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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)

Oil ends lower as April contracts expire ahead of U.S. crude-supply data

MARKET WATCH

Trades look for hints on potential for OPEC output cut extension

Shutterstock/zhengzaishuru

By

MyraP. Saefong

Markets/commodities reporter

RachelKoning Beals

News editor

Oil prices settled lower Tuesday in volatile trading tied to the expiration of the April futures contracts, ahead of data expected to reveal a rise in weekly U.S. crude supplies.

Traders also kept an eye out for hints on whether the Organization of the Petroleum Exporting Countries will extend the production-cut agreement between its members and other major producers beyond June. OPEC sources have indicated that members increasingly favor an extension but want the backing of non-OPEC oil producers, which have yet to deliver fully on existing cuts.

April West Texas Intermediate crude CLJ7, -1.49% declined by 88 cents, or 1.8%, to settle at $47.34 a barrel on the New York Mercantile Exchange. The contract, which expired at the settlement, finish at their lowest level since November, according to FactSet data. May WTI CLK7, -0.58% which is now the front-month contract, shed 67 cents, or 1.4%, to finish at $48.24 a barrel.

May Brent crude LCOK7, -0.51% lost 66 cents, or 1.3%, to $50.96 a barrel on the ICE Futures exchange in London.

“WTI crude oil was unable to hold on to early gains despite a falling U.S. dollar providing support to commodity prices in general,” Colin Cieszynski, chief market strategist at CMC Markets, told MarketWatch.

“Given the high volatility and big surprises in both directions of the last three weeks, it appears some traders may be going to the sidelines ahead of the [supply data] news, while others may be expecting a big build after last week’s surprise decline,” he said.

Petroleum inventory data are due out from the American Petroleum Institute late Tuesday and Energy Information Administration early Wednesday. Analysts surveyed by S&P Global Platts forecast a climb of 2 million barrels in crude inventories for the week ended March 17.

“A lot of the recent volatility in oil has been around traders trying to figure out if the big build we saw in U.S. inventories in the winter is over or not,” said Cieszynski. EIA data released last week showed the first decline in crude stockpiles in 10 weeks.

The world’s biggest crude exporter is conceding ground to shale producers in the U.S., people familiar with current Saudi policy said. Saudi Arabia’s crude exports to the U.S. for the week ended March 10 fell by 426,000 barrels a day compared with the previous week, according to U.S. data.

Elsewhere in energy trading, April gasoline RBJ7, -0.28%  fell by 0.4% to $1.605 a gallon, while April heating oil HOJ7, -0.39%  lost 0.7% to $1.503 a gallon.

April natural gas NGJ17, -0.32%  settled at $3.093 per million British thermal units, up 1.7%.

McDermott, Transocean Gushing Along With Crude Oil

THE STREET

Oil-services stocks have mixed performance against crude oil.

Here’s the weekly chart for Noble.

Courtesy of MetaStock Xenith

Noble shares trade around $7, down 36.4% year to date and in bear market territory 51.7% below its March 7 high of $13.90. The stock is in bull market territory 45.6% above its Nov. 2 low of $4.61.

The weekly chart is positive with the stock above its key weekly moving average of $5.90 and well below its 200-week simple moving average of $20.03. The weekly momentum reading is projected to rise to 48.84 this week up from 38.13 on Dec. 2.

Investors looking to buy Noble should consider doing so on weakness to $5.49, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should consider doing so if the stock rises to $9.55, which is another key level on technical charts until the end of 2016.

Here’s the weekly chart for Transocean.

Courtesy of MetaStock Xenith

Transocean shares trade close to $15, up 19.9% year to date and in bull market territory 93.5% above its Feb. 24 low of $7.67.

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The weekly chart is positive but overbought with the stock above its key weekly moving average of $11.88 but well below its 200-week simple moving average of $27.85. The weekly momentum reading is projected to rise to 81.28 this week up from 75.24 on Dec. 2, moving above its overbought threshold of 80.00.

Investors looking to buy Transocean should consider doing so on weakness to $12.98, which is a key level on technical charts until the end of December. Investors looking to reduce holdings should consider doing so at $27.85, which is the 200-week simple moving average.

Here’s the weekly chart for Tidewater.

Courtesy of MetaStock Xenith

Tidewater trades around $3.50. The stock rose above the “option on survival” price range of $1 to $3, after a low of $1.50 set on Oct. 31. The stock is down 48% year to date and in bear market territory 70.3% below its March 7 high of $11.58. The stock is now in bull market territory 129.3% above its Oct. 31 low of $1.50.

The weekly chart is positive with the stock below its key weekly moving average of $2.63 and is still well below its 200-week simple moving average of $31.43. The weekly momentum reading is projected to rise to 41.15 this week up from 29.41 on Dec. 2.

