US crude rises 1%, settling above $74 for first time since Nov 2014 as sanctions on Iranian oil loom 

CNBC

  • Oil prices rose as U.S. sanctions against Iran threatened to remove a substantial volume of oil from world markets.
  • OPEC and Russia have said they will raise output to meet demand, but many analysts think that the extra supply may be inadequate.
  • A Canadian production outage disrupted the North American market.

Oil prices rose on Friday as U.S. sanctions against Iran threatened to remove a substantial volume of crude from world markets at a time of rising global demand.

U.S. West Texas Intermediate (WTI) crude ended Friday’s session up 70 cents, or 1 percent, at $74.15, its best closing price since Nov. 24, 2014. WTI hit a session peak of $74.46, also its highest level since November 2014.

Brent crude rose $1.59, or 2 percent, to $79.44, just shy of a 3½-year closing price.

“All the potential shortfalls could outstrip the production increase agreed to by OPEC and Russia,” said Dominick Chirichella, Director of Risk Management at EMI DTN. There’s a risk that supplies from Iran could be cut further as there’s pressure on other countries to join the United States in sanctions, he said.

Iran is the fifth-largest oil producer in the world, pumping about 4.7 million barrels per day (bpd), or almost 5 percent of world’s oil, much of it to China and other energy-hungry nations such as India.

Crude oil prices hit 3.5-year high

Crude oil prices hit 3.5-year high  

The U.S. government wants to stop Tehran exporting oil to cut off a vital supply of finance and hopes other big oil producers in the Organization of the Petroleum Exporting Countries and Russia will make up for the deficit.

But the world oil market is already tight and many analysts and big investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.

But the world oil market is already tight with unplanned disruptions in Canada, Libya and Venezuela removing supply.

Many analysts and investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.

“It is becoming increasingly clear that Saudi Arabia and Russia will struggle to compensate for potential losses in oil production from the likes of Venezuela, Iran and Libya,” said Abhishek Kumar, analyst at Interfax Energy in London.

Vienna-based consultancy JBC Energy said the stronger the implementation and enforcement of U.S. sanctions, the higher the oil price will go. “Triple-digit oil prices are not off the table,” JBC said.

A Reuters survey of 35 economists and analysts on Friday forecast Brent would average $72.58 a barrel in 2018, 90 cents higher than the $71.68 forecast in last month’s poll and compared with the $71.15 average so far this year.

North American oil stocks have fallen as an outage at Canada’s Syncrude has locked in more than 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncor Energy.

Dan Eberhart: Oil prices to keep rising

Dan Eberhart: Oil prices to keep rising  

Outside North America, record demand and voluntary supply cuts led by OPEC have pushed up prices. Unplanned supply disruptions from Libya to Venezuela have further tightened the market.

Libya’s National Oil Corporation (NOC) said on Friday it expects to declare force majeure on loadings from the eastern ports of Zueitina and Hariga from July 1, raising losses in output from a power struggle over oil exports to 800,000 bpd

OPEC and Russia have said they will raise output to meet demand and replace crude from unplanned disruptions but many analysts think that the extra supply may be inadequate.

Major buyers of Iranian oil, including Japan, India and South Korea, have indicated that they may stop importing Iranian crude if U.S. sanctions are imposed.

Until then, however, Asia is buying as much Iranian oil as possible. Imports of Iranian crude oil by major buyers in Asia rose in May to the highest in eight months. China, India, Japan and South Korea last month imported 1.8 million bpd from Iran, up 15 percent from a year ago.

— CNBC’s Tom DiChristopher contributed to this report.

US oil dips from 3-1/2 yr high, but markets remain tight

CNBC

  • U.S. oil prices on Friday held around three-and-a-half year highs touched the previous day.
  • A Canadian production outage disrupted the North American market.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

U.S. oil prices on Friday held around three-and-a-half year highs touched the previous day as a Canadian production outage disrupted the North American market.

International oil markets also remained firm as looming sanctions by Washington against Iran are expected to lead to a sharp drop in supplies from the OPEC-member.

U.S. West Texas Intermediate (WTI) crude futures were at $73.17 a barrel at 0049 GMT, down 28 cents, or 0.4 percent from their last settlement.WTI on Thursday hit its highest since November 2014 at $74.03 per barrel.

Brent crude futures were at $77.79 per barrel, down 6 cents.

Traders and analysts said Friday’s dip was more a result of profit-taking than any market fundamentals, with WTI still up by more than 18 percent from June lows.

