Oil slips amid slow holiday trade before OPEC+ meeting

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Reuters
KEY POINTS
  • Brent crude futures declined 28 cents, or 0.4%, at $63.59 a barrel by 0547 GMT.
  • West Texas Intermediate (WTI) futures were down 15 cents, or 0.3%, at $57.97 a barrel.
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A photo taken August 19, 2013 shows a worker checking oil tanks at an oil well near Tioga, North Dakota.
Karen Bleier | AFP | Getty Images

Oil prices slipped on Friday in quiet trade with the U.S. Thanksgiving holiday limiting activity, while investors awaited a meeting of OPEC and its allies next week that may result in the extension of an output cut agreement to support the market.

Brent crude futures declined 28 cents, or 0.4%, at $63.59 a barrel by 0547 GMT. Brent futures are set for a slight gain of 0.3% for the week, the fourth weekly increase, during which prices have climbed 3.1%.

West Texas Intermediate (WTI) futures were down 15 cents, or 0.3%, at $57.97 a barrel.

For the week, WTI is set to gain 0.4%, the fourth weekly increase, during which prices have risen 3.2%.

Next week’s meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, is high on investors’ list of things to watch.

The group has agreed to cut its output by 1.2 million barrels per day through to March to support prices and analysts expect the agreement to be extended as U.S. production keeps hitting records.

“It is highly probable that the group will rollover the deal in its current form until at least the end of 2020, but we see limited scope for a new round of cuts, in light of uneven compliance and diminishing returns,” Fitch Solutions said in a note.

Russian oil companies proposed on Thursday not to change their output quotas, putting pressure on OPEC+ to avoid any major shift in the policy when the group meets in Vienna on Dec. 5-6.

Still, “risk-neutral is an excellent spot to be ahead of the weekend as there is a ton of headline risk that could upset the apple cart,” said Stephen Innes chief Asia market strategist at AxiTrader.

China warned the United States on Thursday that it would take “firm countermeasures” in response to U.S. legislation backing anti-government protesters in Hong Kong.

Investors are concerned any such move by China would further delay a preliminary agreement with the United States to end their trade war that has held back growth in global economies and in the consumption of oil.

Oil drops after US inventory build, new output record

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Reuters
KEY POINTS
  • Brent crude futures were down 18 cents, or 0.3%, at $63.88 a barrel by 0517 GMT, having dropped 0.3% on Wednesday.
  • U.S. West Texas Intermediate crude fell 24 cents, or 0.4%, to $57.87, after falling 0.5% in the previous session.
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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 Thursday, extending losses from the previous session after official data showed U.S. crude and gasoline stocks rose against expectations as production hit a record.

Brent crude futures were down 18 cents, or 0.3%, at $63.88 a barrel by 0517 GMT, having dropped 0.3% on Wednesday.

U.S. West Texas Intermediate crude fell 24 cents, or 0.4%, to $57.87, after falling 0.5% in the previous session.

Crude stockpiles in the United States swelled 1.6 million barrels last week as production hit a record high of 12.9 million barrels per day (bpd) and refinery runs slowed, the Energy Information Administration said. Analysts in a Reuters poll had forecast a drop of 418,000 barrels.

More bearish was a 5.1 million-barrel rise in gasoline stocks, compared with forecasts for a 1.2 million-barrel gain.

“Stubbornly high U.S. crude inventories have seen oil prices ease in Asia today,” said Jeffrey Halley, senior market analyst at OANDA. But “dips … are likely to be limited for now, as the U.S. holiday mutes activity,” he added.

Oil prices had risen this week on expectations that China and the United States, the world’s two biggest crude users, would soon sign a preliminary agreement, putting an end to their 16-month trade dispute.

Forces based in eastern Libya said on Wednesday they had driven rival factions from the 70,000-bpd El Feel oilfield after attacking the area with air strikes, leading to production being halted and raising some worries about supply.

In the United States, energy services company Baker Hughes reported that U.S. oil drillers reduced the number of drilling rigs for a record 12 months in a row.

Drillers cut three oil rigs in the week to Nov. 27, bringing the count down to 668, lowest since April 2017, Baker Hughes said in its report released a day early due to the U.S. Thanksgiving holiday.

Oil slips as US stocks rise, but hopes for US-China trade deal stem losses

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Reuters
KEY POINTS
  • Brent crude futures dropped 15 cents, or 0.23%, to $64.12 a barrel by 0421 GMT.
  • West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.27%, to $58.25 per barrel.
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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

Oil eased on Wednesday following an industry report showing a surprise build in U.S. crude stockpiles, but hopes surrounding the signing of the first phase of a U.S.-China trade deal prevented a bigger drop in prices.

Brent crude futures dropped 15 cents, or 0.23%, to $64.12 a barrel by 0421 GMT, while West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.27%, to $58.25 per barrel.

Wednesday’s decline reversed two days of gains, with WTI climbing 1.1% through Tuesday and Brent gaining 1.4% during the period, on the expectation that China and the United States, the world’s two biggest crude oil users, would soon sign a preliminary agreement beginning an end to their 16-month trade war.

But data from industry group the American Petroleum Institute late on Tuesday showed U.S. crude stocks rose by 3.6 million barrels in the week to Nov. 22 to 449.6 million, compared with analysts’ expectations for a decrease of 418,000 barrels.

“Strong builds in U.S. inventories have kept bullish gains measured as markets remain cautious over shaky economic fundamentals and demand-side concerns,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.

Later on Wednesday the U.S. Energy Information Administration (EIA) is due to publish official inventory data.

