Oil prices near 2014 highs over warnings of western air strikes against Syria

CNBC

  • Oil prices edged higher on Wednesday, adding to steep gains in the previous session.
  • Markets eyed an escalation of Middle East tensions after Europe’s air traffic control agency warned of possible air strikes on Syria in the next 72 hours.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil prices edged higher on Wednesday, adding to steep gains in the previous session, as markets eyed an escalation of Middle East tensions after Europe’s air traffic control agency warned of possible air strikes on Syria in the next 72 hours.

Brent crude futures rose to $71.09 per barrel at 0104 GMT, up 7 cents from their last close. Brent surged more than 3 percent on Tuesday to hit its highest level since late 2014, at $71.34 a barrel.

U.S. WTI crude futures were at $65.63 a barrel, up 12 from their last settlement.

The United States and its allies are considering a strike against Syrian President Bashar al-Assad’s forces following a suspected poison gas attack last weekend.

Pan-European air traffic control agency Eurocontrol said air-to-ground and/or cruise missiles could be used within the next 72 hours, warning that there was a possibility of intermittent disruption of radio navigation equipment.

Although Syria itself is not a significant oil producer itself, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.

Oil markets were also supported by easing concerns over a prolonged trade spat between the United States and China after China’s President Xi Jinping on Tuesday gave a speech with a conciliatory tone.

“The relaxation of tensions between the U.S. and China (is) allowing oil traders to exercise their worries over geopolitics,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Not all oil market indicators pointed to ongoing price rises, however.U.S. crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute on Tuesday, compared with analysts’ expectations for a decrease of 189,000 barrels.

And the U.S. Energy Information Administration said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output.

In its monthly short-term energy outlook, the agency forecast that U.S. crude oil output will rise by 750,000 barrels per day to 11.44 million bpd next year. Last month, it expected a 570,000 bpd year-over-year increase to 11.27 million bpd.

That will likely make the United states the world’s biggest oil producer by 2019, surpassing Russia which currently pumps out almost 11 million bpd.

Oil prices seesaw as US trade dispute with China rattles market

CNBC

  • Oil prices dipped on Tuesday, easing after strong gains in the previous session.
  • Despite a softening of trade concerns, oil markets still face an abundance of supplies.
  • The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

An oil pump jack in Gonzales, Texas.

Getty Images
An oil pump jack in Gonzales, Texas.

Oil prices dipped on Tuesday, easing after strong gains in the previous session when hopes that trade disputes between the United States and China could be resolved buoyed global markets.

Despite a softening of trade concerns, oil markets still face an abundance of supplies that puts pressure on producers to keep their prices competitive in order not to lose market share.

U.S. WTI crude futures were at $63.26 a barrel at 0031 GMT, down 16 cents, or 0.3 percent, from their previous settlement.

Brent crude futures were at $68.52 per barrel, down 13 cents, or 0.2 percent.

The dips came after a more than 2 percent rally on Monday during European and American trade hours.

“Oil prices rose sharply (on Monday) as a weaker U.S.-dollar and easingconcerns about the trade war saw investor appetite return,” ANZ bank said.

“Reports that back-channel talks over the trade dispute between the U.S. and China are ongoing helped soothe investor angst,” it added.

Concerns of a prolonged trade dispute between the world’s two biggest economies and uncertainty over the supply and demand balance of global oil markets have resulted in volatile yet range-bound recent trading.

“Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“U.S. oil inventories had been rising for the past couple of months but the data released last week showed an unexpected draw. This week’s data may be crucial for determining the direction of WTI,” he added.

The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

Oil markets have generally been supported by healthy demand as well as supply restraint led by the Organization of the Petroleum Exporting Countries.

However, soaring U.S. crude production, which has jumped by a quarter since mid-2016 to 10.46 million barrels per day (bpd), is threatening to undermine OPEC’s efforts to tighten the market and prop up prices.

The United States late last year overtook top exporter Saudi Arabia as the world’s second biggest crude producer. Only Russia pumps more crude out of the ground, at almost 11 million bpd.