Investors looking to buy Tidewater should consider buying weakness to $3 as an “option on survival.” Investors looking to reduce holdings should consider doing so if the stock rises to $5.31, which is a key level on technical charts until the end of 2016.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

Oil rises above $50

Oil rises above $50 despite doubts over OPEC output cut

By Sabina Zawadzki | LONDON

LONDON Oil rebounded from the week’s lows to stabilize above $50 a barrel on Thursday as market watchers focused on a weekend meeting of OPEC and non-OPEC producers that may result in an agreement to cut crude output further.

Brent and U.S. oil prices gained support earlier from a slightly weaker dollar, but the U.S. currency turned positive as the euro fell on the European Central Bank’s decision to extend but reduce its bond-buying program.

Oil producers meet in Vienna on Saturday to see whether those outside the Organization of the Petroleum Exporting Countries will cut production to help erase a global supply glut that has depressed prices for more than two years.

OPEC has agreed to slash production by 1.2 million barrels per day (bpd) in the first half of 2017, a deal that bolstered crude futures despite doubts over whether the amount was enough and whether the cuts would be effectively implemented.

Brent was up 50 cents at $53.50 a barrel by 1400 GMT. U.S. light crude rose 50 cents to $50.27.

Both benchmarks have fallen more than $2 a barrel from highs reached on Monday when investors bought heavily in the wake of the OPEC deal.

Non-OPEC Russia has signaled it was ready to cut production by 300,000 bpd and on Thursday Azerbaijan said it would come to Vienna armed with proposals for its own reduction.

Nevertheless, some analysts suggest the promised reduction in crude oil production may be insufficient to dent global oversupply and rebalance markets.

“Optimism over the OPEC cut decision has eroded a bit,” said SEB Chief Commodities Analyst Bjarne Schieldrop in Oslo.

“The devil will be in the details.”

Stocks data on Wednesday provided little guidance on the state of the U.S. oil market.

U.S. crude oil inventories dropped 2.4 million barrels in the week to Dec. 2, compared with analyst expectations for a draw of 1 million barrels.

But stocks at the Cushing, Oklahoma delivery hub for U.S. crude futures increased by 3.8 million barrels, the most since 2009, according to the U.S. Energy Information Administration (EIA).

(Additional reporting by Christopher Johnson in London, Jane Chung in Seoul and Keith Wallis in Singapore; Editing by Dale Hudson)

Oil prices jump more than 2 percent after OPEC output deal

By Christopher Johnson | LONDON

LONDON Oil prices rose more than 2 percent on Thursday, building on big gains made after OPEC and Russia agreed to restrict output, even as analysts warned other producers were likely to top up supply.

The Organization of the Petroleum Exporting Countries agreed on Wednesday its first oil output reduction since 2008 after de-facto leader Saudi Arabia accepted “a big hit” and dropped a demand that arch-rival Iran also slash output.

The deal also included the group’s first coordinated action with non-OPEC member Russia in 15 years. On Thursday, Azerbaijan said it was also willing to engage in talks on cuts.

“OPEC, it seems, has gone for the most bullish option,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.

“OPEC has done its best to stabilize the market in the $50-$60 price range, but if they fail to deliver in the coming months, make no mistake, oil prices will fall well below the $40 mark again.”

Benchmark Brent crude for February rose $1.64 a barrel to a high of $53.48 and traded around $53.30, up $1.46 by 1435 GMT (9:35 a.m. ET). On Wednesday, the expired January Brent contract ended up $4.09 or 8.8 percent at $50.47.

U.S. light crude oil was up $1.30 a barrel at $50.74.

The OPEC deal triggered frenzied trading, with Brent futures trading volumes for February and March, when the supply cut will start to be visible in the market, hitting record volumes.

The March 2017 Brent futures contract traded a record 783,000 lots of 1,000 barrels each on Wednesday, worth $39 billion and beating a previous record of just over 600,000 reached in September.

Despite the agreed deal, doubts were widespread.

“Scepticism remains on individual countries’ follow-through, which is keeping prices below year-to-date highs (of $53.73 per barrel in October) for now,” Morgan Stanley analysts said.

Oil prices are still only at September-October levels – when plans for a cut were first announced – and crude prices are less than half mid-2014 levels, when the oil price began to collapse.

OPEC produces a third of global oil, or around 33.6 million bpd, and the deal aims to reduce output by 1.2 million bpd from January 2017, similar to January 2016 levels.

Analysts said the cuts could leave the field open for other producers, especially U.S. shale drillers.

“We do not believe that oil prices can sustainably remain above $55 per barrel, with global production responding first and foremost in the U.S.,” Goldman Sachs said.

