Oil prices rise as Saudi Arabia cuts supply to United States

CNBC

  • Both U.S. crude futures and international Brent futures saw gains.
  • The price rise came after a report from the U.S. Energy Information Administration (EIA) on Wednesday showed a drop in Saudi crude supply to the United States.

A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

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A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

Oil prices rose for a third day on Thursday, pushed up by signs of lower imports into the United States as part of efforts by OPEC to tighten the market.

U.S. West Texas Intermediate (WTI) crude futures were at $54.58 per barrel at 0249 GMT, up 35 cents, or 0.7 percent, from their last settlement. WTI closed up 1.7 percent on Wednesday, when prices touched their highest since Nov. 21 at $54.93 a barrel.

International Brent crude oil futures were up 52 cents, or 0.8 percent, at $62.17 per barrel.

The price rise came after a report from the U.S. Energy Information Administration (EIA) on Wednesday showed a drop in Saudi crude supply to the United States.

“Crude oil prices were stronger after signs emerged that OPEC cuts are impacting trade. EIA’s weekly report showed that U.S. imports from Saudi Arabia fell by more than half from the previous week to 442,000 barrels per day (bpd). This is the second lowest level in weekly data going back to 2010,” ANZ bank said.

Saudi Arabia is the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-OPEC producers, including Russia, announced supply cuts late last year aimed at tightening the market and propping up prices.

Despite these efforts, oil remains in ample supply, not least because of soaring U.S. crude oil production, which jumped by more than 2 million bpd last year to a record 11.9 million bpd.

This shows in high U.S. commercial crude oil stockpiles, which rose by 919,000 barrels in the week to Jan. 25, to 445.94 million barrels, EIA data showed. Stockpiles are 6.6 percent higher than a year ago.

Oil prices rise on Venezuelan supply concerns following US sanctions

CNBC

  • Both international Brent and U.S. crude futures saw gains.
  • The gains followed a 2-percent price jump the previous session, when markets first digested the U.S. sanctions on Venezuela’s oil exports.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Oil prices rose on Wednesday as concerns about supply disruptions following U.S. sanctions on Venezuela’s oil industry outweighed downward pressure from a darkening outlook for the global economy.

U.S. West Texas Intermediate (WTI) crude futures were at $53.43 per barrel at 0333 GMT, 12 cents, or 0.2 percent, above their last settlement.

International Brent crude oil futures rose 17 cents, or 0.3 percent, to $61.49 per barrel.

The gains followed a 2-percent price jump in the previous session, when markets first digested the U.S. sanctions on Venezuela’s oil exports.

Washington on Monday announced export sanctions against Venezuela’s state-owned oil firm PDVSA, limiting transactions between U.S. companies that do business with Venezuela through purchases of crude oil and sales of refined products.

“The sanctions so far have been mostly disruptive for refiners on the U.S. Gulf Coast, who are being forced to seek alternative heavy crude supplies, and have stepped up purchases from Canada,” said Vandana Hari of Vanda Insights, an energy consultancy.

She added, however, that Canadian oil exports would be “constrained by pipeline capacity bottlenecks.

The sanctions aim to freeze sale proceeds from PDVSA’s exports of roughly 500,000 barrels per day (bpd) of crude oil to the United States.

Although the move pushed up oil prices, markets appeared relatively relaxed as the sanctions only affect Venezuelan supply to the United States.

“The (Venezuelan) export volumes will not be eliminated from the market, but rather rerouted to other countries,” said Paola Rodriguez-Masiu, an analyst at consultancy Rystad Energy.

With the United States dropping out as a customer for Venezuelan oil, she added that “China and India … will be able to pick up these oil volumes at great discounts.”

Other analysts also pointed to economic weakness as countering supply-side concerns such as the voluntary supply restraint by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market.

“The Venezuelan political crisis as well as a Saudi pledge to lower output further should have boosted crude oil, but pulling in the opposite direction are heightened concerns about global growth, particularly that of China,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.

Global economic growth and fuel consumption are expected to slow this year amid a trade dispute between the United States and China, the world’s two biggest economies.

Officials from Washington and Beijing are set to launch a new round of trade talks on Wednesday amid differences over U.S. demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a U.S. tariff hike on March 2 that has been announced if no agreement is reached.

“The outcome of the meetings will also be the main influencer of sentiment in the oil markets,” Hari said.

Oil prices edge up on US sanctions against Venezuela

CNBC

  • Both Brent and U.S. crude futures saw gains.
  • The U.S. government slapped sanctions on Venezuela’s state-owned oil firm PDVSA, in a move aimed at severely curbing the OPEC member’s crude exports to the United States.

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Oil prices crept up on Tuesday after Washington imposed sanctions on Venezuelan state-owned oil firm PDVSA in a step set to severely curb the OPEC member’s crude exports to the United States.

Despite the move, which comes as the U.S government looks to pile pressure on sitting President Nicolas Maduro to step down, traders said ample global oil supply and an economic slowdown especially in China were keeping crude prices in check.

U.S. West Texas Intermediate (WTI) crude futures were at $52.12 per barrel at 0351 GMT, up 13 cents, or 0.3 percent, from their last settlement.

International Brent crude oil futures were at $60.05 per barrel, up 12 cents, or 0.2 percent.

The United States has remained a major destination for Venezuelan oil despite their political differences, although volumes have declined over the past years amid Venezuela’s economic crisis and as the U.S. government has started targeting the South American nation with sanctions.

The U.S. government is supporting Venezuelan opposition leader Juan Guaido, who proclaimed himself interim president last week and is demanding the resignation of Maduro.

“As a result of today’s action, all property and interests in property of PDVSA subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them,” the U.S. Treasury said late on Monday.

“Persons operating in the oil sector of the Venezuelan economy may be subject to sanctions,” it added.

