has increased for 13 consecutive weeks.

Oil near flat in strong week for crudeBy Julia Simon

NEW YORK: Oil prices were little changed in modest volume on Thursday, during a week in which crude benchmarks recouped more of March’s losses on increased hopes world supply and demand were nearing balance.

At the same time, the U.S. oil rig count rose to its highest level in two years, threatening the rebalancing of markets.

Energy services firm Baker Hughes said on Thursday that drillers added 11 oil rigs in the week to April 13, bringing the total count up to 683. The number of U.S. rigs has increased for 13 consecutive weeks.

The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017.

With the increasing rig count pointing to rising supply, Tony Headrick, energy market analyst at CHS Hedging, said OPEC would be watching.

“Ultimately OPEC is viewing it as a point of discussion in terms of whether or not they look to extend cuts,” Headrick said.

OPEC meets on May 25 to consider extending the cuts beyond June. Saudi Arabia, Kuwait and most other OPEC members are leaning towards this if agreement is reached with other producers, OPEC sources told Reuters last month.

OPEC data showed members of the group had cut March output beyond the level they had promised.

Benchmark Brent crude futures settled up 3 cents to $55.89 a barrel after touching a one-month high on Wednesday. U.S. West Texas Intermediate crude futures settled up 7 cents at $53.18 a barrel. Both benchmarks were set for a third consecutive weekly gain. About 431,000 U.S. crude contracts changed hands Thursday, short of the 531,000-contract average over the past 200 trading days.

The Paris-based International Energy Agency (IEA) said on Thursday that supply and demand in the global oil market were close to matching after a fall in stockpiles in developed countries in March.

The IEA said oil stocks in the Organisation for Economic Cooperation and Development industrialized countries fell by 17.2 million barrels in March, although inventories were still 300 million barrels above the five-year average.

“It can be argued confidently that the market is already very close to balance,” the agency said in its monthly report.

The IEA trimmed its oil demand growth forecast for 2017 by 40,000 barrels per day and warned that its revised level of 1.3 million barrels per day “could prove optimistic.” (Additional reporting by David Gaffen in New York, Karolin Schaps in London and Naveen Thukral in Singapore; Editing by

US crude oil stocks fall by 1.3 million barrels

 

Pipelines and oil storage tanks in Cushing, Okla.

3 ways to play rising oil: Gartman   

U.S. crude stocks fell unexpectedly last week as imports declined and refinery runs rose, while gasoline and distillate inventories also drew, industry group the American Petroleum Institute said Tuesday.

Crude inventories fell by 1.3 million barrels in the week to April 7 to 532.4 million, compared with analysts’ expectations for an increase of 87,000 barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 358,000 barrels, API said.

Refinery crude runs rose by 57,000 barrels per day, API data showed.

Gasoline stocks fell by 3.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.7 million-barrel decline.

Distillate fuels stockpiles, which include diesel and heating oil, fell by 1.6 million barrels, compared with expectations for a 885,000-barrel drop, the API data showed.

U.S. crude imports fell last week by 15,000 barrels per day to 7.8 million bpd.

Crude Oil Prices Extend Gains as G7 Grapples with Syria Crisis

Apr 11, 2017

Fundamental analysis, economic and market themes

Crude oil prices continued to push upward as US Secretary of State Rex Tillerson took a tougher line on the conflict in Syria at a meeting with his G7 counterparts. He said the US will “[hold] to account any and all who commit crimes against the innocents,” stoking fears of a deepening crisis that may disrupt supply flow.

The sit-down extends for another day and traders will probably continue to monitor emerging commentary with great interest. Tillerson travels to Russia immediately thereafter and worries about the outcome of a diplomatic showdown may keep prices elevated.

Meanwhile, gold prices marked time as Fed Chair Janet Yellen carefully side-stepped opportunities to dislodge status-quo policy expectations in a closely-watched speech at the University of Michigan. From here, a lull in top-tier economic event risk puts geopolitics front and center.

The yellow metal rallied as risk aversion swept the markets after last week’s surprise US missile strike on Syria, threatening Fed rate hike prospects. Signs of deepening crisis may weigh on sentiment anew, making for more of the same. Needless to say, de-escalation may put this dynamic into reverse.