Greg McKenna, chief market strategist at futures brokerage AxiTrader said this week’s crude price rises had “exhausted the bulls.”

Crude oil prices hit 3.5-year high

Crude oil prices hit 3.5-year high  

North America’s oil markets have tightened significantly as an outage of Canada’s Syncrude has locked in over 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncot.

Outside North America, oil prices have been rallying for most of 2018 due to record demand and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Oil demand has been chasing records for most of the year, and OPEC has said it will raise output in order to meet demand and replace crude from unplanned disruptions.

Looming U.S. sanctions against OPEC-exporter Iran are also fueling Brent prices.

Unplanned supply disruptions from Libya to Venezuela have helped to further tighten the market.

US oil dips as markets well supplied despite strong demand, outages

CNBC

  • U.S. oil prices dipped from three-and-a-half year highs on Thursday.
  • Physical markets remained well supplied despite record demand and ongoing disruptions.

Pumpjacks operating near Ruehlermoor, Germany.

Getty Images
Pumpjacks operating near Ruehlermoor, Germany.

U.S. oil prices dipped from three-and-a-half year highs on Thursday as physical markets remained well supplied despite record demand and ongoing disruptions.

U.S. West Texas Intermediate (WTI) crude futures were at $72.55 a barrel at 0114 GMT, down 21 cents, or 0.3 percent from their last settlement.

WTI hit its highest since November 2014 at $73.06 per barrel in the previous session.

Brent crude futures were at $77.63 per barrel, virtually unchanged from their last close and still below recent May highs.

Oil prices have been rallying for much of 2018 on tightening market conditions due to record demand and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Unplanned supply disruptions from Canada to Libya and Venezuela have added to those cuts.

Yet not all indicators point towards an ever-tightening market.

Although output growth is slowing, U.S. crude production is approaching 11 million barrels per day (bpd).

With Russia and Saudi Arabia at similar levels, and output expected to rise as OPEC and Russia ease their supply restrictions, there will soon be three countries pumping out 11 million barrels of crude each and every day.

Oil prices hit 3.5-year high

Oil prices hit 3.5-year high  

This unprecedented output means just three countries are meeting a third of world consumption.

“The physical oil market is well supplied,” said Konstantinos Venetis, senior economist at research firm TS Lombard, although he warned OPEC and Russia were producing at near maximum output “leaving a thinner margin of safety for the future.”

US inventories fall

Despite rising U.S. output, U.S. commercial crude oil inventories dropped by almost 10 million barrels in the week to June 22, to 416.64 million barrels, according to the Energy Information Administration on Wednesday.

That’s below the 5-year average level of around 425 million barrels.

Traders expect inventories to draw further in coming weeks as an outage of Canada’s Syncrude locks in over 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncot.

The draw in U.S. inventories was also due to high exports of almost 3 million bpd, coupled with domestic refinery activity hitting a utilization rate of 97.5 percent, the highest in more than a decade.

Oil demand has been chasing records for most of 2018, but the outlook is dimming amid escalating trade disputes between the United States and other major economies including China and the European Union.

“Our macroeconomic view remains overwhelmingly bearish,” commodity brokerage Marex Spectron said.

“Credit conditions have worsened again, which is likely to have an outright negative impact on the demand for crude oil in the next 4-6 weeks,” it said.

Oil rises on supply disruptions, US push to shut out Iran

CNBC

  • Oil prices rose on Wednesday, pushed up by supply disruptions in Libya and Canada.
  • U.S. officials said all countries should stop Iranian crude imports from November.

A pump jack in Midland Texas.

Justin Solomon | CNBC

Oil prices rose on Wednesday as a supply disruption in Canada tightened the market and after U.S. officials told importers to stop buying Iranian crude from November.

Uncertainty over Libyan exports also supported crude, traders said.

Brent crude futures had risen 18 cents, or 0.2 percent, from their last close to $76.49 per barrel by 0604 GMT.

U.S. West Texas Intermediate (WTI) crude futures were at $70.69, up 16 cents, or 0.2 percent.

The United States demanded all countries stop imports of Iranian oil from November, a State Department official said on Tuesday.

Oil markets did not react more strongly to Washington’s pressure as the move was expected.

In addition, top exporter Saudi Arabia plans to raise output to make up for lost supplies.

