US crude rises 1.3%, settling at $68.72 and snapping 7-week losing streak

CNBC

  • Brent and U.S. crude rise, putting futures on pace to snap several weeks of declines.
  • Crude futures draw support from signs that U.S. sanctions on Iran are already reducing global crude supply.
  • The market remains cautious after U.S.-China talks aimed at resolving a trade dispute ended Thursday with no breakthrough

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices rose on Friday, but pared gains ahead of the close, as the market remained on edge about potential oversupply despite signs that Iran sanctions could curb output.

“In the near term we’re still fairly well supplied,” said John Kilduff, a partner at Again Capital Management.

U.S. West Texas Intermediate crude rose 89 cents, or 1.3 percent, to $68.72. For the week, WTI gained 4.3 percent, snapping a seven-week losing streak.

Benchmark Brent crude oil was up $1.02, or 1.4 percent, at $75.75 a barrel by 2:24 p.m. ET. Brent was on track for a gain of more than 5 percent this week, following three consecutive weekly losses.

“Both crude markers are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

Outlook for oil prices

There will be further ‘upside’ to oil prices this year due to supply disruptions: Bernstein  

Concerns that an escalating trade war between China and the U.S. could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China’s Unipec will resume purchases of U.S. crude oil in October, after a two-month halt due to the fight.

Worries that Mexico’s incoming administration would not strike a bilateral agreement over NAFTA with the U.S. also weighed on the market, traders said. A dispute over opening up the oil and gas sector is weighing on the talks, Bloomberg reported, citing two people familiar with negotiations.

At the same time, concerns about global crude supply intensified with signs that U.S. sanctions on Iran are curbing shipments.

The U.S. government re-imposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal, which Washington saw as inadequate for curbing Tehran’s activities in the Middle East and denying it the means to make an atomic bomb. Tehran says it has no ambitions to make such a bomb.

Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to around 2.5 percent of global consumption.

“Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations,” U.S. investment bank Jefferies said on Friday.

“We expect that by Q4 the market will be dealing with either undersupply, dwindling spare capacity – or both,” it added.

Jackie DeAngelis commodity hit

Crude mostly flat on the day  

Energy consultancy FGE says it expects Iran’s crude and condensate exports to drop below 1 million bpd by mid-2019.

The dollar index served as a tailwind, said Bob Yawger, director of futures at Mizuho in New York. A key index of the dollar versus a basket of other currencies fell on Friday, boosting the price of oil and other dollar denominated commodities.

The dollar fell after Federal Reserve Chair Jerome Powell said steady rate hikes are the best way to protect the U.S. economic recovery.

U.S. energy companies cut nine oil drilling rigs this week, the biggest reduction since May 2016, General Electric Co’s Baker Hughes energy services firm said. Changes in the rig count serves as an indicator of future production trends.

Traders kept an eye on the North Sea, where workers on three oil and gas platforms plan to strike next month. Oil production will stop during the strikes. The three fields contribute about 45,000 to 50,000 bpd to the North Sea’s Forties and Brent crude streams.

— CNBC’s Tom DiChristopher contributed to this report.

International oil prices slip amid escalation of US-China trade spat; drop in US crude inventories offers support

CNBC

  • U.S. crude oil prices saw more gains on Thursday as commercial crude inventories stateside declined.
  • Meanwhile, international crude markets were down as a result of concerns over the ongoing U.S.-China trade dispute.

International oil prices slipped on Thursday, weighed down by the escalating trade dispute between the United States and China, although a decline in U.S. commercial crude inventories offered some support.

International benchmark Brent crude oil futures were at $74.63 per barrel at 0422 GMT, down 18 cents, or 0.2 percent, from their last close.

West Texas Intermediate (WTI) crude futures were at $67.90 per barrel, up 4 cents from their last settlement, buoyed by the decline in U.S. crude inventories.

International markets weakened as the intensifying trade spat between the United States and China was seen as a drag on economic growth.

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of the other’s goods. Washington is holding hearings this week on a proposed list of an additional $200 billion worth of Chinese imports to face duties.

“These (overall) measures are expected to shave up to 0.3-0.5 percentage points from China’s real GDP growth in 2019,” said rating agency Moody’s Investor Service.

“For the U.S. … trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3 percent in 2019.”.

In U.S. oil markets, a decline in commercial crude inventories provided WTI with stronger support than Brent.

Greg McKenna, chief market strategist at futures brokerage AxiTrader said the U.S. crude price support came “as the EIA inventory data showed a big draw in U.S. crude and a solid run rate of 98.1 percent for refineries”.

U.S. commercial crude oil inventories fell by 5.8 million barrels in the week to Aug. 17 to 408.36 million barrels, the Energy Information Administration (EIA) said on Wednesday.

In production, U.S. crude oil output rose back to 11 million barrels per day, the EIA report said.

That means the world’s three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.

Oil prices increase amid decline in US crude inventories

CNBC

  • Oil prices rose on Wednesday as U.S. crude inventories declined.
  • The potential shortfall of Iranian oil from November due to U.S. sanctions continues to weigh on the market.
  • Concerns also remain over the potential impact of the U.S.-China trade dispute on fuel demand growth.

Oil prices rose on Wednesday, supported by a drop in U.S. crude inventories and a weaker dollar, along with concerns about a potential shortfall of Iranian oil from November due to U.S. sanctions.

Brent crude oil futures were at $72.83 per barrel at 0234 GMT, up 20 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 28 cents, or 0.4 percent, at $66.12 per barrel.