What will drive crude oil and gold prices in the next 3 months? See our forecasts to find out!

GOLD TECHNICAL ANALYSISGold prices remain locked in a range below trend-defining resistance in the 1263.87-65.66 area (February swing high, trend line, 50% Fibonacci expansion). Negative RSI divergence hints that upside momentum is ebbing and a turn lower may be ahead. A break below the 1241.20-49.01 region (range floor, 38.2% Fib) exposes 1218.90, an inflection point in play since mid-January. Alternatively, a move above resistance targets the 61.8% level at 1282.31.

Crude Oil Prices Extend Gains as G7 Grapples with Syria Crisis

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continued to push higher as expected having cleared resistance at 52.04, the 38.2%Fibonacci expansion. From here, a daily close abovethe 50% levelat 53.57 targets the 55.10-21 area (January 3 high, 61.8% Fib). Alternatively, a reversal back below 50.04 exposes the 23.6% expansion at 50.14 anew.

Crude Oil Prices Extend Gains as G7 Grapples with Syria Crisis

Chart created using TradingView

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

WTI Crude Oil and Natural Gas Forecast

By: DailyForex.com

WTI Crude Oil

The WTI Crude Oil market rallied significantly during the day on Friday, mainly in reaction to a nice uptrend, and of course the US airstrikes against the Syrian military. However, a less than stellar job report turned everything around and we ended up forming something akin to a shooting star. While I do not suspect that this market’s going to break down right away, I do recognize that the market is starting to run out of momentum. Because of this, a breakdown below the bottom of the candle would be and I selling opportunity and should send this market looking for the $51 level, and then possibly the $50 level. A break above the top of the candle should be a buying opportunity in theory, but there is a lot of noise above that will come into play, making it a very difficult trade.

Crude oil

Natural Gas

The natural gas markets rallied initially as well, but turned around to test the $3.25 level. The market breaking down below there could send the market down to the $3.13 level, an area that has been supportive. There is a gap down there, so I think that at this point we will more than likely will find buyers that will keep the market somewhat afloat. At this point, it looks as if choppy conditions will continue, but it’s more than likely going to be bullish in general. Short-term, I’m looking to sell but I do expect to see the buyers return.

If we broke down below the $3.10 level, then I think the trend may turn around, but we have seen such a move higher and the fact that the 50 and the 100-day exponential moving averages have crossed suggests that there is still a significant amount of bullish pressure underneath in the natural gas markets.

Natural gas

Oil prices hit one-month highs

Oil prices hit one-month highs as buyers stay upbeat

By David Gaffen | NEW YORK

NEW YORK Oil prices rose by 1 percent on Thursday, posting a fourth straight day of gains, but analysts remained cautious about record-high U.S. crude inventories.

Brent crude futures settled up 53 cents, or 1 percent, at $54.89 a barrel. U.S. West Texas Intermediate crude futures rose 1.1 percent, or 55 cents a barrel, to $51.70.

The gains gave crude its highest close since a March 8 rout when investors bailed out of bullish positions due to concerns about supply.

Crude prices have been rebounding in the last two weeks from that decline. Refinery runs are starting to increase as the U.S. summer driving season approaches and gasoline inventories have been declining.

Yet U.S. government data still show crude inventories at record levels, prompting some analysts to grow concerned about speculators jumping back into the market after several weeks when they reduced positions in response to inventory figures.

“It’s hard to justify the move on the on back of fundamentals,” said Robert Yawger, director in energy futures at Mizuho.

On Wednesday, the U.S. Energy Information Administration (EIA) reported a surprising increase of 1.57 million barrels in crude inventories, bringing total U.S. stocks to a record 535.5 million barrels.

U.S. oil production rose by 52,000 barrels per day (bpd) to 9.2 million bpd.

“The U.S. crude oil production profile is a mirror image of where it was last year, when at the end of the second quarter, production was 600,000 bpd lower than at the start of the year and this year is going to be the opposite,” said Olivier Jakob, at consultancy Petromatrix.

“By the end of the second quarter, you could have U.S. production up by 1 million bpd.”

Traders have been watching U.S. gasoline inventories as an indicator of what may happen with crude supplies. The latest data showed gasoline supplies at 239 million barrels, higher than any year at this point during this century other than last year.

