Oil rises after U.S. crude stocks drop, focus on OPEC+ meeting

CNBC

Reuters
KEY POINTS
  • Brent crude futures were up 10 cents, or 0.2%, at $43 a barrel as of 0049 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures rose 14 cents, or 0.4%, to $40.43 a barrel.
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices rose on Wednesday after a sharp drop in U.S. crude inventories, with the market waiting for more direction from a meeting later in the day on the future level of production by OPEC and its allies.

Brent crude futures were up 10 cents, or 0.2%, at $43 a barrel as of 0049 GMT, and U.S. West Texas Intermediate (WTI) crude futures rose 14 cents, or 0.4%, to $40.43 a barrel.

In a sign of improving demand despite the coronavirus pandemic, U.S. crude inventories fell by 8.3 million barrels in the week to July 10, beating analysts’ expectations for a decline of 2.1 million barrels, according to data from industry group the American Petroleum Institute.

Official data from the U.S. Department of Energy’s Energy Information Administration (EIA) is due on Wednesday.

On supply, the market will be closely watching the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) later on Wednesday.

Key members of OPEC and allies including Russia, a group known as OPEC+, are set to decide whether to extend output cuts of 9.7 million barrels per day (bpd) that end in July or ease them to 7.7 million bpd.

“OPEC+ decision on production cut tapering will set the tone for the oil market,” ANZ Research said in a note.

In June, OPEC and its allies delivered compliance of 107% with their agreed oil output cuts, an OPEC+ source said on Tuesday.

Meanwhile, OPEC said in its monthly report that global oil demand would soar by a record 7 million bpd in 2021 as the global economy recovers from the coronavirus pandemic although it would stay below 2019 levels.

Oil prices drop on demand recovery fears amid U.S. virus surge

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures slid 84 cents, or 2.1%, to $39.26 a barrel at 0138 GMT.
  • Brent crude futures fell 77 cents, or 1.8% to $41.95 a barrel.
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 fell around 2% in early trade on Tuesday on worries that new clampdowns on businesses to stem surging coronavirus cases in California and other U.S. states could threaten the nascent recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures slid 84 cents, or 2.1%, to $39.26 a barrel at 0138 GMT, while Brent crude futures fell 77 cents, or 1.8% to $41.95 a barrel.

Both benchmark contracts lost just over 1% on Monday.

California’s governor on Monday ordered bars to shut and restaurants, movie theatres, zoos and museums in the country’s most populous state to cease indoor operations as coronavirus cases and hospitalizations soared.

The state’s two largest school districts, in Los Angeles and San Diego, also said they would teach only online when school resumes in August.

California’s moves follow the recent reinstatement of some restrictions in other states, such as Florida and Texas.

“With the California soft lockdown now framing the picture, July could be an even more challenging month for oil than expected with even more demand woes emanating from coronavirus-linked uncertainty,” AxiCorp market strategist Stephen Innes, market strategist said in a note.

The market will be closely watching data on fuel consumption due later on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration.

Analysts estimate U.S. gasoline stockpiles fell by 900,000 barrels and crude oil inventories fell by 2.3 million barrels in the week to July 10, a preliminary Reuters poll showed.

With fuel demand growth hampered, the market will also be eyeing the next move from the Organization of Petroleum Exporting Countries and its allies, together known as OPEC+, whose market monitoring panel is set to meet on Tuesday and Wednesday.

Under their existing agreement, OPEC+ is set to taper its record supply cut of 9.7 million barrels per day to 7.7 million bpd from August through December.

Citi analysts said implementing the 2 million bpd increase in output from August could weigh on the market given the demand uncertainties, along with the potential for increased Libyan output, a return of 20% to 30% of curbed North American production and an end to China’s crude buying spree.

Oil eases as coronavirus fears offset gasoline recovery signs

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.3%, to $40.76 a barrel by 0229 GMT, after rising 0.7% on Wednesday.
  • Brent crude futures slipped 7 cents, or 0.2%, to $43.22, after gaining 0.5% on Wednesday.
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 drifted lower on Thursday as concerns about renewed COVID-19 lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand.

U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.3%, to $40.76 a barrel by 0229 GMT, after rising 0.7% on Wednesday.

Brent crude futures slipped 7 cents, or 0.2%, to $43.22, after gaining 0.5% on Wednesday.

