Oil prices rise as investors put hopes on China stimulus

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Reuters
KEY POINTS
  • Brent crude futures were up 24 cents, or 0.4%, at $60.85 a barrel by 0221 GMT, having fallen earlier in the session. They dropped by 1.6% on Wednesday.
  • U.S. West Texas Intermediate (WTI) crude futures were up by 10 cents, 0.2%, at $55.16 a barrel. They ended 0.9% lower the previous session.
GP: Sinopec oil China 190322
A man working in a filling station of Sinopec, China Petroleum and Chemical Corporation, in Shanghai, China, on March 22, 2018.
Johannes EIsele | AFP | Getty Images

Oil prices rose on Thursday as investors banked on more economic stimulus by China after weak PMI data, partly recovering from losses in the previous session on a surprise build in U.S. crude stocks.

Brent crude futures were up 24 cents, or 0.4%, at $60.85 a barrel by 0221 GMT, having fallen earlier in the session. They dropped by 1.6% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were up by 10 cents, 0.2%, at $55.16 a barrel. They ended 0.9% lower the previous session.

Factory activity in China shrank for a sixth straight month in October, while growth in China’s services sector activity slowed to the lowest since February 2016, official data showed on Thursday.

“The move up in oil is driven by the expectation that more China stimulus is now on the way after the six-month low in the China manufacturing PMI,” said Jeffrey Halley, senior market analyst at OANDA.

“The kneejerk response …. was to sell commodities and energy, but central banks globally have itchy trigger fingers at the moment with regards to easing and I believe China will be no different,” he said.

The U.S. Federal Reserve on Wednesday cut interest rates for a third time this year with the Fed’s stance vouching for the durability of an economic expansion that is now the longest on record.

Rate cuts can often be bullish for oil prices because a stronger economy typically implies higher demand for crude.

Still, prices are likely to be capped until inventories start to show sustained declines.

Crude inventories rose 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analysts’ expectations for a 494,000-barrel build.

 

Oil prices drop as trade worries overshadow fall in stocks

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Reuters
KEY POINTS
  • Brent crude was down 18 cents, or 0.3%, at $61.41 a barrel by 0405 GMT after gaining 2 cents on Tuesday.
  • U.S. West Texas Intermediate (WTI) crude was down 27 cents, or 0.5%, at $55.27 a barrel, having dropped 0.5% in the previous session.
GP: US Oil Workers Oil Boom in Texas's Permian Basin 191030
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

Oil prices fell on Wednesday as a possible delay in resolving the U.S.China trade war overshadowed a drop in U.S. crude inventories.

Brent crude was down 18 cents, or 0.3%, at $61.41 a barrel by 0405 GMT after gaining 2 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude was down 27 cents, or 0.5%, at $55.27 a barrel, having dropped 0.5% in the previous session.

U.S. crude inventories fell 708,000 barrels in the week ended Oct. 25 to 436 million, compared with analysts’ expectations for an increase of 494,000 barrels, according to data from the industry group, the American Petroleum Institute.

“The market has largely ignored the decline in U.S. crude inventories and assumed the demand side will remain weak in the foreseeable future as the global cyclical slowdown deepens,” said Margaret Yang, market analyst at CMC Markets in Singapore.

“Fading optimism over a U.S.-China phase-one deal further weighed on oil prices as trade risks are set to rise,” she said.

The United States and China were continuing to work on an interim trade agreement, but it may not be completed in time for U.S. and Chinese leaders to sign it next month, a U.S. administration official said.

The latest potential setback in the negotiations stalled a rally in global share markets.

Russia’s deputy energy minister also said on Tuesday it was too early to talk of deeper output cuts by OPEC and its allies, adding to the pressure on the market.

The Organization of the Petroleum Exporting Countries and other producers including Russia — a grouping referred to as OPEC+ — have cut oil output by 1.2 million barrels per day to support prices since January.

In the United States, gasoline stocks dropped by 4.7 million barrels, compared with analyst expectations for a drop of 2.2 million barrels, and distillate stocks were down by 1.6 million barrels, versus an expected fall of 2.35 million barrels.

Still, crude stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.2 million barrels, the API said.

Oil prices edge lower ahead of US stockpile numbers

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Reuters
KEY POINTS
  • Brent futures were down 6 cents at $61.51 a barrel by 0311 GMT, having fallen 0.7% on Monday.
  • U.S. West Texas Intermediate (WTI) crude was down 12 cents at $55.69, after falling 1.5% in the previous session.
GP: Oil Tankers on the Mississippi in Louisiana 191029
A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.
Art Wager | Getty Images

Oil prices slipped on Tuesday as investors awaited U.S. crude inventory data for a pointer on oil demand trends, while concerns about slower economic growth overshadowed signs of a thawing in the trade war between Washington and Beijing.

Brent futures were down 6 cents at $61.51 a barrel by 0311 GMT, having fallen 0.7% on Monday.

U.S. West Texas Intermediate (WTI) crude was down 12 cents at $55.69, after falling 1.5% in the previous session.

Prices rose sharply last week amid a decline in U.S. inventories and signs of an easing in the U.S.-China trade war, but worries on Monday about weaker economic growth offset hopes of a rise in oil demand even if trade talks progress.

“The inventory read last week is still reverberating through trading, although we did see that finally start to give way last night, but we can see there is very little appetite to go on with it today,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

U.S. crude inventories were forecast to have increased by around 700,000 barrels last week, according to a Reuters poll of analysts, having unexpectedly fallen the previous week, the first decline in six weeks.

U.S. crude oil stockpiles at Cushing, Oklahoma, the delivery point for WTI, have risen by about 1.5 million barrels in the week through Oct. 25, traders said earlier, citing data from market intelligence firm Genscape.

