Oil prices dip on concerns Sino-US trade conflict could escalate

CNBC

  • Oil prices fell on Friday amid concerns the trade war between the United States and China could intensify.
  • Looming U.S. sanctions against Iran’s oil exports prevented markets from falling further.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices fell on Friday amid concerns the trade war between the United States and China could intensify, although looming U.S. sanctions against Iran’s oil exports prevented markets from falling further.

International Brent crude oil futures were at $77.55 per barrel at 0106 GMT, down 22 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 6 cents at $70.19 a barrel.

Still, with Venezuelan supply falling sharply and concerns around U.S. sanctions against Iran that will target its oil exports from November, crude markets in August are on track to post a more than 4 percent rise for Brent and a 2 percent increase for WTI.

Despite this, some analysts cautioned that the trade disputes between the United States and other major economies, especially China and the European Union, could start to drag on economic growth and, by extension, fuel demand.

“You have to wonder if it (crude) can sustain these prices in a world where President Trump doubles down on his battle with the EU and China at the same time,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Oil could hit mid-$90s in next few months, energy expert says

Oil could hit mid-$90s in next few months, energy expert says  

U.S. President Donald Trump is reportedly planning to ramp up trade conflict with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week, several media reported on Thursday.

“Assuming the trade war is about to escalate again, the questions traders will be wondering about is global growth (and) demand for crude,” McKenna said.

Shanghai delivery

Meanwhile, China’s Shanghai crude oil futures, launched in March, will see delivery of their first contract on Friday.

The speed of Shanghai crude’s take-up has surprised many traders and analysts.

Among the three major crude benchmarks – WTI, Brent and Shanghai – China’s front-month crude futures now make up a share of almost 15 percent in terms of monthly volumes.

Traders said Shanghai’s fast rise reflects China’s importance as the world’s biggest oil importer. It is also part of a policy by Beijing to increasingly use the yuan currency in global trade, especially during times of economic disputes with the United States.

Since its launch in March, front-month Shanghai crude oil futures have gained almost 10 percent in value to 481 yuan ($70.31) per barrel.

Oil prices nod up as US fuel supply falls and sanctions on Iran loom

CNBC

  • Oil prices were up slightly on Thursday, extending their gains from the prior session from a drop in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela.
  • The International Energy Agency said global oil markets are likely to tighten toward the end of 2018.

Oil prices inched up on Thursday, extending solid gains from the previous session on a fall in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela.

International Brent crude oil futures were at $77.21 per barrel at 0114 GMT, up 7 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 14 cents at $69.65 a barrel.

The rises came after crude hit multi-week highs during the previous session.

U.S. commercial crude inventories fell by 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels. U.S. production was flat from the previous week’s record 11 million barrels per day (bpd).

“Oil prices rose on the back of an unexpected U.S. inventory draw, the second week in a row of declines, together with gasoline demand reaching a record high,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“The looming sanctions against Iran are beginning to impact oil supply lifting crude prices,” added Alfonso Esparza, analyst at futures brokerage OANDA.

The Organization of the Petroleum Exporting Countries (OPEC), of which Iran is the third biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian oil supply after U.S sanctions against Tehran start in November, the head of Iraq’s state-oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.

Iran’s August crude oil exports will likely drop to just over 2 million bpd, versus a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.

The International Energy Agency (IEA) warned of a tightening market towards the end of the year, due to a combination of supply concerns, such as Iran and also Venezuela, and strong demand especially in Asia.

“Definitely there are some worries that oil markets can tighten towards the end of this year,” the IEA’s chief Fatih Birol told Reuters on Wednesday.

Crude oil exports in crisis-struck OPEC-member Venezuela have halved in recent years to only around 1 million bpd.

Oil prices inch up amid looming Iran sanctions and rising global supply

CNBC

  • Oil prices firmed on Wednesday as the prospect of upcoming U.S. sanctions on Iran was kept in check by rising supply outside of the Organization of the Petroleum Exporting Countries.
  • As the impending U.S. sanctions on Iran in November loom, crude buyers have reduced their orders from Tehran.

Oil markets were stable on Wednesday, buoyed by falling supplies from Iran ahead of U.S. sanctions but held in check by rising production outside the Organization of the Petroleum Exporting Countries.

International Brent crude oil futures were at $76 per barrel at 0257 GMT, up 5 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 6 cents at $68.59 a barrel.

Traders said crude prices have been supported by the prospect of U.S. sanctions against Iran, which will start to target its oil industry from November.

Bowing to pressure from Washington, many crude buyers have already reduced orders from OPEC’s third-biggest producer.

Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million barrels per day (bpd), versus a peak of 3.09 million bpd in April, trade flows data on Thomson Reuters Eikon showed.

Another concern is crisis-struck OPEC-member Venezuela, where oil exports have dropped by half since 2016 to below 1 million bpd.

To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oil fields, valuing the investment at $430 million. However, given the country’s political and economic instability, many analysts doubted whether this investment would go through.

Rising non-OPEC supply

Despite the risk of disruption especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb towards year-end.

“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the U.S. bank said in a note to clients.

“Currently, non-OPEC supply outages are at a 15-month high of 730,000 barrels per day. However, nearly half of these volumes are in the process of being restored,” it said.

Adding to that will be new production in Canada, Brazil and from the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second-half of the year “taming upside pressures on Brent crude oil prices”.

Bank of America said it expected Brent prices to be in a $65 to $80 per barrel range “until Iran sanctions start to bite” in the first-half of 2019.

In the United States, crude oil inventories rose by 38,000 barrels to 405.7 million barrels in the week to Aug. 24, industry group the American Petroleum Institute said on Tuesday.

Official U.S. fuel inventory and crude production data will be published on Wednesday by the Energy Information Administration (EIA).

Oil prices steady on mixed supply signals

CNBC

  • Oil prices steadied on Tuesday due to conflicting signals on the supply front.
  • Recent data showed that output from the Organisation of the Petroleum Exporting Countries is gradually rising but remains below target.
  • On Monday, the International Energy Agency warned of further supply disruptions in global crude, in particular from Venezuela.

Oil prices were steady on Tuesday, capped by gradually rising output from producer club OPEC and supported by perceived supply risks from places such as Venezuela, Africa and Iran.

International Brent crude oil futures were at $76.21 per barrel at 0542 GMT, unchanged from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 4 cents at $68.83 per barrel.

Traders said markets were range-bound, hemmed in by conflicting price signals.

The monitoring committee of the Organization of the Petroleum Exporting Countries (OPEC) found that oil producers participating in a supply-reduction agreement, which includes non-OPEC member Russia, cut output in July by 9 percent more than called for.

The findings for last month compare with a compliance level of 120 percent for June and 147 percent for May, meaning participants have been steadily increasing production.

OPEC and its allies agreed in late 2016 to cut output from 2017 by around 1.8 million barrels per day (bpd) versus October 2016 levels.

Concerns about an economic slowdown because of trade conflict between the United States and China also continued to weigh on global markets, traders said.

However, the International Energy Agency (IEA) on Monday warned of further supply disruptions, especially from Venezuela, where an economic crisis has cut deep into the OPEC-member’s oil output.

Venezuelan crude oil exports had halved in the previous two years to just 1 million bpd by mid-2018, according to trade flow data.

“We can expect a further fall,” the IEA’s Executive Director Fatih Birol told Reuters in Norway on Monday.

Birol also warned that African OPEC-members Libya and Nigeria “seem both still fragile countries” despite some recent improvements.

Birol said it was too early to gauge the impact of the U.S. sanctions that will target Iran from November.

Oil stable as U.S./Sino trade row weighs, Iran sanctions cut supply outlook

CNBC

  • Oil prices saw a slight decline on Monday amid concerns over the potential impact of the U.S.-China trade dispute on global economic growth.
  • The decline in prices was kept in check by impending U.S. sanctions on Iran in November, a move which is expected to remove at least 1 million barrels per day of crude oil from the market.

Oil prices dipped slightly on Monday on concerns that a U.S.-China trade dispute will erode global economic growth, although looming U.S. sanctions against Iran’s oil sector kept crude from falling further, traders said.

International Brent crude oil futures were at $75.75 per barrel at 0122 GMT, down 7 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 9 cents at $68.63 a barrel.

“Falling U.S. rig counts and last week’s decline in U.S. inventories are supporting oil prices amid a protracted U.S.-China trade war that could dampen global growth and weigh on oil demand,” said Stephen Innes, Head of Trading for Asia/Pacific at futures brokerage OANDA in Singapore.

U.S. energy companies cut nine oil drilling rigs last week, dropping to 860, the biggest reduction since May 2016, energy services firm Baker Hughes said on Friday.

“Despite growing concerns about potential oversupply, the markets will continue to get a fillip from U.S. sanctions against Iran,” Innes added.

Washington will target Iran’s oil exports with sanctions from November.

OPEC-member Iran has exported around 2.5 million barrels per day (bpd) of crude oil so far this year. Most analysts expect this figure to fall by at least 1 million bpd once sanctions kick in.