U.S. crude inventories fell by 5.2 million barrels in the week to Aug.17, to 405.6 million barrels, ahead of analysts’ forecasts for a fall of 1.5 million barrels, according to data from industry group the American Petroleum Institute. [API/S]

Official data from the U.S. Energy Information Administration (EIA) is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

“Investors are also confident that (official) inventories in the United States will decrease this week,” ANZ Bank said in a note.

Signs of slowing U.S. crude output growth and a weaker U.S. dollar also provided some support to oil prices, said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

The U.S. dollar index against a basket of six major currencies eased on Wednesday to 95.211 after losing 0.7 percent the previous day, weighed by U.S. President Trump’s comments on monetary policy.

A weaker U.S. dollar makes oil, which is priced in dollars, less expensive to buyers in other currencies.

The U.S. Energy Information Administration last week cut its 2018 U.S. crude production growth to 10.68 million barrels per day (bpd), from 10.79 million bpd amid lower crude prices.

Concerns also remain over how much oil will be removed from global markets by renewed sanctions on Iran, despite worries that demand growth could weaken amid a trade disputes between the United States and China, the world’s two biggest economies.

“The Iran issue continues to occupy traders’ minds,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC) and OPEC’s third-largest oil producer, said earlier this week no other OPEC member should be allowed to take over its share of oil exports.

Meanwhile, a Chinese trade delegation is in Washington to discuss trade disputes with the U.S. side. But signs of a thaw were unlikely as U.S. President Donald Trump told Reuters in an interview on Monday that he did not expect much progress.

Oil’s uptrend remains intact

CNBC

  • Oil’s price hasn’t rebounded, but many features of the commodity’s performance suggest the bear is not in command of this market, Daryl Guppy writes.
  • The longer-term trading band target for NYMEX oil is near $76, but that may take four or five months to be reached.

A heavy crude oil pump.

Jsmes Hall | EyeEm | Getty Images
A heavy crude oil pump.

A little over a month ago I wrote about NYMEX oil and suggested that the pullback was a buying opportunity. Investors watch for the opportunity to add to long positions as the price rebounds from any of the three support features on the oil price chart.

To date, the price has not rebounded. Does that analysis still hold as oil falls towards $65?

The short answer is “yes,” but with the repeated caveat that traders need to wait for evidence of a rebound before taking a long position. The analysis holds because the technical structure of the NYMEX oil market remains the same.

The fall below the long-term uptrend line is potentially bearish, but other features suggest the bear is not in command of the market. The future importance of the uptrend line is the way this will now act as a resistance level for future rallies.

Extending the line into the future suggests that it may be early 2019 before there is a serious challenge to the $76 price level. The extended line acts as a resistance level. That time frame changes if oil is able to move above the trend line and again use it as a support level.

The first support feature of the chart is the long-term support level near $65. That was the support base for the most recent strong rebound rally. That level is currently under test.

Oil has a well-established pattern of moving in trading bands around $11 wide. The current price activity is testing the lower edge of the trading band. Applying trade band projection methods gives a long-term target near $76. Achieving that target is hampered by the way the projected uptrend line now acts as a resistance level.

The second trend feature is shown with the Guppy Multiple Moving Average indicator. Despite the price retreat, the long-term group of averages is well separated, which shows strong and consistent investor support for a rising trend. When price retreats, then investors come into the market as buyers. This is the most consistent trend support behavior shown in the GMMA indicator on the oil chart in nearly a decade.

Compression in the group shows the development of a trend change and compression is currently not developing.

The degree of separation between the long-term and short-term GMMA is largely steady. The consistent degree of separation is a characteristic seen with stable trends, which again suggests that the current extended retreat is temporary rather than the beginning of a trend change.

The short-term group of averages reflects the way traders are thinking and its shows an appetite for short-term trade opportunities.

Those support features and the trend strength features all continue to suggest that the oil price is experiencing a temporary retreat. The longer-term trading band target is near $76, but it may take four or five months to achieve.

We use the ANTSYSS trade method to extract good returns from this trend behavior.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders, which can be found atwww.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe. He is a special consultant to AxiCorp.

Oil prices edge down on concerns of slowing economic growth

CNBC

  • Oil prices fell on Monday over concerns of slowing economic growth.
  • International Brent crude oil futures were at $71.59 per barrel at 0413 GMT, down 24 cents from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, at $65.67 per barrel.

Oil prices fell on Monday as concerns over slowing economic growth weighed on markets.

Brent crude futures, which act as a benchmark for international oil prices, were at $71.59 per barrel at 0413 GMT, down 24 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, or 0.4 percent, at $65.67 per barrel.

Reuters technical commodity analyst Wang Tao said Brent and WTI would likely come under pressure soon, testing support at $70.62 per barrel and $64.83 per barrel respectively.

“Disappointing industrial data out of China along with concerns over emerging market economies centered on Turkey weighed on commodities,” Edward Bell of Emirates NBD bank said in a note on Sunday.

In the United States, U.S. energy companies last week kept the oil rig count unchanged at 869, according to the Baker Hughes energy services firm.

“The recent softening in benchmark prices should temper the pace of growth in U.S. exploration and production activity, and lead to slower overall output growth,” Bell said.

Outside the United States, traders said U.S. sanctions against Iran could soon impact prices.

The U.S. government has introduced financial sanctions against Iran which, from November, will also target the country’s petroleum sector.

Iran produced around 3.65 million barrels per day of crude in July, according to a Reuters survey, making it the third biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia and Iraq.