Gasoline prices trailed the rest of the market on Thursday, with RBOB futures rising 0.8 percent to $1.7292 a gallon. Demand for gasoline traditionally picks up in the summer as the U.S. driving season gets going.

U.S. crude exports have risen to a record 1.1 million bpd. Most cargoes are going to Asia, where traders see signs of a tightening market due to efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut output.

Additional production could come back online in coming days, with the 350,000-bpd Syncrude oil sands project in Alberta, which cut production to zero after a fire, expected to restart operations in the first week of May, according to sources familiar with the matter.

(Additional reporting by Amanda Cooper in London and Henning Gloystein in Singapore; Editing by Richard Chang and Meredith Mazzilli)

U.S. Crude Oil

NASDAQ

UPDATE 10-Oil rises, near 1-month high; U.S. crude stocks seen down


* Brent, U.S. crude at highest since March 7
    * UK North Sea Buzzard field temporarily halted
    * Market watching for signs of tighter supply
    * U.S. crude stocks fell by 1.8 million barrels last week:
API

 (Adds U.S. inventory report in paragraph 7)
    By Scott DiSavino NEW YORK, April 4 (Reuters) - Oil prices on Tuesday rose to
a near one-month high, supported by an unplanned production
outage in the North Sea and expectations of a drawdown in U.S.
crude and product inventories.
    Brent <LCOc1> futures rose $1.05, or 2 percent to settle at
$54.17 a barrel. The move higher came after the global benchmark
broke above its 100-day moving average, a key resistance level,
putting the contract into technically overbought territory for
the first time since the end of December.
    U.S. West Texas Intermediate crude <CLc1>, meanwhile, gained
79 cents, or 1.6 percent, to settle at $51.03 per barrel.
    Both contracts ended the day at their highest levels since
March 7. They hit four-month lows late last month but have
recovered 9 percent since then on expectations the Organization
of the Petroleum Exporting Countries (OPEC) and other producers
would cut output under an agreement reached last year.
    "OPEC compliance is still holding better than we expected
with next week's release of various monthly agency reports
likely to confirm," Jim Ritterbusch, president of Chicago-based
energy advisory firm Ritterbusch & Associates, said in a note.
    In the North Sea, production of crude oil from Britain's
180,000 barrel per day Buzzard field was temporarily halted
while repair work is carried out at an onshore processing
terminal, trading sources said, noting normal output should be
restored in the coming day or two. [nL5N1HC3ZC]
    Meanwhile, U.S. crude stocks fell by more than expected last
week, dropping by 1.8 million barrels compared with analysts'
expectations of a 435,000 barrel decline, according to data
released late Tuesday from the American Petroleum Institute.
[API/S] [nZXN04ZI00]
    The U.S. Energy Information Administration will issue its
inventory figures on Wednesday at 10:30 a.m. EDT.
    "U.S. product stocks need to be watched closely, since they
have fallen massively over the last few weeks," said Carsten
Fritsch, commodities analyst at Commerzbank in Frankfurt.
    Yet global inventories remain high. UBS analyst Giovanni
Staunovo said OPEC was taking longer than expected to tighten
the oil market but recent data suggested the process was now
well under way.
    "We believe the implemented production cuts will trigger a
material drawdown in OECD oil inventories and thus higher crude
oil prices," Staunovo said, referring to the Organisation for
Economic Co-operation and Development.
    "We expect Brent oil prices to rise above $60 a barrel in
three months," Staunovo said.

 (Additional reporting by Christopher Johnson in London and Jane
Chung in Seoul; Editing by Marguerita Choy; Editing by David
Gregorio and Andrew Hay)

Read more: http://www.nasdaq.com/article/update-10oil-rises-near-1month-high-us-crude-stocks-seen-down-20170404-01253#ixzz4dMDoH0Y1

Journal of Petroleum Technology

New Technology Could End Costly Crude Oil Pipeline Blockages

Mon, 04/03/2017 – 1:02pm

by University of Houston
This is an artist’s rendering of a prototype device that would electrokinetically remove asphaltenes from crude oil near the point of production. Source:Yao et al., 2015, Department of Petroleum Engineering, University of Houston

Getting crude oil from the wellhead to its downstream destination can be literally stopped in its tracks when components of the oil known as asphaltenes clump together, reducing the flow or causing a complete blockage.

