Oil prices dip on unexpected growth in US crude stocks

CNBC

  • Oil prices dropped on Thursday, weighed down by a surprise rise in U.S. crude inventories.
  • A possible production increase by OPEC and non-OPEC members including Russia has been in focus.

An oil pump jack in Gonzales, Texas.

Getty Images
An oil pump jack in Gonzales, Texas.

Oil prices dropped on Thursday, weighed down by a surprise rise in U.S. crude inventories and by expectations that OPEC and other producers could increase output at a meeting in June.

Brent crude was down 20 cents at $77.30 per barrel at 0041 GMT, after settling the last session up 2.8 percent.

U.S. West Texas Intermediate crude was down 20 cents at $68.01 a barrel. In the previous session, it settled up $1.48, or 2.2 percent, at $68.21 per barrel.

U.S. crude inventories rose by 1 million barrels in the week to May 25 to 434.9 million barrels, according to data from industry group the American Petroleum Institute, although analysts had expected a decrease of 525,000 barrels.

Data from the Energy Information Administration is due at 11 a.m. EDT (1500 GMT) on Thursday, a day later than usual due to a public holiday on Monday.

Oil prices driven more by financial markets than physical ones, says oil expert

Oil prices driven more by financial markets than physical ones, says oil expert  

A possible production increase by the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC members including Russia has been in focus, especially after Saudi Arabia, de facto leader of the oil cartel, and Russia have discussed boosting output by some 1 million barrels per day.

OPEC and some non-OPEC members have committed to curb their output by about 1.8 million barrels per day until the end of 2018, and they will meet in Vienna on June 22 whether or not their commitment should remain unchanged.

“With the OPEC meeting still another three weeks away, oil prices are likely to remain sensitive to headlines,” ANZ bank said in a note.

A Gulf source familiar with the thinking of Saudi Arabia said OPEC and its allies aim to continue their agreement to cut oil output by the end of this year but are ready to make gradual adjustments to offset any supply shortfall.

Oil prices mixed amid worries over growing supplies

CNBC

  • Oil prices were mixed in early Asian trade.
  • Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by 1 million barrels per day to counter potential supply shortfalls from Venezuela and Iran.
  • Credit Suisse analysts said even if Russia and OPEC producers raise output, they would likely only add an additional 500,000 bpd.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil prices were mixed in early Asian trade on Wednesday, with worries that Saudi Arabia and Russia will pump more crude weighing on the market.

Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by 1 million barrels per day (bpd) to counter potential supply shortfalls from Venezuela and Iran.

Brent crude was down 1 cent at $75.38 a barrel by 0015 GMT, after settling up 9 cents on Tuesday.

U.S. West Texas Intermediate crude was up 13 cents, or 0.2 percent,at $66.86 a barrel, having earlier settled down $1.15.

Credit Suisse analysts on Tuesday said even if Russia and OPEC producers raise output, they would likely only add an additional 500,000 bpd, which would leave inventories in the most developed countries short of the five-year average by the end of 2018.

Charts show more pain possible for oil

Charts show more pain possible for oil  

The Organization of the Petroleum Exporting Countries is due to meet in Vienna on June 22.

Falling stocks and a stronger U.S. dollar index also weighed on oil prices. U.S. stock markets sank more than 1 percent, while the dollar wobbled at a 10-month high against the euro. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies.

U.S. oil got some support as U.S. crude inventories likely fell by 1.8 million barrels last week, a preliminary Reuters poll showed on Tuesday.

Industry group American Petroleum Institute (API) releases its weekly oil data at 2030 GMT, followed by the report by U.S. Energy Department’s Energy Information Administration on Thursday, both delayed a day because of the federal Memorial Day holiday on Monday.

Oil prices mixed, but pressure builds on expected crude output increase

CNBC

  • Oil prices were mixed in Asian trading on Tuesday.
  • Prices stayed under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply.
  • Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by some 1 million barrels per day.

Oil pumps wells Monterey Shale fracking

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Oil prices were mixed in Asian trading on Tuesday, but remained under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply.

Brent crude futures were up 21 cents, or 0.28 percent, at $75.51 a barrel at 0635 GMT, after settling at their lowest since May 8 at $75.30.

U.S. West Texas Intermediate (WTI) crude was down $1.11, or 1.64 percent, at $66.77 a barrel, sitting around its lowest since April 17.

“Investors have started pricing in the likelihood of Saudi Arabia and Russia increasing crude oil production,” ANZ Bank said in a note.

“However, doubt remains, with any agreement to be finalized at the June OPEC meeting.”

Concerns that Saudi Arabia and Russia could boost output have put downward pressures on oil prices, along with rising oil production in the United States.

Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by some 1 million barrels per day to make up potential supply shortfalls from Venezuela and Iran.

The Organization of the Petroleum Exporting Countries (OPEC) is due to meet in Vienna on June 22.

