Oil slides as US crude production hits record, Asia factory output weakens

CNBC

Reuters

KEY POINTS
  • Both international Brent and U.S. crude futures slipped.
  • Rising U.S. crude production and weakening factory output in China and Japan weighed on prices.
Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil prices dipped on Thursday, dragged down by weakening factory output in China and Japan and record U.S. crude output, although markets remained relatively well supported by supply cuts led by producer club OPEC.

International Brent crude futures were at $66.15 per barrel at 0248 GMT, down 24 cents, or 0.4 percent from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.92 per barrel, down 2 cents from their last settlement.

Prices were dragged down by surging American crude oil production, which has risen by more than 2 million barrels per day (bpd) over the last year, to an unprecedented 12.1 million bpd.

Traders said China’s weakening economy also weighed on oil prices.

Factory activity in China, the world’s biggest oil importer, shrank for the third straight month in February. China’s official manufacturing gauge fell to a three-year low, highlighting deepening cracks in an economy facing persistently weak demand at home and abroad.

In Japan, Asia’s second-biggest economy, factory output posted the biggest decline in a year in January as China’s slowdown affects the entire region.

Still, oil markets remain relatively well supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-affiliated producers like Russia, known as ‘OPEC+’, agreed late last year to reduce output by 1.2 million bpd to prop up prices.

Because of these cuts, U.S. commercial crude inventories fell 8.6 million barrels in the week to Feb. 22 to 445.87 million barrels.

“Crude imports into the U.S. fell 1.6 million bpd last week, to a two-decade low,” ANZ bank said on Thursday.

Oil rises on OPEC-led supply cuts, report of falling US crude inventories

CNBC

Reuters

KEY POINTS
  • Both international Brent and U.S. crude futures gained.
  • U.S. crude oil inventories fell by 4.2 million barrels in the week to Feb. 22, to 444.3 million barrels, the American Petroleum Institute (API) estimated in a weekly report on Tuesday.
  • Meanwhile, OPEC has indicated it will continue to withhold supply despite pressure from U.S. President Donald Trump this week to stop artificially tightening markets.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Oil prices rose on Wednesday after a report of declining crude inventories in the country and as producer club OPEC seemed to stick to its supply cuts despite pressure from U.S. President Donald Trump.

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.02 per barrel at 0100 GMT, up 52 cents, or 0.9 percent, from their last settlement.

International Brent crude futures were at $65.55 per barrel, up 34 cents, or 0.5 percent from their last close.

U.S. crude oil inventories fell by 4.2 million barrels in the week to Feb. 22, to 444.3 million barrels, the American Petroleum Institute (API) estimated in a weekly report on Tuesday.

Official data will be released by the U.S. Energy Information Administration (EIA) after 1800 GMT.

Oil markets have generally received support this year from supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-affiliated producers like Russia, known as OPEC+, agreed late last year to cut output by 1.2 million barrels per day (bpd) to prop up prices.

And the group has indicated it will continue to withhold supply despite pressure from U.S. President Donald Trump this week to stop artificially tightening markets.

“Crude oil has been rising lately, not due to strong growth and rising demand but primarily due to a politically orchestrated cut in production from OPEC and friends,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.

Despite this, oil remains in ample supply as U.S. crude oil production has risen by more than 2 million bpd over the past year, to a record 12 million bpd, and because demand growth is low because of a global economic slowdown and improving energy efficiency across industries.

“The OPEC+ production cuts have … so far failed to create the tightness needed to support a continued rally,” Hansen said.

Oil prices steady after steep drop on Trump’s OPEC tweet

CNBC

 | 
Reuters
KEY POINTS

  • Oil prices steady after steep drop on President Donald Trump’s renewed pressure campaign on OPEC.
  • OPEC-led production cuts and U.S. sanctions on Iran and Venezuela are supporting prices.
  • Analysts polled by Reuters expect U.S. crude stockpiles to rise for a sixth week.
Reusable: Texas oil production fracking worker cleans off truck 150204
A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
Getty Images

Oil traded roughly flat on Tuesday as Saudi Arabia and the rest of OPEC were expected to stick to their policy of cutting production, despite renewed pressure from U.S. President Donald Trump.

Prices slid on Monday, when many traders were out of the office attending International Petroleum Week, a series of industry events in London, after Trump called on OPEC to ease its efforts to boost the oil market. Prices were “getting too high,” the president said.

“Yesterday was a typical price action you see during IP Week when you have a headline,” said Olivier Jakob, oil analyst at Petromatrix. “But I don’t think it will change anything in current OPEC supply policy.”