“The market’s struggling to get strong conviction to the upside at the current point in time,” said Lachlan Shaw, head of commodity research at National Australia Bank. “There’s mixed evidence on demand.”

Oil prices rose on Wednesday as data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts had expected, as demand climbed to 8.8 million barrels per day (bpd), highest since March 20.

A spike in COVID-19 cases across several U.S. states, however, raised the prospect of renewed lockdowns that would likely hold back any sustained recovery in fuel demand.

That has kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.

Gasoline demand was falling in areas where lockdowns were being reinstated in the United States, while demand on the U.S. East Coast, where coronavirus infections were under control, was recovering well, Shaw said.

The United States reported more than 58,000 new COVID-19 cases on Wednesday, the biggest increase ever reported by a country in a single day, with infections climbing in 42 out of 50 states, according to a Reuters tally.

The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Together called OPEC+, the producers could decide to pare or extend their record 9.7 million bpd supply cut from August.

The panel has been pressing OPEC+ over-producers, such as Iraq and Nigeria, to improve their compliance with the curbs.

Angola has agreed to comply fully with its supply commitments, moving to cut more over July to September to make up for previous excess production, OPEC sources said this week.

Meanwhile, OPEC member Libya, which has been blockaded since January, is trying to resume exports, with Libya’s National Oil Corp lifting force majeure at the Es Sider oil terminal on Wednesday. An oil tanker, however, was prevented from entering the port.

Oil dips as U.S. inventory build stokes supply fears

CNBC

Reuters
KEY POINTS
  • Brent crude futures fell 13 cents, or 0.3%, to $42.95 a barrel by 0019 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents, or 0.3%, to $40.52 a barrel.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices eased in early trade on Wednesday as industry data showing a build in U.S. crude stockpiles and a forecast for U.S. crude output to fall less than anticipated in 2020 added to worries about oversupply.

Brent crude futures fell 13 cents, or 0.3%, to $42.95 a barrel by 0019 GMT. U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents, or 0.3%, to $40.52 a barrel.

Prices were little changed in the previous session and have been held in a narrow band over the past two weeks as concerns about a spike in coronavirus cases globally tempers optimism about a recovery in fuel demand.

U.S. crude oil stockpiles rose last week, against expectations for a draw, although gasoline and distillate inventories fell more than expected, data from industry group the American Petroleum Institute showed on Tuesday.

The U.S. Energy Information Administration’s (EIA) said on Tuesday U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020, a smaller decline than the 670,000 bpd it forecast previously.

However, it also expected global oil demand would recover through the end of 2021, predicting demand of 101.1 million bpd by the fourth quarter of next year.

“The EIA’s forecast of a lower decline in U.S. output was partially offset by its outlook for firm demand recovery, which limited losses in oil markets,” Hiroyuki Kikukawa, general manager of research at Nissan Securities said.

“Still, expectations that the Organization of the Petroleum Exporting Countries (OPEC) and allies would taper oil output cuts from August and softer U.S. equities added to pressure,” he said.

Abu Dhabi National Oil Co (ADNOC) plans to boost oil exports in August, the first signal that OPEC and its allies, together known as OPEC+, are preparing to ease record oil output cuts next month, three sources familiar with the development told Reuters.

Key ministers of the OPEC+ are due to hold talks next week.

Meanwhile, the number of confirmed coronavirus cases in the United States pushed past 3 million on Tuesday, according to a Reuters tally.

Oil falls as growing coronavirus cases stoke fuel demand worries

CNBC

Reuters
KEY POINTS
  • Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.
  • Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Crude prices fell on Friday as the resurgence of the coronavirus globally and in the United States, the world’s largest oil consumer, dimmed the prospects of fuel demand recovery.

Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.

Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.

Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New U.S. COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.

“The market has become increasingly confident that easing restrictions on travel and business would boost demand for crude oil, but the pandemic’s progress threatens to derail this recovery,” ANZ Research said in a note.

“The recovery in gasoline demand will plateau until the U.S. economy improves,” it said.

Gasoline demand will be closely watched as the United States heads into its July 4 holiday weekend as many Americans are expected to hit the road.

U.S. gasoline stocks rose by 1.2 million barrels in the week to June 26, according to data from the Energy Information Administration released on Wednesday.