Oil prices slip on demand worries, prospect of Libyan supply return

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Reuters
KEY POINTS
  • Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market.
  • Investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.
  • U.S. West Texas Intermediate (WTI) crude futures traded down  26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% in the previous day.
  • Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain.

Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.

U.S. West Texas Intermediate (WTI) crude futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data.

By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.

Brent crude futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.

Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.

But at the same time, coronavirus cases continue to rise in southern and southwestern U.S. states.

“It’s really difficult to say that demand is a one-way street. There are still plenty of risks going both ways,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.

Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the U.S. government on Wednesday.

A preliminary Reuters poll showed analysts expect U.S. crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.

On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.

Libya’s National Oil Corp (NOC) said on Monday it was making progress on talks with neighboring countries to lift the blockade.

Oil prices drop for second straight session as coronavirus spike cools demand hopes

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Reuters
KEY POINTS
  • Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.
  • Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, economist at Singapore’s OCBC bank said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.

Oil prices creep up on demand recovery, tempered by virus outbreaks

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.
  • Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices rose on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite a surge in coronavirus infections in some U.S. states and indications of a revival in U.S. crude production.

U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.

Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.

Overall, commodities markets were taking a positive view on the global recovery on Friday despite worries about coronavirus flare-ups, said Michael McCarthy, chief market strategist at CMC Markets.

“It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,” he said.

Analysts said satellite data showing strong pick-ups in traffic in China, Europe and across the United States pointed to a recovery in fuel demand.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.

However, there are fears a spike in Covid-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

“The risk of a fresh outbreak could hit the recovery in demand,” ANZ Research said in a note.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

WTI would have to be between $36 and $41 a barrel for a majority of producers to restore output, nearly a third said in the survey. Another 27% said prices would have to range between $41 and $45 per barrel.

Oil prices fall further on virus fears, U.S. crude stock build

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.7%, to $37.75 per barrel at 0245 GMT on Thursday, after dropping $2.36 on Wednesday.
  • Brent crude futures fell 30 cents, or 0.7%, to $40.01 per barrel after falling $2.32 on Wednesday.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices slipped on Thursday, extending losses of more than 5% in the previous session, weighed down by record high U.S. crude inventories and worries that a rapid resurgence in Covid-19 cases could choke a revival in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures fell 26 cents, or 0.7%, to $37.75 per barrel at 0245 GMT on Thursday, after dropping $2.36 on Wednesday.

Brent crude futures fell 30 cents, or 0.7%, to $40.01 per barrel after falling $2.32 on Wednesday. A day earlier, the benchmark contract hit its highest price since early March, just before pandemic lockdowns and a Saudi-Russian price war slammed markets.

Wednesday’s selloff came after U.S. government data showed crude stockpiles rose by 1.4 million barrels, driving inventories to a record high for a third straight week last week.

Analysts, however, said that was mostly due to a flotilla of Saudi cargoes booked by U.S. refiners when prices slumped in March. Those shipments are due to ease soon.

Worries about a second wave of Covid-19 cases in several U.S. states, where lockdowns had eased, and a rapid spread of infections in South America and South

Asia are expected to keep a lid on fuel demand, market watchers said.

“The latest trends there are not encouraging,” said National Australia Bank’s head of commodity research, Lachlan Shaw.

The fear is that even if lockdowns are eased, people will stay home because of the perceived health risks.

Stephen Innes, market strategist at AxiCorp, said mobility data from Google showed driving in Texas, Florida and to a certain extent California was flatlining.

In another reminder of fuel demand woes, Australia’s flagship airline, Qantas Airways, said on Thursday it expected little revival in international travel until at least July 2021, as it slashed a fifth of its workforce and grounded 100 planes.

“It highlights the reality that we’re talking years before international aviation recovers — probably three to four years,” Shaw said.

Oil prices slides as U.S. crude stockpile growth heightens oversupply fears

CNBC

Reuters
KEY POINTS
  • Brent crude was down 29 cents, or 0.7%, at $42.34 a barrel by 0335 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.9%, to $40.02 a barrel.
Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil futures dropped on Wednesday, extending losses from the previous day, after U.S. crude stockpiles grew more than expected, adding to worries about oversupply.

Brent crude was down 29 cents, or 0.7%, at $42.34 a barrel by 0335 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.9%, to $40.02 a barrel.

U.S. crude inventories rose by a much bigger than expected 1.7 million barrels last week, according to industry group the American Petroleum Institute (API), well ahead of analysts’ expectations for a 300,000-barrel build.

However, U.S. gasoline and distillate inventories fell, the data showed, feeding optimism that fuel consumption is picking up as some economies ease lockdowns imposed to contain the coronavirus pandemic.

U.S. government data will be released on Wednesday.

“Some investors took profits after the recent rally as they saw higher U.S. crude stockpiles,” Chiyoki Chen, chief analyst at Sunward Trading said.

On Tuesday, both Brent and WTI contracts traded at their highest levels since prices collapsed in early March.

Global oil consumption has started to recover as economies emerge from lockdown, while the Organization of the Petroleum Exporting Countries (OPEC) and allied producers — a grouping known as OPEC+ — have slashed output and U.S. shale producers have shut in wells.

Still, the market remains concerned about a rising number of coronavirus cases in the United States and elsewhere, said Kazuhiko Saito, chief analyst at Fujitomi Co.

New cases of Covid-19 rose 25% in the United States in the week ended June 21 and the death toll in Latin America passed 100,000 on Tuesday, according to a Reuters analysis and tally.

China, the world’s top crude importer, is also expected to slow crude imports in the third quarter, after record purchases in recent months, as higher oil prices hurt demand and refiners worry about a second virus outbreak.

“We expect Brent to be traded between $35-45 a barrel for the next week as concerns over a second wave of the coronavirus pandemic will limit gains, while reduced supply from OPEC+ will lend support,” Sunward’s Chen said.