Oil prices rise for first time in three days, but trade war drags 

CNBC

  • Oil has been caught in this month’s global financial market slump.
  • The ongoing U.S.-China trade war has continued to weigh on the demand outlook for oil.

Oil prices climbed for the first time in three days on Wednesday, but rising supply and fears over the outlook for demand amid the U.S.-China trade war kept pressure on the market.

Brent crude futures had gained 47 cents, or 0.6 percent, to $76.38 a barrel by 0441 GMT. They fell 1.8 percent on Tuesday, at one point touching their lowest since Aug. 24 at $75.09 a barrel.

U.S. West Texas Intermediate (WTI) crude futures advanced 16 cents, or 0.2 percent, to $66.34 a barrel on Wednesday. They dropped 1.3 percent the day before, after hitting their weakest since Aug. 17 at $65.33 a barrel.

Both crude benchmarks have fallen about $10 a barrel from four-year highs reached in the first week of October, and are on track to post their worst monthly performance since July 2016.

“Everyone thought we were going to go into the $90s, but now we are heading for the $60s,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, referring to Brent prices.

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade scrap between the world’s two largest economies.

U.S. President Donald Trump said on Monday that he thinks there will be “a great deal” with China on trade but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible.

Trump said he would like to make a deal now but that China was not ready. He did not elaborate.

The United States has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods.

In a bearish signal, the American Petroleum Institute reported U.S. crude inventories rose 5.7 million barrels last week, more than analyst forecasts for a 4.1 million-barrel build.

Investors will look to official government data on U.S. inventories due on Wednesday.

Oil production from Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand.

The United States is set to impose new sanctions on Iranian crude from next week, and exports from the Islamic Republic have already begun to fall.

Saudi Arabia and Russia have said they will pump enough crude to meet demand once the sanctions kick in.

“(After the recent drop in oil prices), this is not the time to back off, if Trump wants to put the screws on Iran,” Nunan said.

Brent oil prices dips on rising supply, global market woes

CNBC

  • Global stock markets were hit by renewed concerns about the U.S.-China trade war.
  • Meanwhile, the oil markets also saw signs of rising crude supply from top producers ahead of U.S. sanctions on Iran’s petroleum exports.

Brent oil prices dipped on Tuesday, weighed down by ongoing weakness in global stock markets and by signs of rising global supply despite looming sanctions on Iran’s crude exports.

Front-month Brent crude oil futures were at $77.05 a barrel at 0428 GMT, down 29 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were firmer, however, at $67.16 a barrel, up 12 from their last settlement.

Oil has been caught up in broad financial market slumps this month, with stocks falling again on Monday after reports Washington was planning an additional $257 billion worth of tariffs on Chinese goods if upcoming talks between Presidents Donald Trump and Xi Jinping fail to end a trade war between the world’s two largest economies.

High oil prices are hurting consumers and could dent demand, the executive director of the International Energy Agency (IEA) said on Tuesday.

“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down,” said IEA chief Fatih Birol.

Oil was also being weighed down by signs of rising supply from top producers.

“A Saudi pledge to produce as much oil as possible, and the stock market rout, have sharply reduced concerns about the Nov. 4 implementation of U.S. sanctions against Iran,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Russia has also indicated that it will provide enough oil to meet demand once U.S. sanctions hit Iran from next week.

In a sign that oil supply remains ample despite the looming U.S. sanctions against Iran’s petroleum exports, crude output from the world’s top 3 producers, Russia, the United States and Saudi Arabia, reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

That’s an increase of 10 million bpd since the start of the decade and means that these three producers alone now meet a third of global crude demand.

Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year.

Despite that, Hansen said “given the yet unknown impact on Iran’s ability to produce and export (amid sanctions) … we could see some speculative buying emerge ahead of Nov. 4.”

Iran’s seaborne crude exports, by contrast, have fallen from a 2018-peak of just over 2.5 million bpd in May to around 1.5 million bpd in September and October, Eikon data showed.

Oil falls as investors wary of trade slowdown

CNBC

  • Oil markets remain tense ahead of impending U.S. sanctions against Iran’s crude exports, which are set to start next week.

Oil prices dipped on Monday amid cautious sentiment as a plunge in financial markets last week and dollar strength early this week underscored concerns that growth may be slowing, especially in Asia’s emerging economies.

Front-month Brent crude oil futures were trading down 39 cents, or 0.5 percent, at $77.23 a barrel at 0616 GMT.

U.S. West Texas Intermediate (WTI) crude futures were at $67.31 a barrel, down 28 cents, or 0.4 percent, from their last settlement.

Investors remained wary after hefty losses last week, while a stronger dollar on safe-haven buying puts pressure on the purchasing power of emerging markets.

“Cooling economic conditions and symptoms of softer international trade have exacerbated bearish conditions as (the) growth outlook dims,” said Benjamin Lu of brokerage Phillip Futures in Singapore.

Singapore-based ship tanker brokerage Eastport said stock prices were falling amid policy uncertainty, rising interest rates and disappointing earnings from some companies.

Financial market turmoil may “weigh on investment and consumer spending, reducing trade flows and ultimately hitting demand,” it said.