The American Petroleum Institute releases industry data later on Tuesday, while the U.S. government’s Energy Information Administration releases inventory data on Wednesday.

The United States Trade Representative is studying whether to extend tariff suspensions on $34 billion of Chinese goods set to expire on Dec. 28 this year, the agency said on Monday.

U.S. President Donald Trump said earlier on Monday he expected to sign a significant part of the trade deal with China ahead of schedule but did not elaborate on the timing.

Leaders of the world’s two biggest economies are working to agree on the text for a “Phase 1” trade agreement announced by Trump on Oct. 11. Trump has said he hopes to sign the deal with China’s President Xi Jinping next month at a summit in Chile.

The trade war has hit economic growth around the world and kept oil prices range-bound for months.

Oil prices drop after data shows industrial profits decline in China

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Reuters
KEY POINTS
  • Brent crude was down 12 cents, or 0.2%, at $61.90 a barrel by 0409 GMT, having gained more than 4% last week, its best weekly gain since Sept. 20.
  • West Texas Intermediate (WTI) crude futures were down 16 cents, 0.3%, at $56.50 a barrel, after rising more than 5% last week, also the biggest weekly increase since Sept. 20.
GP: Tullow Oil 190812 EU
The Tullow Oil Plc Prof. John Evans Atta Mills Floating Production Storage and Offloading vessel sits docked in Singapore on Jan. 21, 2016.
Nicky Loh | Bloomberg | Getty Images

After strong gains last week, oil prices were slightly lower on Monday as data released in China reinforced signs that its economy is slowing, though progress in China-U.S. trade talks has supported prices.

Brent crude was down 12 cents, or 0.2%, at $61.90 a barrel by 0409 GMT, having gained more than 4% last week, its best weekly gain since Sept. 20.

West Texas Intermediate (WTI) crude futures were down 16 cents, 0.3%, at $56.50 a barrel, after rising more than 5% last week, also the biggest weekly increase since Sept. 20.

Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the toll a slowing economy and protracted U.S. trade war are having on corporate balance sheets.

“There have been some small profit-taking sells on the weak China data released on Sunday and unwinding of weekend hedges,” said Stephen Innes, Asia Pacific market strategist at Axi Trader.

“But the market remains well supported on the dip,” he added, pointing to signs of progress in China-U.S. trade talks.

The two sides issued a statement on Friday saying they are close to finalizing some parts of a trade agreement.

U.S. energy companies also reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling.

Russia’s energy ministry said on Friday it is continuing close cooperation with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers to enhance market stability and predictability.

The statement came a day after Igor Sechin, CEO of Russian oil producer, Rosneft, said the September attacks on Saudi oil assets created doubts over its reliability as a supplier. The attacks temporarily shut down around half of the kingdom’s oil output.

OPEC+, an alliance of OPEC members and other major producers including Russia, has since January implemented a deal to cut output by 1.2 million bpd to support the market.

The pact runs to March 2020 and the producers meet to review policy on Dec. 5-6.

Elsewhere, a suggestion by U.S. President Donald Trump that Exxon Mobil or another U.S. oil company could operate Syrian oil fields drew rebukes from legal and energy experts.

Money managers cut their net long U.S. crude futures and options positions in the week to October 22, the U.S. Commodity Futures Trading Commission said on Friday.

Oil prices fall on weak demand outlook

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Reuters
KEY POINTS
  • Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session on the back of a surprise draw in U.S. crude stocks.
  • Brent crude futures fell 39 cents, or 0.6%, to $60.78 a barrel by 0111 GMT.
  • West Texas Intermediate (WTI) crude futures dropped 46 cents, or 0.8%, to $55.51 per barrel.
RT: Worker on oil rig in the Permian Basin near Wink, Texas 180822
A drilling crew member on an oil rig in the Permian Basin near Wink, Texas.
Nick Oxford | Reuters

Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session on the back of a surprise draw in U.S. crude stocks.

Brent crude futures fell 39 cents, or 0.6%, to $60.78 a barrel by 0111 GMT. The international benchmark crude rose 2.5% on Wednesday to settle at $61.17 a barrel, levels not seen since Sept. 30.

West Texas Intermediate (WTI) crude futures dropped 46 cents, or 0.8%, to $55.51 per barrel. U.S. crude closed 3.3% higher in the previous session.

U.S. crude inventories fell 1.7 million barrels in the week ended Oct. 18, compared with analysts’ expectations for a 2.2 million barrel build, data from the Energy Information Administration showed.

This was in stark contrast with earlier inventory data released by industry group the American Petroleum Institute (API), which showed a build of 4.5 million barrels in U.S. crude stocks.

The EIA said the drawdown in weekly stocks came as refineries hiked crude runs and oil imports fell, which prodded a jump in both benchmark crude grades on Wednesday.

“Given the unexpected drawdown in this week’s report, it is perhaps unsurprising that the market reaction was positive,” Kieran Clancy of Capital Economics said in a note.

“That said, with headwinds facing the U.S. and the global economy likely to intensify in the months ahead, it probably won’t be long before a return of fears over the health of demand.”

Some market participants said a decline in U.S. product inventories, as shown by the EIA data, could point to underlying demand.

“The EIA report may be an indication that oil demand is not as bad as a current dreary run of global headline macro data might suggest,” said Stephen Innes, market strategist at AxiTrader.

The prospects of deeper production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies also helped support the market.

Russian Energy Minister Alexander Novak, however, said on Wednesday that no formal calls have been made yet to change the current global oil supply deal.

OPEC, Russia and other producers have since January implemented a deal to cut oil output by 1.2 million barrels per day (bpd) until March 2020 to support the market. The producers will meet to review the policy on Dec. 5-6.