A petroleum engineer from the University of Houston has reported building a prototype device to address the problem, which currently requires the use of chemical dispersants and inhibitors or a physical process to remove the accumulated solids.

Konstantinos Kostarelos, associate professor of petroleum engineering at UH, described the device and the way it works in the Journal of Petroleum Technology.

Blockages happen when molecules called asphaltenes — which make up the heaviest fraction of crude oil — solidify with pressure and temperature changes once outside the reservoir. Over time, that builds up and hardens on the inside of the pipe, resulting in reduced flow or complete blockage of producing wells and surface equipment, including pumps, pipelines and separators, the researchers said.

“You have a clean pipe and things flow normally, but the coating of the asphaltenes inside the pipe builds up, so if your pipe diameter was six inches, it slowly becomes five inches, then four inches — so the pipe size is not what was designed,” Kostarelos said.

When that happens the flow rate is reduced. Pumps can increase the flow rate, but require huge amounts of pressure.

To address the problem, the researchers built a prototype device that would remove asphaltenes from crude oil near the point of production, using electrokinetics. “A scaled-down device was fabricated and tested using a model oil to prove the concept and study some of the parameters that would influence the design of a larger-scale device,” they wrote.

Coauthors on the paper include UH undergraduate students Clint Martin, Kyo Tran, Jose Moreno and Aaron Hubik, along with Shahab Ayatollahi of Sharif University of Technology.

The process involved putting two electrical plates, charged at 4,000 volts, into the pipe. The plates attract the asphaltene, removing it from the flowing oil.

“The asphaltene molecules, which are polar, start coating the plates and we remove the plates periodically,” said Kostarelos. “It worked better than I expected.”

Future work will involve using a wider variety of solvents and ultimately, a prototype that can be used with produced crude.

Iraq to boost crude oil production

ABC News

Minister: Iraq to boost crude oil production by year’s end

Iraq’s oil minister said on Sunday that his country plans to increase daily crude oil production to 5 million barrels by the end of this year, up from the current rate of about 4.4 million barrels per day, to secure sorely needed cash for its ailing economy.

Iraq, where oil revenues make up nearly 95 percent of the budget, has been reeling under an economic crisis since 2014, when oil prices began their descent from a high of above $100 a barrel. The Islamic State group’s onslaught, starting in 2014, has exacerbated the situation — forcing Iraq to divert much of its resources to a long and costly war.

Addressing an energy conference in Baghdad, Oil Minister Jabar Ali Al-Luaibi didn’t give details on which of the country’s oil fields would supply the increased output.

Late last year, Iraq joined a deal by OPEC and non-OPEC members to lower production for six months by 1.8 million barrels a day in order to prop up global oil prices. The mutual production decrease began on Jan. 1. Iraq’s share in the deal is to reduce output by 210,000 barrels a day to 4.351 million barrels.

“There are positive elements in that deal and we achieved a lot of its targets,” al-Luaibi told reporters on the sideline of the conference. “Work and cooperation are underway … to reach the 1.8 (million barrels a day) reduction,” he added, without divulging whether Iraq is going to support an extension to that deal.

OPEC Secretary General, Mohammed Barkindo, said the compliance among the participants was 86 percent in January and 94 percent in February. Barkindo told reporters that OPEC members would consider whether to extend the production decrease agreement at a meeting next month.

The deal propped up the crude price to around $50 per barrel.

Iraq holds the world’s fourth-largest oil reserves. This year, it added 10 billion barrels, bringing its total reserves up to 153.1 billion barrels.

Al-Luaibi also said that more 15 billion barrels are planned to be added by 2018.

Iraq’s 2017 budget stands at about 100.67 trillion Iraqi dinars, or nearly $85.17 billion, running with a deficit of 21.65 trillion dinars, or about $18.32 billion. That’s based on an estimated oil price of $42 per barrel and daily export capacity of 3.75 million barrels.

Iraq is also grappling with a major humanitarian crisis. The U.N. estimates that more than 3 million people have been forced from their homes since 2014. It also faces growing dissatisfaction among residents of areas recaptured from IS who have had their properties demolished and suffer from scarce public services.