Prepare for another big oil rally this summer: RBC's Helima Croft

Prepare for another big oil rally this summer: RBC’s Helima Croft  

The spread between Brent and WTI stands at around $8.7 a barrel, the widest since March 2015 due to the depressed price of U.S. crude compared to Brent.

“The way I see it is that WTI prices are stabilizing rather than falling after rising sharply in recent weeks because the prices were expected to be in the range of $55-$65 a barrel,” said Vincent Hwang, commodity analyst at NH Investment & Securities in Seoul.

“But at the same time there are some worries over a fall in U.S. oil demand if more Middle East crude supplies flow into the market,” Hwang said.

Meanwhile, record crude oil volumes from the United States are expected to head to Asia in coming months, nibbling away the market share of OPEC and Russia.

U.S. oil production has surged by more than 27 percent in the last two years to 10.73 million barrels per day (bpd). That puts the United States ahead of top exporter Saudi Arabia, and only Russia pumps out more, at around 11 million bpd.

Oil slumps as OPEC, Russia look to raise output amid US surge

CNBC

  • Oil prices slumped on Monday, extending steep declines from Friday.
  • Saudi Arabia as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.
  • Surging U.S. crude production also showed no sign of abating.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices slumped on Monday, extending steep declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as U.S. production gains show no signs of abating.

Brent crude futures were at $75.09 per barrel at 0452 GMT, down $1.35, or 1.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $66.22 a barrel, down $1.66, or 2.5 percent.

Brent and WTI have fallen by 6.4 percent and 9.1 percent respectively from peaks touched earlier in May.

In China, Shanghai crude oil futures tumbled by 4.8 percent to 457.7 yuan ($71.64) per barrel.

The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to their lowest in more than a decade at less than $30 per barrel.

But prices have soared since the start of the cuts last year, with Brent breaking through $80 per barrel earlier in May, triggering concerns that high prices would crimp economic growth and stoke inflation.

“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at U.S. bank Morgan Stanley, wrote over the weekend in a note.

$60 a barrel may be the new oil sweet spot, says expert

$60 a barrel may be the new oil sweet spot, says expert  

To address potential supply shortfalls, Saudi Arabia, de-facto leader of producer cartel OPEC, as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.

“Crude oil prices collapsed … after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second-half of the year to make up for losses elsewhere under the production cut agreement,” ANZ bank said on Monday.

Meanwhile, surging U.S. crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.

U.S. energy companies added 15 rigs looking for new oil in the week ended May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise.

U.S. crude production has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to Russia’s 11 million bpd.

“Oil prices are showing symptoms of a falling knife as investors are jittery on the prospect of increased production from three of the world’s top producers,” Singapore-based brokerage Phillip Futures said on Monday.

Oil prices tumbled Friday

USA TODAY

Oil pumps at dusk.
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Oil prices tumbled Friday after Saudi Arabian and Russian oil ministers said they’re likely to boost production soon in response to political troubles that could slash output in Iran and Venezuela.

If OPEC officials follow through at a meeting late next month, the move could modestly reduce gasoline prices for American consumers, but likely wouldn’t alter the longer-term climb in fuel costs amid strong global demand, experts say.

“It probably isn’t going to be enough to change the landscape,” says Phil Flynn, senior energy analyst with the Price Futures Group.

West Texas Intermediate fell $2.83, or 4%, Friday to $67.88. The U.S. benchmark is down from a peak of $72.58 earlier this week but still up 13.6% this year.

A production boost would mark at least a partial reversal for OPEC, which cut output by 1.8 million barrels a day in January 2017 to relieve a global oil glut and support prices.

But President Trump’s decision earlier this month to withdraw from the Iran nuclear deal and reinstate sanctions against that oil-rich country threatens to choke off at least a few hundred thousand barrels a day from the global market. Meanwhile, Venezuela is ensnared in a political crisis that could curtail production by 1 million to 2 million barrels a day, Flynn says.

While Saudi Oil Minister Khalid Al-Falih and his Russian counterpart, Alexander Novak, are largely moving to offset that deficit, other developments are also playing a role.

Trump ripped OPEC last month for high oil prices, tweeting, “Looks like OPEC is at it again.”

Trump has forged a close relationship with Saudi Arabia, and that country is aiming to defuse any political tensions caused by high crude and gasoline prices, says Tom Kloza, global energy analyst for the Oil Price Information Service. Also, a run-up in crude and gasoline prices could crimp global demand, ultimately harming the oil cartel, he says.

An agreement among OPEC and non-OPEC countries next month could lift production by 300,000 to 1 million barrels a day. But Flynn says even the higher figure would not be enough to offset the lower output from Iran and Venezuela. And, he notes, global demand continues to rise. He expects oil to climb back into the $70 to $80 range within weeks.

Kloza, however, says an increase of 1 million barrels a day could push down crude prices to about $60 in the medium term. He figures unleaded regular prices would fall about 30 cents from the current $2.97 average.