(Additional reporting by Henning Gloystein and Keith Wallis in Singapore; Editing by Elaine Hardcastle and David Evans)

Oil Prices Climb Ahead of Key OPEC Meeting

The cartel hasn’t yet reached consensus on production cuts, causing volatility

Arriving in Vienna, Iraq Oil Minister Jabar al-Luaibi said Monday that he was confident OPEC would reach an agreement this week. Iran and Iraq, which have previously said they want to keep increasing output, indicated in a Monday private meeting that they would consider holding production steady, according to a person familiar with the matter.

That’s part of what drove prices higher Monday, said John Kilduff, founding partner of Again Capital.

ENLARGE

“Iran and Iraq are holding the key to getting a deal done,” he said. “Their rhetoric counts right now.”

But there have been few indications that OPEC’s members have found a way around the hurdles that have kept them from reaching an accord, even with a strong push by Saudi Arabia. Russia, which isn’t a member of OPEC, has stopped short of saying it would curtail output.

Still, many market participants believe the stakes are too high for OPEC members to fail to reach a deal. Oil prices last month climbed above $50 after the cartel pledged to cut production. Some analysts now fear that U.S. crude could plunge below $40 level if oil ministers leave Vienna empty handed.

One challenge for OPEC is to nail down how much each country will be allowed to produce. Another is enforcing any arrangement when the group has a notoriously poor record of compliance and the fact that some sizeable oil producers, like Nigeria and Libya, are exempt from the negotiations.

OPEC’s output has also continued to climb over the past two months, with many countries pumping more oil even as they discussed freezing or curtailing production. In September, OPEC agreed to target production levels that would have translated into a 200,000 to 700,000 barrel-a-day reduction.

Tariq Zahir, managing member of Tyche Capital Partners, said the group would now have to agree to cut at least 1 million barrels a day to make a meaningful dent in supply.

“I think there’s going to be some kind of a deal done to save face,” Mr. Zahir said. “But you need to have a serious cut.”

Even if OPEC strikes a deal, its impact on prices may be short-lived.

“We may be seeing prices in the low 40s before we see the high 50s,” said Mark Anderle, director of supply and trading at TAC Energy.

Gasoline futures rose 4 cents, or 2.91%, to $1.4127 a gallon. Diesel futures rose 4.28 cents, or 2.91%, to $1.5128 a gallon.

What’s Next?

What’s Next for Crude Oil; Higher Prices or CrashCommodities / Crude Oil

By: Sol_Palha

Commodities

“If the doors of perception were cleansed everything would appear to man as it is, infinite. For man has closed himself up, till he sees all things thru chinks of his cavern.” ~ William Blake

2016 started with all the Drs of Gloom stating that oil was heading lower and many even predicted that it would trade down to $10.00. It was kind of interesting to watch this circus as there is a saying the cure for low prices is usually low prices. It would have made sense to take a firm stance against oil when it was trading above $100, but not when it was trading in the $30.00 ranges. These same experts were busy proclaiming higher prices when oil was trading north of $100.00. Only when oil was close to putting in a bottom, did they muster the courage to issue even lower prices; they would have been well served by simply keeping quiet. Experts were all trying to outdo each other; each one is releasing lower prices and a gloomier scenario. Here are some examples of the stories being put out at the time:

Get Ready for $10 Oil: Bloomberg on Feb 2016

Oil could crash to $10 a barrel, warn investment bank bears:  telegraph.co.uk on Jan 2016

Oil Seen Heading to $20 by Morgan Stanley on Dollar Strength: Bloomberg on Jan 2016

Goldman Sees Risk of Oil Below $20: Bloomberg Feb 2016

At that point, we knew that a bottom was close at hand and on the 20th of January, 2016 we penned the first of many articles on oil. This is what we said back in Jan:

As it has closed below the psychological level of $30 on a weekly basis, it is likely it will experience one more downward wave before a tradable bottom is in place. A move to the $23-$25 ranges is now a strong possibility, and as long as oil does not close below $23.00 on a weekly basis, oil will start putting in a slow bottoming formation. Once a bottom is in, do not expect miracles from oil, trading will probably be limited to a tight range of $24.00-$36.00 for some time. Only a monthly close above $40 will signal that the trading range is going to shift to a slightly higher zone of $36.00-$58.00 with a possible overshoot to $65.00. Full Story

It is remarkable how these so-called experts always start to clamour and make the most noise when a market is either going to top or bottom. It would be fine if the advice they offered were of value, but they seem to tell you to buy when it is time to sell and sell when it is time to buy. In other words, their advice is usually on par with rubbish.

Marketwatch.com jumped the gun when they penned the following article

Why oil prices will head back toward $20 next winter:  Market watch May 2016

Now that oil is trending upwards; we won’t be surprised if articles calling for oil $100 start to surface again.