“It is very unlikely the U.S. will succeed in ending Iranian oil sales on this timetable, but we are increasing our estimate of oil likely to come off the market by November to about 700,000 barrels per day (bpd) – another bullish factor for prices,” said risk consultancy Eurasia Group.

During the last round of sanctions, which ended in 2016, several Asian countries received waivers from Washington allowing them to continue to import from Iran.

Oil is spiking on new Iran sanctions — is the energy trade about to catch fire?

Oil is spiking on new Iran sanctions — is the energy trade about to catch fire?  

This time, Washington already hinted when announcing renewed sanctions in May that it was unwilling to grant waivers.

And while Tokyo and Seoul said on Wednesday they were still hoping to receive waivers from Washington, Japanese and South Korean buyers have already started dialing back purchases.

Tight market

Beyond looming sanctions, other threats to supply are keeping markets on edge.

In Libya, a power struggle between the official government and rebels has left it unclear who will handle the country’s large oil exports, although as of Tuesday the oil ports of Hariga and Zueitina in eastern Libya were working normally.

In North America, a supply outage at Syncrude in Canada has locked in 350,000 bpd of crude, with repairs expected to last at least through July.

Stephen Innes of futures brokerage OANDA said the outage had contributed to a major draw in U.S. crude oil inventories.

The American Petroleum Institute (API) on Tuesday reported a 9.2 million barrel reduction in U.S. crude inventories in the week to June 22 to 421.4 million barrels.

Trying to make up for disrupted supply, the Organization of the Petroleum Exporting Countries (OPEC) said late last week it would increase output.

Top exporter and de-facto OPEC leader Saudi Arabia plans to pump a record 11 million bpd in July, up from 10.8 million bpd in June.

Despite this, French bank BNP Paribas said the “agreement to elevate output still leaves production restraints in place, limiting the market’s ability to rebuild inventories.”

“Considering significant future supply losses faced by Iran (under U.S. sanctions) and supply risks in Venezuela and Libya … oil fundamentals still remain favorable for oil prices to rise over the next 6 months despite the OPEC+ decision,” BNP said.

Oil prices edge up on Libya worries, but OPEC supply rise drags

CNBC

  • Oil prices inched up on Tuesday on uncertainty over Libyan oil exports.
  • Plans by producer cartel OPEC to raise output continued to drag.

Oil prices inched up on Tuesday on uncertainty over Libyan oil exports, although plans by producer cartel OPEC to raise output continued to drag.

Brent crude futures, the international benchmark for oil prices, were at $74.81 per barrel at 0311 GMT, up 8 cents, or 0.1 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $68.24 a barrel, up 16 cents, or 0.22 percent.

Traders said prices were mostly driven up by uncertainty around oil exports by Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC).

Eastern Libyan commander Khalifa Haftar’s forces have handed control of oil ports to a separate National Oil Corporation (NOC) based in the country’s east.

The official state-owned oil company based in the capital Tripoli, also called NOC, will not be allowed to handle that oil anymore, he said.

In comments later confirmed to Reuters, Ahmed Mismari, spokesman of Haftar’s Libya National Army (LNA), said on television that no tanker would be allowed to dock at eastern ports without permission from an NOC entity based in the main eastern city, Benghazi.

“The move increases the risk that Libyan oil output will be shut in as the NOC in Tripoli is the only legal entity with the right to sell oil,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

When it comes to crude, ignore short-term bumpiness. Oil is heading higher, expert says

When it comes to crude, ignore short-term bumpiness. Oil is heading higher, expert says.

The uncertainty over Libya’s oil exports comes after OPEC together with a group of non-OPEC partners including top producer OPEC announced a supply rise of around 1 million barrels per day (bpd) aimed at cooling oil markets.

Oil markets have tightened significantly since 2017, when OPEC and its partners started withholding supply to prop up slumping prices at the time.

“Despite the OPEC agreement (last week) we believe that tight supply is likely to drive oil prices higher during 2018,” Jason Gammel of U.S. investment bank Jefferies said in a note

“We expect that Brent prices will be in excess of $80 per barrel in 2H18,” he added.

Bank of America Merrill Lynch (BoAML) said tight market conditions would push Brent prices to $90 per barrel by the second quarter of 2019.

But BoAML warned of uncertainty as the impact of announced U.S. sanctions against Iran was not yet clear, and as the effects of the global trade dispute between the United States and major other economies including the European Union and China gradually take effect.

“We estimate a demand drop of 44,000 bpd for every 1 percent drop in global trade,” the bank said.