Hedge funds slashed their bullish wagers on U.S. crude in the latest week to the lowest level in more than a year, the U.S. Commodity Futures Trading Commission said on Friday.

The speculator group cut its combined futures and options position in New York and London by 42,644 contracts to 216,733 in the week to Oct. 23, the lowest level since September 2017.

There were also signs of a slowdown in global trade, with rates for dry-bulk and container ships – which carry most raw materials and manufactured goods – coming under pressure.

On the supply side, however, oil markets remain tense ahead of looming U.S. sanctions against Iran’s crude exports, which are set to start next week and are expected to tighten supply, especially to Asia which takes most of Iran’s shipments.

The tight market in Asia is visible in the low amount of unsold crude oil stored on tankers on waters around Singapore and southern Malaysia, the region’s main oil trading and storage hub.

Just four stationary supertankers are currently filled with crude oil, according to Refinitiv Eikon ship tracking data.

That’s down from around 15 a year ago, and from 40 in mid-2016 during the peak of the supply glut.

In North America, however, there is no oil shortage as U.S. crude oil production has increased by almost a third since mid-2016 to around 11 million barrels per day.

Production is set to rise further. U.S. drillers added two oil rigs in the week to Oct. 26, bringing the total count to 875, the highest level since March 2015, Baker Hughes energy services firm said on Friday.

More than half of all U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico, the country’s biggest shale oil formation.

Oil prices drop as focus shifts to oversupply

CNBC

  • Saudi Arabia’s OPEC governor said on Thursday the oil market could be heading into oversupply.
  • Oil prices have slumped this week amid declines in the stock markets.

Oil prices fell on Friday and were heading for a third weekly loss, pulled down as Saudi Arabia’s OPEC governor said the market may become oversupplied soon and after a slump in global equities clouded the outlook for demand.

Brent crude futures were down 51 cents, or 0.7 percent, at $76.38 a barrel by 0331 GMT. The global benchmark is on course for a weekly loss of over 4 percent.

U.S. crude was down 64 cents, or 1 percent, at $66.68 a barrel. The U.S. benchmark is set for a 3.5 percent loss this week.

“Bearish sentiment could force a re-test of support in the low $70.0 per barrel range,” Fitch Solutions said in a note on Friday.

Saudi Arabia’s OPEC governor said on Thursday that the oil market could face oversupply in the current quarter.

“The market in the fourth quarter could be shifting towards an oversupply situation as evidenced by rising inventories over the past few weeks,” Adeeb Al-Aama told Reuters.

Saudi Arabia Energy Minister Khalid Al-Falih said there could be a need for intervention to reduce oil stockpiles after increases in recent months.

U.S. crude oil stockpiles rose last week for the fifth consecutive week, while gasoline and distillate inventories fell, the Energy Information Administration said this week.

Falls in stock markets have roiled oil prices this week as Wall Street had its biggest daily decline since 2011.

“The near $10 per barrel drop in Brent crude seen over October is a spillover from the global sell-off in equities and broader risk-off sentiment in the market,” said Fitch Solutions.

Financial markets have been hit hard by a range of worries, including the U.S.-China trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, and economic concerns in Italy.

There are also signs of a slowdown in global trade, with container and bulk freight rates dropping away after rising for most of 2018.

Despite this, Fitch Solutions said “fundamentals in oil … remain broadly bullish”, largely because of the U.S. sanctions against Iran’s oil exports, which start on Nov. 4.

Washington is putting pressure on governments around the world to stop importing oil from Iran.

Most, including its biggest customer China, are falling in line, and Iran has turned to storing its unsold oil on its tanker fleet in the hope that it can sell the crude off quickly once the sanctions are lifted again.

Oil prices fall one percent amid global stock market slump

CNBC

  • Oil markets remain cautious ahead of U.S. sanctions on Iran’s crude exports which go into effect from Nov. 4.

Oil prices fell by around one percent on Thursday, coming under pressure from sharp selloffs in global stock markets, with U.S. stocks posting the biggest daily decline since 2011 to wipe out the year’s gains.

Front-month Brent crude oil futures were at $75.42 a barrel at 0043 GMT, 75 cents, or 1 percent, below their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $66.23 a barrel, 59 cents, or 0.9 percent, below their last settlement.

“Oil prices fell under extreme selling pressure … as the steep selloff across stock markets fuelled fears over a possible drop in oil demand growth,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Markets have been hit hard this month by a range of worries, including the Sino-U.S. trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.

In oil, WTI has fallen nearly 10 percent so far this month, while Brent is down nearly 9 percent.

Still, oil markets remain nervous ahead of U.S. sanctions against Iran’s crude exports, which kick in from Nov. 4.

Bowing to pressure from Washington, China’s oil-majors Sinopec and China National Petroleum Corp (CNPC) have not ordered any oil from Iran for November because of concerns that violating sanctions could impact their global operations.

China is Iran’s biggest oil customer. Halting oil Iranian imports means its many refiners will have to seek alternative supplies elsewhere.

Some relief could come from the United States, where crude production and storage levels are high.

U.S. commercial crude oil stockpiles rose for a fifth consecutive week last week, increasing by 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said on Wednesday.

Output remained unchanged at 10.9 million barrels per day (bpd), slightly below a record 11.2 million bpd reached at the start of October.