Oil prices fall as U.S. fuel demand remains weak

CNBC

Reuters
KEY POINTS
  • Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT.
  • U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices edged lower on Friday after U.S. inventory data showed lackluster fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.

Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT and U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries.

“The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up,” OCBC economist Howie Lee said.

“Beyond the short term, the bullish momentum still looks rather intact.”

Thursday’s data from the Energy Information Administration showed that U.S.crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.

“Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping,” RBC Capital Markets analyst Christopher Louney said in a note.

Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June.

Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.

Oil drops as surprise U.S. stock build douses demand recovery hopes

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures were down 4.4%, or $1.44 at $31.37 a barrel at 0402 GMT after slipping as much as 5% to a low of $31.14 earlier in the session.
  • Brent crude futures dropped 3.2%, or $1.10 to $33.64 per barrel.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices slid for a second consecutive session on Thursday as U.S. industry data showed a steep and surprising build-up in crude stockpiles, dampening hopes of a smooth demand recovery as the world begins to ease its way out of coronavirus lockdowns.

The decline extended losses from Wednesday on uncertainty about Russia’s commitment to deep oil production cuts in the lead-up to a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, dubbed OPEC+.

U.S. West Texas Intermediate (WTI) crude futures were down 4.4%, or $1.44 at $31.37 a barrel at 0402 GMT after slipping as much as 5% to a low of $31.14 earlier in the session.

Brent crude futures dropped 3.2%, or $1.10 to $33.64 per barrel.

“A surprise to consensus API (American Petroleum Institute)inventory build (data) and fear of Russia turning up production weighs on oil prices,” said Stephen Innes, chief global markets strategist at AxiCorp.

“As is often the case during a run-up up to an OPEC+ meeting, the focus is squarely on Russia’s commitment and understandably so as historically they have been the laggard within the OPEC+.”

Data from U.S. industry group API showed crude stocks rose by 8.7 million barrels in the week to May 22, compared with analysts’ expectations for a draw of 1.9 million barrels.

Gasoline stocks rose by 1.1 million barrels, more than 10 times the build analysts had expected, and stocks of diesel and heating oil rose by 6.9 million barrels, nearly four times as much as anticipated.

“It just indicates that demand recovery is progressing but it’s not strong enough yet to be really self-sustaining,” National Australia Bank’s head of commodity research, Lachlan Shaw said.

The market will be looking to see if data from the U.S. Energy Information Administration later on Thursday matches API.

With WTI holding above $30, OPEC+ will be closely watching to see whether U.S. oil shale oil producers, who have breakeven prices in the high $20 and low $30 dollar range, step up production.

Oil slips on demand worries, Hong Kong tensions

CNBC

Reuters
KEY POINTS
  • Brent crude futures fell 21 cents, or 0.6%, to $35.96 by 0120 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.9%, at $34.04 a barrel.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries, while U.S.-China tensions added to negative sentiment.

Brent crude futures fell 21 cents, or 0.6%, to $35.96 by 0120 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.9%, at $34.04 a barrel.

The Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, are cutting their output by nearly 10 million barrels per day in May-June to buttress prices as measures to rein in the coronavirus pandemic have slashed fuel demand.

In the United States, where some states are opening up after lockdowns, optimism about an increase in demand has supported sentiment, but the recovery is fragile, analysts caution. The Memorial Day holiday just passed typically heralds the start of the peak U.S. demand season.

“Early estimates suggest gasoline demand is down by as much as 30% from last year as people stay close to home,” ANZ Research said in a note.

Some analysts and banks are predicting a balanced oil market as soon as June, but that could be too optimistic, according to Eurasia Group.

There is … a significant risk of repeat outbreaks and lockdowns. Even without them, some restrictions — especially on aviation — will remain in place,” it said in a note.

Still as U.S. demand picks up, however slowly, there are signs that inventories are falling. U.S. crude inventories are forecast to have fallen for a third week last week, according a Reuters poll of analysts.

Prices were also under pressure after U.S. President Donald Trump’s economic adviser, Larry Kudlow, said China was making “a big mistake” with national security legislation on Hong Kong.

Beijing’s proposed security law would reduce the territory’s separate legal status. China’s parliament is expected to approve it by Thursday.

Oil prices rise on supply cut hopes, easing of coronavirus lockdowns

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures gained 3.2%, or $1.06, to $34.31 a barrel as of 0429 GMT, just off an intra-day high of $34.33. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday.
  • Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices climbed on Tuesday, boosted by increasing faith in the market that producers will to stick to commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns are eased around the world.

U.S. West Texas Intermediate (WTI) crude futures gained 3.2%, or $1.06, to $34.31 a barrel as of 0429 GMT, just off an intra-day high of $34.33. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday.

Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading.

The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5 million barrels per day (bpd) for May and June under its supply cut deal with the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers, a grouping known as OPEC+.

“There’s definitely a feeling those cuts have come through as well as you could expect,” said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.

OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down around 45% since the start of the year. The big producers agreed in April to cut output by nearly 10 million bpd for May and June.

Russia’s energy ministry on Monday quoted minister Alexander Novak as saying a rise in fuel demand should help cut the current global surplus of around 7-12 million bpd by June or July.

“With economies restarting, the focus definitely is on the improvement in the fundamentals, rather than what seemed like a complete collapse in demand only a few weeks ago,” said strategist Hynes.

Meanwhile data from energy services firm Baker Hughes showed the United States’ rig count hitting a record low of 318 in the week to May 22, also indicating lower output in the future.

Asia markets trade mixed as China’s National People’s Congress continues

KEY POINTS
  • Australia’s benchmark ASX 200 was up 1.75%, with all sectors trading higher.
  • In Japan, the Nikkei 225 index rose 1.53% while South Korea’s Kospi index added 0.89%.
  • Mainland Chinese shares traded mixed, with the Shanghai composite flat.
  • Markets in Singapore, India and Indonesia were shut due to public holidays.

Asia markets traded mixed on Monday as investor sentiment in some markets remained resilient despite growing concerns over the U.S.-China relationship.

Australia’s benchmark ASX 200 was up 1.75%, with all sectors trading higher. In Japan, the Nikkei 225 index rose 1.53% while the Topix index was up 1.42%. South Korea’s Kospi gained 0.89%.

Mainland Chinese shares traded mixed: The Shanghai composite was flat, the Shenzhen composite was down 0.37% and the Shenzhen component was down 0.38%.

In Hong Kong, the Hang Seng index was down 0.66%, extending Friday’s losses of more than 5%.

Asia Pacific markets declined on Friday after China announced a new national security law, which, if implemented, would give Beijing more control over Hong Kong and may incite further pro-democracy protests in the city. The draft measure was announced as China’s National People’s Congress (NPC) — the country’s parliament — kicked off its annual session and will last until May 28.

“Risk sentiment proved resilient, on Friday night, to concerns about the fallout from China introducing national security legislation in Hong Kong. Weakness in Asian equities gave way to a flattish European session, and mild positivity in the US,” Hayden Dimes at ANZ Research said in a Monday morning note.

Government departments in Hong Kong rallied behind Beijing’s plans on Monday after thousands took to the streets to protest over the weekend, Reuters reported. Security Chief John Lee said “terrorism” was growing in the city and activities that harm national security became more rampant, the news wire said.