Oil prices dip but set for solid weekly gains

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Reuters
KEY POINTS
  • Brent crude was down 7 cents, or 0.1%, at $61.01, by 0236 GMT after adding 1% on Thursday.
  • U.S. oil fell 11 cents, or 0.2%, to $56.60 a barrel. The contract is set for a gain of more than 4% this week.
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Jerome Favre | Bloomberg | Getty Images

Oil took a breather on Friday after three days of solid gains, but was set for its strongest week since early July, boosted by a decline in U.S inventories and a looming hurricane in Florida, while new signs of trade talks emerged.

Brent crude was down 7 cents, or 0.1%, at $61.01, by 0236 GMT after adding 1% on Thursday. Brent is heading for a gain of nearly 3% this week.

U.S. oil fell 11 cents, or 0.2%, to $56.60 a barrel. The contract is set for a gain of more than 4% this week.

“The frothy price action emphasises the store that energy markets place on trade progress to support further gains in prices going forward,” said Jeffrey Halley, senior market analyst at OANDA.

“What is given, can be taken away though, and the rally looks more like it’s running on vapours than petrol,” he said.

Worries about a slowdown in economic growth due to the U.S.-China trade war and the flow-on to oil demand kept a lid on price gains, even as falling inventories indicate a balancing market.

However, the United States and China gave signs on Thursday that they will resume trade talks as the two economic superpowers discussed the next round of in-person negotiations in September ahead of a looming deadline for additional U.S. tariffs.

The approach of Hurricane Dorian toward Florida raised fears that offshore U.S. crude producers may slow output if the storm passes into the Gulf of Mexico over the weekend.

Dorian is heading toward landfall on the Atlantic coast of Florida over the weekend and may enter into the eastern Gulf of Mexico next week. It is is forecast to strengthen and become a highly dangerous Category 4 hurricane on Sunday, the National Hurricane Center said.

Chevron’s 356,440 barrel-per-day Pascagoula, Mississippi, refinery is closely monitoring the progress of Hurricane Dorian, a company spokesman said on Thursday.

Last month, Hurricane Barry prompted offshore oil companies to shut as much as 74% of production, lifting U.S. crude prices, before it weakened to a tropical storm.

Government data on Wednesday showed U.S. crude stocks dropped last week by 10 million barrels to their lowest since October as imports slowed, while gasoline and distillate stocks each fell by over 2 million barrels. [EIA/S]

Inventories at the nation’s main delivery hub in Cushing, Oklahoma, where WTI futures are priced, slumped last week by nearly 2 million barrels to their lowest since December, the data showed.

Cushing stocks have dropped by over 300,000 barrels since the government report, traders said, citing market intelligence firm Genscape’s midweek report.

Oil prices pegged back by mounting concern over US economy

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Reuters
KEY POINTS
  • Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT.
  • U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel.
RT: india oil tankers man crossing rail cars Kolkata
A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata.
Rupak De Chowdhuri | Reuters

Oil prices fell on Thursday for the first time in three days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of U.S. economy.

Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT while U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel. Oil prices rose around 1.5 percent in the previous session.

Concerns about a slowdown in economic growth due to the trade war raging between the United States and China, along with the potential hit to oil demand, are keeping prices in check.

Daly said on Thursday she believes the U.S. economy has “strong” momentum, but uncertainty and a global growth slowdown are having an impact.

Daly was speaking to reporters after a speech in Wellington, New Zealand and said she was in “watch and see” mode in assessing the need for another U.S. interest-rate cut.

U.S. President Donald Trump said on Monday he believed China was sincere about wanting to reach a trade deal, but concerns arose on Tuesday after China’s foreign ministry declined to confirm a telephone call between the two countries on trade.

“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.

The market shrugged of a big drop in U.S. inventories, which fell last week by 10 million barrels, compared with analysts’ expectations for a decrease of 2.1 million barrels, the Energy Information Administration said.

U.S. gasoline stocks fell by 2.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 388,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 2.1 million barrels, versus expectations for a 918,000-barrel increase, the EIA data showed.

The crude draw down confirms “that OPEC supply cuts are effectively working by depleting U.S. reserves,” said Stephen Innes, managing partner at Valour Markets.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been restraining supply for most of the period since Jan. 1, 2017. The alliance, known as “OPEC+”, in July renewed the pact until March 2020.

U.S. weekly crude production also rose 200,000 barrels per day to a new record at 12.5 million bpd in the week to Aug. 23.

Oil rises as drop in US inventories eases recession worries

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Reuters
KEY POINTS
  • Brent crude was up by 37 cents, or 0.6%, at $59.88 a barrel by 0220 GMT.
  • West Texas intermediate crude was up 55 cents, or 1.0%, at $55.48 a barrel.
  • U.S. crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million barrel draw, data from industry group, the American Petroleum Institute (API), showed.
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A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
Getty Images

Oil prices rose on Wednesday, with U.S. crude gaining 1% after an inventory report showed U.S. stockpiles fell more than expected, helping ease worries about economic growth due to the Sino-U.S. trade war.