Oil traded as low as 26.14 and then reversed course and started to trend higher. It came within $1 of the top of our suggested targets. We also stated that oil needed to trade above $40.00 on a monthly basis which it has done. It’s now on course for a test of the $55.00-$58.00 ranges, with a possible overshoot to the $60.00 ranges. Fulfilling what we stated in an article titled Mass Psychology predicted crude oil bottom 2016 that was published in March of 2016; an excerpt of this article is listed below:

Notice that the $30.00 price point level has held on a monthly basis. Oil has not closed below this important level on a monthly basis for two months in a row, and this has to be viewed a very bullish development. Our overall view is for crude oil to trend higher with the possibility of trading past the $55.00 ranges. In the face of extreme negativity, oil is reversing, just as it collapsed in the face of Euphoria. A weekly close above 35.00 will set the foundation for oil to trade past the main downtrend line and in doing so send the first signal for a move to the $50 plus ranges.

Now that oil has traded as high as $52.22, what does the future hold for oil? Is it going to reverse and crash due to a stronger dollar as was the case with Gold or is it going to continue trending higher. Let’s take a look at the charts.

Light Crude Weekly Chart

We would like to start off by stating that the trend is still up, so all pullbacks have to be viewed through a bullish lens. We did not feel the same way about Gold, and we stated that early in the year that we did not expect much from Gold. That has panned out so far; as oil has buried gold regarding gains on a percentage basis.

Oil is now sitting on a zone of former resistance, and while the market is somewhat overbought, oil could still trend to our higher targets ($55.00-$58.00) without pulling back. For this to occur, oil cannot close below $49.00 on a weekly basis. A close below $49.00 on a weekly basis will result in a minor pullback to the $45.00 ranges. Long story short, oil either trades to the $55.00-$58.00 ranges from here with a possible overshoot to the $60.00 ranges or it pulls back to the $45.00 ranges before trading to the above-suggested targets. After oil trades to the $58.00 ranges, we do not expect much from it. After topping out we expect it to test the  $45.00-$48.00 ranges.

Conclusion

The trend is still bullish, and until the higher end targets of $55.00-58.00 are hit, or the trend turns negative, all sharp pullbacks should be viewed through an optimistic lens. The trend is showing no signs of weakness so it would take a rather significant development for it change. As oil has traded as high as $52.00 the bulk of the upward move we projected earlier in the year is completed; all that is left is for the upper-end targets to be hit; after that oil is expected to trend lower slowly. We are not expecting a crash but a consolidation; we will examine the longer term outlook after crude oil tops out.

“Only in quiet waters things mirror themselves undistorted. Only in a quiet mind is adequate perception of the world.” ~ Hans Margolius

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oil prices rise on Venezuela protests, strong Asian demand

Reuters

Demonstrators clash with members of Venezuelan National Guard during a rally demanding a referendum to remove Venezuela’s President Nicolas Maduro, in San Cristobal, Venezuela October 26, 2016. REUTERS/Carlos Eduardo Ramirez
By Henning Gloystein | SINGAPORE

SINGAPORE Oil prices rose on Thursday, lifted by concerns over Venezuela’s stability as well as by firm demand in Asia, although doubts over OPEC’s ability to organize a coordinated production cut still weighed on markets.

International Brent crude oil futures LCOc1 were trading at $50.18 per barrel at 0655 GMT (2:55 a.m. ET) on Thursday, up 20 cents, or 0.4 percent, from their last close.

WTI futures CLc1 were at $49.33 per barrel, up 15 cents, or 0.31 percent, from their previous settlement.

Traders said concerns over political stability in Venezuela, a major oil producer, had lifted markets.

In Asia, South Korea’s S-Oil Corp (010950.KS) said on Thursday that it expected refinery demand to rise in the region.

As crude is the main feedstock for oil refineries, strong refining activity tends to be price supportive of crude.

In the United States, WTI futures received support from a 553,000-barrel draw in crude inventories to 468.16 million barrels. [EIA/S]

But some analysts said that the drop in stocks was misleading.

“The decline of 553,000 barrels last week was centered on the west coast, which is isolated from the rest of the network. Inventories actually increased along the East and Gulf Coasts,” ANZ bank said on Thursday.

Traders also said that oil prices were being held back on doubts that the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers like Russia will be able to effectively coordinate curbs in output to prop up prices.

“Investors remain uncertain as to whether OPEC can implement the tentative agreement to cut production,” ANZ bank said.

A cut is being pushed by Saudi Arabia, OPEC’s biggest producer, and it is being supported – at least by word – by Russia, not a member of the cartel but the world’s biggest oil producer.

However, OPEC’s No.2 producer, Iraq, has said it would not cut output, arguing it needs the revenue to fight Islamic State, and the government is trying to lure investors to boost output further from its current record 4.43 million barrels per day.

(Reporting by Henning Gloystein; Editing by Richard Pullin and Gopakumar Warrier)