Venezuela has the world’s biggest proven oil reserves and is a member of the Organization of the Petroleum Exporting Countries (OPEC).

Despite its huge reserves, Venezuela’s exports declined to little more than 1 million barrels per day in 2018 from 1.6 million bpd in 2017, according to Refinitiv ship tracking data and trade sources.

The decline comes amid an economic crisis which has seen investment plummet, power and key equipment supplies disrupted, and salaries left unpaid.

While news of the sanctions against Venezuela grabbed headlines, analysts said the fundamental issue for global oil trade remained plentiful supply.

“The more significant issue is (global) supply, and despite OPEC’s best efforts (to reduce output) there seems to be plenty of it,” said Jeffrey Halley of futures brokerage OANDA in Singapore.

Global oil supply remains high largely due to a more than 2 million bpd increase in U.S. crude oil production last year, to a record 11.9 million bpd.

There are also concerns in the oil industry that crude demand could stutter amid an economic slowdown.

Of China’s 31 provinces, regions and municipalities, at least 23 have cut their economic growth targets for this year, according to provincial announcements this month, in a sign that industry and manufacturing in the world’s No.2 economy is slowing.

To stem the slowdown, China’s National Development and Reform Commission (NDRC) on Tuesday unveiled a flurry of measures aimed at spurring sales of items ranging from cars and appliances to information services.

Oil slips on rising US rig count, China industrial slowdown

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  • Both Brent and U.S. crude futures slipped.
  • U.S. energy firms last week raised the number of rigs looking for new oil for the first time in 2019 to 862, an additional 10 rigs, Baker Hughes energy services firm said in its weekly report on Friday.
  • Beyond oil supply, a key question for this year will be demand growth, with concerns over a slowing economy in China. the world’s second-largest oil user.

Oil refinery and storage Australia

Jason Reed | Reuters

Oil prices fell on Monday after U.S. energy firms added rigs for the first time this year in a sign that crude production there may rise further, and as China, the world’s second-largest oil user, reported additional signs of an economic slowdown.

U.S. crude oil futures were at $53.43 per barrel at 0253 GMT, down 26 cents, or 0.5 percent, from their last settlement.

International Brent crude oil futures were at $61.50 a barrel, down 14 cents, or 0.2 percent.

High U.S. crude oil production, which rose to a record 11.9 million barrels per day (bpd) late last year, has been weighing on oil markets, traders said.

In a sign that output could rise further, U.S. energy firms last week raised the number of rigs looking for new oil for the first time in 2019 to 862, an additional 10 rigs, Baker Hughes energy services firm said in its weekly report on Friday.

Beyond oil supply, a key question for this year will be demand growth.

Oil consumption has been increasing steadily, likely averaging above 100 million bpd for the first time ever in 2019, driven largely by a boom in China.

However, an economic slowdown amid a trade dispute between Washington and Beijing is weighing on fuel demand-growth expectations.

Earnings at China’s industrial firms shrank for a second straight month in December on falling prices and sluggish factory activity, piling more pressure on the world’s second-largest economy, which reported the slowest pace of growth last year since 1990.

China is trying to stem the slowdown with aggressive fiscal stimulus measures.

But there are concerns that these measures may not have the desired effect as China’s economy is already laden with massive debt and some of the bigger government spending measures may be of little real use.

The increased U.S. supply, the country is now the world’s largest producer, and the economic slowdown are weighing on the oil price outlook.

“We expect U.S. crude oil prices to range between $50-$60 per barrel in 2019 and about $10 more per barrel for Brent,” Tortoise Capital Advisors said in its 2019 oil market outlook.

However, Tortoise added that oil prices would be supported above $50 per barrel as it was “very clear that Saudi Arabia will no longer be willing to accept these lower oil prices”.

The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, started supply cuts late last year to tighten markets and buoy prices.

Oil prices jump as US threatens sanctions against Venezuela

CNBC

  • Both Brent and U.S. crude futures gained more than 1 percent.
  • Washington on Thursday signaled it could impose sanctions on Venezuela’s crude exports as Caracas is embroiled in political and economic turmoil.
  • Amid violent street protests, Venezuela’s opposition leader Juan Guaido declared himself interim president earlier this week, winning backing from Washington and large parts of Latin America, prompting Nicolas Maduro, the country’s leader since 2013, to break relations with the United States.

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Andrew Burton | Getty Images

Oil prices rose by more than one percent on Friday as turmoil in Venezuela triggered concerns that its oil exports could soon be disrupted.

Washington on Thursday signaled it could impose sanctions on Venezuela’s crude exports as Caracas descends further into political and economic turmoil.

International Brent crude oil futures were at $61.89 a barrel at 0246 GMT, 80 cents, or 1.3 percent, above their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $53.90 per barrel, up 77 cents, or 1.5 percent.

Amid violent street protests, Venezuela’s opposition leader Juan Guaido declared himself interim president earlier this week, winning backing from Washington and large parts of Latin America, prompting Nicolas Maduro, the country’s leader since 2013, to break relations with the United States.

Fundamentally, however, global oil markets are still well supplied, thanks in part to surging output in the United States, where crude production rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd.

Record U.S. production would likely offset any short-term disruptions to enezuelan supply due to possible U.S. sanctions, Britain’s Barclays on Thursday said in a note. The bank cut its 2019 average Brent crude oil forecast to $70 a barrel, down from $72 previously.

The surge in U.S. output has resulted in swelling U.S. fuel inventories.

Gasoline stocks rose for an eighth consecutive week in the week to Jan. 18, by 4.1 million barrels to a record 259.6 million barrels, the U.S. Energy Information Administration (EIA) said in a weekly report on Thursday.

Crude inventories rose by 8 million barrels.