Brent crude was up by 37 cents, or 0.6%, at $59.88 a barrel by 0220 GMT. West Texas intermediate crude was up 55 cents, or 1.0%, at $55.48 a barrel.

U.S. crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million barrel draw, data from industry group, the American Petroleum Institute (API), showed.

The U.S. government’s weekly report is due to be released Wednesday morning and if official numbers confirm the API data then it will be the biggest weekly decline in nine weeks.

“The mammoth crude inventory draw has, at least for the time being, put to rest those U.S. recessionary doom and gloom fears that have been hanging over oil markets like a dark cloud,” said Stephen Innes, managing partner at Valour Markets.

Still, concerns about global growth amid the raging trade war between the United States and China are likely to cap gains.

U.S. President Donald Trump said on Monday that he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations.

On Tuesday, however, concerns about trade resurfaced after China’s foreign ministry that it had not heard of any recent telephone call between the United States and China on trade, and said it hopes Washington can stop its wrong actions and create conditions for talks.

Crude oil prices have fallen about 20% from 2019 highs reached in April, partly because of worries that the U.S.-China trade war is hurting the global economy, which could dent demand for oil.

“Global recession risks are higher than at any stage since the (global financial crisis) and the U.S. is not immune,” Morgan Stanley said.

China’s Commerce Ministry last week said it would impose additional tariffs of 5% or 10% on 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

Oil rises as US-China trade comments calm markets

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Reuters
KEY POINTS
  • Brent crude was up by 25 cents, or 0.4%, at $58.95 a barrel by 0214 GMT, after falling 1% in the previous session, dropping for a third day in a row.
  • U.S. crude was up by 30 cents or 0.6% at $53.94 a barrel, having also dropped 1% on Monday for a fourth day of declines.
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A woman walks past a mural with the corporate logo of the state oil company PDVSA in Caracas, Venezuela November 3, 2017.
Marco Bello | Reuters

Oil prices rose on Tuesday after U.S. President Donald Trump predicted a trade deal with China after positive comments by Beijing, calming nerves after a round of tit-for-tat tariff hikes had sent markets reeling.

Brent crude was up by 25 cents, or 0.4%, at $58.95 a barrel by 0214 GMT, after falling 1% in the previous session, dropping for a third day in a row.

U.S. crude was up by 30 cents or 0.6% at $53.94 a barrel, having also dropped 1% on Monday for a fourth day of declines.

Trump on Monday said he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations, settling global markets.

“For now, the street is in thrall to the President’s comments, with financial markets doing abrupt changes of direction on his words that wouldn’t look out of place in Fast and the Furious film,” said Jeffrey Halley, senior market analyst at OANDA.

Oil prices have fallen around 20% from a 2019 high reached in April, in part because of worries that the U.S.-China trade conflict is hurting the global economy, which could dent demand for oil.

China’s Commerce Ministry said last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

“Unless you believe a trade deal will happen the slowdown in the global economy continues … and earnings all over the globe will be under pressure,” said Greg McKenna, strategist at McKenna Macro.

The measures are prompting reactions from Chinese companies, with Sinopec seeking a tariff exemption for importing U.S. oil in the coming months, sources told Reuters.

Meanwhile, U.S. crude oil and gasoline inventories likely fell last week, while distillate stockpiles rose, a preliminary Reuters poll showed on Monday.

Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.1 million barrels in the week to Aug. 23.

Oil falls as trade war raises recession fears

CNBC

Reuters
KEY POINTS
  • Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since Aug. 15.
  • U.S. oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9.
RT: Oil tanker Front Altair file photo
Undated handout archive photo by the Norwegian shipowner Frontline of the crude oil tanker Front Altair, released June 13, 2019.
NTB Scanpix | Reuters

Oil prices fell on Monday, pushing U.S. crude to its lowest in more than two weeks, as an intensifying U.S.China trade war knocked confidence in the global economy.

Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since Aug. 15.

U.S. oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9.

Concerns about an economic slowdown are being fanned by a ratcheting up of trade tensions between the United States and China.

China’s commerce ministry said late last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products such as soybeans, and small aircraft.

In retaliation, President Donald Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

“The only thing that will lift the storm clouds over oil markets this week will be if both China and the U.S. talk and decide to mutually take a step back,” said Jeffrey Halley, market analyst at Oanda. “I can’t see that happening.”

U.S. Federal Reserve chair Jerome Powell told an annual economic symposium in Jackson Hole, Wyoming that the U.S. economy is in a “favourable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansion on track.”

The remarks gave few clues about whether the central bank will cut interest rates at its next meeting.

But exacerbating concern over the possibility of recession, U.S. manufacturing industries registered their first month of contraction in almost a decade.

The Brent/WTI spread was at minus $5.24, after widening 60 cents to settle at minus $5.17 on Friday. The spread blew out after China included U.S. oil for the first time in its tariff moves.

Hedge funds and other money managers raised their bullish wagers on U.S. crude to a three-month high in the latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.

U.S. energy companies cut the most oil rigs in about four months last week, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.