In a sign that oil supplies remain ample, China’s Sinopec, Asia’s largest refiner, plans to cut Saudi crude imports in May by 40 percent, instead buying from alternative sources, after Saudi Aramco set higher-than-expected prices, a company official said on Monday.

Oil prices fall on surprise US inventory rise; China crude volatile

CNBC

  • Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65.
  • Traders said the dips came after the American Petroleum Institute reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65, pulled down by a report of increasing U.S. crude inventories that surprised many traders.

U.S. WTI crude futures were at $64.86 a barrel by 0201 GMT, down 39 cents, or 0.6 percent, from their previous settlement.

Brent crude futures were at $69.75 per barrel, down 36 cents, or 0.5 percent.

Traders said the dips came after the American Petroleum Institute (API) late on Tuesday reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.

Official U.S. inventory data will be published by the Energy Information Administration (EIA) late on Wednesday.

“We’ll see how the inventory data looks and whether these recent highs can be challenged again. For the moment it is looking like both WTI and Brent are stalling,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Wednesday’s price falls came despite top exporter Saudi Arabia saying it was working with top producer Russia on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years.

Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering greatly extending a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.

“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday.

AxiTrader’s McKenna said such an agreement between Russia and Saudi Arabia “effectively means an expansion” of the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader but in which Russia is not a member.

In Asia, Shanghai crude oil futures saw their third day of trading continuing with high volume but also volatility.

Spot Shanghai crude futures were down by 4.4 percent on Wednesday,to 407.5 yuan ($64.93)per barrel by 0201 GMT.

In dollar-terms, that puts Chinese crude prices significantly below Brent and only slightly above U.S. WTI.

McKenna said he hoped Shanghai crude “gets a lot of traction and we end up with three established global benchmarks”, but he cautioned that “the first couple of days have been volatile.”

Oil stable on weaker dollar and healthy economic growth, but pockets of oversupply linger

CNBC

  • Oil prices were stable on Wednesday, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand.

Oil

Lucy Nicholson | Reuters

Oil prices were stable on Wednesday, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand.

Despite this, crude prices remain well below recent highs due to signs of lingering oversupply, including rising U.S. inventories and ample physical flows globally.

U.S. West Texas Intermediate (WTI) crude futures were at $59.17 a barrel at 0123 GMT, down 2 cents from their last settlement. WTI was trading above $65 in early February.

Brent crude futures were at $62.77 per barrel, up 5 cents from their last close. Brent was above $70 a barrel earlier this month.

Ongoing weakness in the U.S. dollar, which potentially stokes demand from countries using other currencies at home, as well as healthy economic growth were supporting oil markets, traders said.

“While we continue to see a firming fundamental backdrop over the course of this year … investors should not discount the caution signs that have been emerging,” investment bank RBC Capital Markets said in a note to clients.

“Pockets of oversupply have been emerging in the physical market,” the Canadian bank said, adding that “the tempering physical oil backdrop is … playing a central role in the recent price softness”.

John Kilduff of Again Capital Talks U.S. Shale Oil Growth

John Kilduff of Again Capital talks about U.S. shale oil growth  

The American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to 422.4 million.

That was largely due to soaring U.S. crude production, which has jumped by over 20 percent since mid-2016 to over 10 million barrels per day (bpd), surpassing output of top exporter Saudi Arabia and coming within reach of Russia, the world’s biggest producer.

U.S. crude is increasingly appearing on global markets.

More is set to come as the Louisiana Offshore Oil Port in the Gulf of Mexico starts testing supertankers for exports.

The surge in U.S. production and exports means oil may be in oversupply again soon, flipping a deficit from 2017 induced by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

The International Energy Agency said on Tuesday oil demand would grow by 1.4 million bpd in 2018, but added output growth could outpace demand.

The physical market is already reacting, with prices for regional crudes from the North Sea, Russia, the United States, and Middle East becoming cheaper as producers struggle to remain competitive amid ample supplies.

Despite the warning lights from within oil markets, economic fundamentals remain healthy.

High consumer spending drove Japan’s economy to eight straight quarters of growth in October-December, its longest continuous expansion since the 1980s bubble economy, Cabinet Office data showed on Wednesday.