Brent crude, the global benchmark, rose 28 cents to $65.04 around 10:10 a.m. ET (1510 GMT), after losing 3.5 percent on Monday. U.S. West Texas Intermediate crude fell 1 cent to $55.47, stabilizing after a roughly 3-percent fall.

Expectations that U.S. crude inventories had risen for a sixth straight week limited the rally.

U.S. crude stocks were seen 3.6 million barrels higher in weekly inventory reports, underlining that supply is adequate in the world’s top consumer. The first such report is due at 4:30 p.m. ET (2130 GMT) from the American Petroleum Institute, following by more comprehensive government figures on Wednesday morning.

Oil is up about 20 percent since the start of the year, when OPEC and non-member producers, such as Russia, began cutting production in an effort to reduce a global glut.

Saudi Arabia and other OPEC members are likely to be cautious about relaxing their supply-cut plan, Jakob said, after a boost in output in the second half of last year ahead of U.S. sanctions on Iran led to a steep slide in prices.

“Will the kingdom budge and increase production or at least keep it steady,” said PVM’s Tamas Varga. “Just two weeks after announcing deeper cuts, it would be a capitulation.”

An OPEC source, in comments to Reuters on Tuesday, agreed with the analysts’ views.

U.S. sanctions against OPEC members Iran and Venezuela have also contributed to the gains and are providing a floor for prices, analysts say.

Optimism about a U.S.-China trade deal also helped prices to rally.

Trump on Monday said he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences.

— CNBC’s Tom DiChristopher contributed to this report.

Oil prices firm on hopes for US-China trade deal

CNBC

Reuters

KEY POINTS
  • President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods originally scheduled for later this week thanks to progress in trade talks and said if progress continued, he and Chinese President Xi Jinping would seal a deal.
  • Both the international benchmark Brent and U.S. crude futures contracts saw gains.

Oil prices rose on Monday as Washington and China appeared to edge closer to a trade deal, dampening fears over the outlook for global economic growth.

International Brent crude oil futures were at $67.26 a barrel at 0005 GMT, up 14 cents, or 0.2 percent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $57.38 per barrel, up 11 cents, or 0.2 percent, from their last settlement. WTI futures climbed 0.5 percent on Friday, having marked their highest since Nov. 16 at $57.81 a barrel.

“Crude prices continue to be supported on optimism a trade deal will be reached in the coming days by the world’s two largest economies, said Edward Moya, senior market analyst, OANDA.

President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods scheduled for later this week thanks to progress in trade talks and said if progress continued, he and Chinese President Xi Jinping would seal a deal.

Signs of reduced global oil supply also supported crude prices.

U.S. energy firms this week cut the number of oil rigs operating for the first time in three weeks week after U.S. crude production hit an all-time high, boosting exports to a record-peak and stockpiles to their highest in over a year.

Meanwhile, Mexico’s Pemex produced 1.62 million barrels of crude per day in January, less than any month in almost three decades, the state-owned oil company said on Friday, underscoring the challenges facing a government that vows to pump far more in a few years.

Oil prices fall as US crude output hits record

CNBC

Reuters
KEY POINTS
  • Both international Brent and U.S. crude futures slipped.
  • U.S. crude oil production reached 12 million bpd for the first time last week, the Energy Information Administration (EIA) said on Thursday in a weekly report.
Reusable: Oil worker 130728
Andrew Burton | Getty Images

Oil prices fell on Friday after the United States reported its crude output hit a record 12 million barrels per day (bpd), undermining efforts by Middle East-dominated producer club OPEC to withhold supply and tighten global markets.

International Brent crude futures were at $66.87 per barrel at 0326 GMT, down 20 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.84 per barrel, down 12 cents, or 0.2 percent, from their last settlement.

U.S. crude oil production reached 12 million bpd for the first time last week, the Energy Information Administration (EIA) said on Thursday in a weekly report.

That means U.S. crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to ever reach 12 million bpd of production.

As output surges, U.S. oil stocks are also rising.

U.S. commercial crude oil inventories rose by 3.7 million barrels to 454.5 million barrels in the week ended Feb. 15, the EIA said.

Analysts say U.S. output will rise further and that oil firms will export more oil to sell off surplus stocks.

“We see total U.S. crude production hitting 13 million bpd by year-end, with 2019 averaging 12.5 million bpd,” U.S. bank Citi said following the release of the EIA report.

Of that, the bank said, “we could be seeing some weeks with 4.6 million bpd of gross crude exports by end-year, adding to this week’s new record” of 3.6 million bpd.

Friday’s dips at least temporarily halted a rally that pushed crude prices this week to their highest for 2019 so far amid the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing.

Another recent price driver has been U.S. sanctions against oil exporters Iran and Venezuela.