“If the (EIA) numbers are similar to the API, this would be the fifth straight week of stock builds, and would not be the most constructive reading for WTI as we head into the Thanksgiving holiday,” ING analyst Warren Patterson said in a note.

Still, optimism on global trade, along with market expectations for an extension in supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and associates, have supported oil prices, Phillip Futures analyst Lu said.

U.S. President Donald Trump said on Tuesday that the United States and China are close to agreement on the first phase of their trade deal, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

Elsewhere OPEC and its production-cutting allies, a grouping known as ‘OPEC+’, will begin holding meetings on Dec. 4 in Vienna to examine output policy.

A meeting of the OPEC+ group on Dec. 6 will make a final announcement on the future policy, with an extension of curbs, possibly until June, the expected outcome.

Oil prices steady as US-China trade deal talks seek breakthrough

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Reuters
KEY POINTS
  • Brent crude futures were down 1 cent at $63.64 at 0331 GMT, after rising 0.4% in the previous session.
  • West Texas Intermediate crude futures fell 5 cents at $57.96, having risen 0.4% on Monday.
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Workers cross walkways between zones aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, near Lavan island, Iran, on Jan. 5. 2017.
Ali Mohammadi | Bloomberg | Getty Images

Oil prices were steady on Tuesday, hanging onto gains from the previous session, after comments from the United States and China kept alive hopes that the world’s two largest economies are soon to agree on ending their trade war.

Brent crude futures were down 1 cent at $63.64 at 0331 GMT, after rising 0.4% in the previous session.

West Texas Intermediate crude futures fell 5 cents at $57.96, having risen 0.4% on Monday.

Top trade negotiators from China and the United States held a phone call on Tuesday morning, China’s Commerce Ministry said, as the two sides try to hammer out a preliminary “phase one” deal in a trade war that has dragged on for 16 months.

“Oil prices tend to be strongly correlated to trade news flows,” said Stephen Innes, chief Asia market strategist at AxiTrader. “Optimism over (a) trade deal remains supportive for prices.”

China and the United States are “moving closer to agreeing” on a “phase one” trade deal, the Global Times — a tabloid run by the Chinese Communist Party’s official People’s Daily — reported earlier.

Still, the Global Times report noted that Washington and Beijing had not agreed on specifics or the size of rollbacks of tariffs on Chinese goods.

Beijing’s insistence that Washington roll back the Trump administration’s tariffs has been a major sticking point.

On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5 at its headquarters in Vienna, followed by talks with other oil producers, including Russia, that have agreed to reduce output to support prices, a group known as OPEC+.

The broader producer group is widely expected to extend its 1.2-million-barrel-per-day supply cut to the middle of 2020.

Analysts at J.P. Morgan expect that OPEC+ may extend the output cuts until the end of 2020, the bank said in a note.

In the U.S., crude oil stockpiles are expected to have declined by 300,000 barrels last week, according to a Reuters poll of analysts. It would be the first decline in five weeks if confirmed.

The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA).

The API is scheduled to release its data for the latest week at 4:30 p.m. EST (2130 GMT) on Tuesday, and the weekly EIA report is due at 10:30 a.m. on Wednesday.

Oil gains on fresh hopes for US-China trade talks

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Reuters
KEY POINTS
  • West Texas Intermediate (WTI) crude rose 18 cents, or 0.31% to $57.95 a barrel by 0626 GMT, having ended last week little changed after tracking ups and downs in the trade talks process.
  • Brent crude futures were at $63.66, up 27 cents or 0.43%, the benchmark having also finished little changed last week.
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A general view of the Novokuibyshev Refinery owned by Rosneft oil company on March 15, 2012 in Novokuibyshevsk, Samara region, Russia.
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Oil prices rose on Monday as positive noises from Washington over the weekend rekindled hopes in global markets that the United States and China could soon sign an interim deal to end their bitter trade war.

West Texas Intermediate (WTI) crude rose 18 cents, or 0.31% to $57.95 a barrel by 0626 GMT, having ended last week little changed after tracking ups and downs in the trade talks process.

Brent crude futures were at $63.66, up 27 cents or 0.43%, the benchmark having also finished little changed last week.

“It is still all about trade talks,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “It seems to be dominating markets action at the moment.”

Monday’s higher opening prices came after U.S. national security adviser Robert O’Brien said on Saturday that an initial trade agreement with China is still possible by the end of the year.

This came a day after U.S. President Donald Trump and Chinese President Xi Jinping expressed a desire to sign an initial trade deal and defuse a 16-month tariff war that has lowered global growth — though Trump said he had yet to decide whether he wanted to finalize a deal while Xi said he would not be afraid to retaliate when necessary.

A move by China to protect intellectual property was also providing a supportive atmosphere for the trade talks, McCarthy added.

“This is a big step forward for potential trade negotiation if they are adopted as official policy,” he said.

Still, concern remains that events in Hong Kong, riven by months of anti-government unrest, could overshadow trade talk progress.

U.S. national security adviser O’Brien warned on Saturday that Washington would not turn a blind eye to what happens in Hong Kong, where demonstrators remain angry at what they see as Beijing meddling in freedoms promised to the ex-British colony when it returned to Chinese rule more than 20 years ago.

Over the weekend, the city’s democrats won a landslide and symbolic majority in district council elections.

A potential supply cut by OPEC+ of three more months to mid-2020 when they meet over Dec. 5-6 could also push prices up. The Organization of the Petroleum Exporting Countries meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, lead by Russia, known as OPEC+.

“Oil may continue its roller-coaster ride again this week … risks remain around both trade and the imminent OPEC decision, but the latest evidence suggests expectations are more favourable for oil prices on both variables,” Stephen Innes, chief market strategist at AxiTrader, said in a note.