Oil prices edge down as global growth worries threaten demand

CNBC

  • Both Brent and U.S. crude futures slipped.
  • The International Monetary Fund trimmed its global growth forecasts on Monday.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Oil prices edged lower on Tuesday as concerns over global economic growth stoked fears over future demand.

International Brent crude oil futures were down 10 cents, or 0.2 percent, at $62.64 by 0106 GMT. They closed down 0.1 percent on Monday.

U.S. West Texas Intermediate (WTI) crude futures were at $53.70 per barrel, down 0.1 percent, or 4 cents.

“Trade war concerns have reduced global growth expectations and with it comes a lower demand for energy,” said Alfonso Esparza, senior analyst, OANDA.

The International Monetary Fund trimmed its global growth forecasts on Monday and a survey showed increasing pessimism among business chiefs, highlighting the challenges facing policymakers as they tackle an array of actual or potential crises, from the U.S.-China trade war to Brexit.

Also clouding the outlook was data showing a slowdown in growth in China, the world’s second biggest economy.

However, oil prices were offered some support in the wake of recent data that indicated major exporters were beginning to curtail production.

In the United States, energy services firm Baker Hughes said that energy companies cut the number of rigs drilling for oil by 21 last week, the biggest decline in three years and taking the count down to the lowest since May, 2018 at 852.

The Organization of the Petroleum Exporting Countries (OPEC)on Friday published a list of oil output cuts by its members and other major producers for the six months to June, an effort to boost confidence in a move designed to avoid a supply glut in 2019.

Oil firms as China’s economic slowdown was not as big as some expected

CNBC

  • Both Brent and U.S. crude futures saw gains.
  • In an expected cooling, China’s economy grew by 6.6 percent in 2018, its slowest expansion in 28 years and down from a revised 6.8 percent in 2017, official data showed on Monday.

Oil tanker

Jean-Paul Pelissier | Reuters

Oil prices firmed on Monday after data showed China’s economic slowdown was not as big as some analysts had expected, with supply cuts led by the Organization of the Petroleum Exporting Countries also offering support.

International Brent crude oil futures were at $62.83 per barrel at 0259, up 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $53.92 a barrel, up 12 cents, or 0.2 percent.

Both oil price benchmarks had dipped into the red earlier in the session on fears that China’s 2018 economic growth figures would be weaker.

In an expected cooling, China’s economy grew by 6.6 percent in 2018, its slowest expansion in 28 years and down from a revised 6.8 percent in 2017, official data showed on Monday. China’s September-December 2018 growth was at 6.4 percent, down from 6.5 percent in the previous quarter.

Although the slowdown was in line with expectations and not as sharp as some analysts had expected, the cooling of the world’s number two economy casts a shadow over global growth.

“The global outlook remains murky, despite emerging positives from a dovish Fed (now boosting U.S. mortgage applications), faster China easing (China credit growth stabilizing) and a more durable U.S.-China truce,” U.S. bank J.P. Morgan said in a note.

Despite this, analysts said supply cuts led by OPEC would likely support crude oil prices.

“Brent can remain above $60 per barrel on OPEC+ compliance, expiry of Iran waivers and slower U.S. output growth,” J.P. Morgan said.

It recommended investors should “stay long” crude oil.

Researchers at Bernstein Energy said the supply cuts led by OPEC “will move the market back into supply deficit” for most of 2019 and that “this should allow oil prices to rise to U.S. $70 per barrel before year-end from current levels of U.S.$60 per barrel.”

In the United States, energy firms cut 21 oil rigs in the week to Jan. 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.

It was biggest decline since February 2016, as drillers reacted to the 40 percent plunge in U.S. crude prices late last year.

However, U.S. crude oil production still rose by more than 2 million barrels per day (bpd) in 2018, to a record 11.9 million bpd.

With the rig count stalling, last year’s growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

Oil prices fall after jump the day before; glut, economy worries weigh

CNBC

  • Both Brent and U.S. crude futures slipped as of 0611 GMT after soaring at least 7.9 percent each during the previous session.
  • Both crude benchmarks are down at least 37 percent from highs touched in October.

A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

Getty Images
A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

Oil fell on Thursday after soaring at least 7.9 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market surge offered support.

Brent crude oil futures were down 16 cents, or 0.29 percent, at $54.31 per barrel by 0611 GMT. They rose 7.9 percent to $54.47 a barrel the day before.

U.S. West Texas Intermediate (WTI) crude futures fell 0.37 percent to $46.05 per barrel. They jumped 8.7 percent to $46.22 per barrel in the previous session.

Both crude benchmarks are down at least 37 percent from highs touched in October.

Global stocks rebounded on Wednesday on the back of the Trump administration’s attempt to shore up investor confidence and a report on strong U.S. holiday spending.

Shim Hye-jin, a commodity analyst at Samsung Securities in Seoul, said oil prices were still low despite gains made the day before.

“But if OPEC’s cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-70 a barrel next year.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed at a meeting earlier this month to limit output by 1.2 million barrels per day starting in January.

Meanwhile, potentially bolstering oil prices, a preliminary Reuters poll on Wednesday forecast that U.S. crude inventories would drop 2.7 million barrels in the week to Dec. 21, marking their fourth straight week fall.

The American Petroleum Institute’s (API) inventory data is due on Thursday, while the government’s Energy Information Administration (EIA) is set to release its report on Friday.

— CNBC contributed to this report.

Oil prices fall for third straight session amid supply glut worries

CNBC

  • Both Brent and U.S. crude futures slipped more than 1 percent.
  • Both U.S. crude and Brent have shed more than 30 percent from early October amid swelling global inventories, with WTI currently trading at levels not seen since October 2017.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Oil prices dropped over 1 percent on Tuesday, falling for a third straight session, as reports of inventory builds and forecasts of record shale output in the United States, currently the world’s biggest producer, stoked worries about oversupply.

Concerns around future oil demand amid weakening global economic growth and doubts over the impact of planned production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) were also pressuring prices, traders said.

International benchmark Brent crude oil futures were at $58.90 per barrel at 0340 GMT, down 71 cents, or 1.2 percent, from their last close. Brent has fallen more than 4 percent in the past three sessions so far.

U.S. West Texas Intermediate (WTI) crude futures were down 60 cents, or 1.2 percent, at $49.27 per barrel.

Both U.S. crude and Brent have shed more than 30 percent from early October amid swelling global inventories, with WTI currently trading at levels not seen since October 2017.

“OPEC is reducing production to attempt to rebalance. However, data from Cushing still shows an oversupply,” said Hue Frame, portfolio manager at Frame Funds.

“This isn’t being viewed favourably by the market, especially in combination with slow global growth.”

Inventories at the U.S. storage hub of Cushing, Oklahoma, which is the delivery point for the WTI futures contract, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday.

Meanwhile, oil production from seven major U.S. shale basins is expected to climb to 8.03 million barrels per day (bpd) by the end of the year for the first time, the U.S. Energy Information Administration said on Monday.

“Rising U.S. shale production levels along with a deceleration in global economic growth has threatened to offset OPEC+ efforts as markets weigh the potential of looser fundamentals,” said Benjamin Lu Jiaxuan, an analyst at Singapore-based brokerage firm Phillip Futures.

With oil prices now falling, unprofitable shale producers will eventually stop operating and cut supply, but that will take some time, analysts said.

Supply curbs agreed by OPEC and its Russia-led allies might not bring about the desired results as U.S. output goes on increasing and as Iran keeps pumping out more oil, analysts said.

The cuts are also coming from currently high production. Oil output from Russia has been at a record-high of 11.42 million barrels per day (bpd) so far in December.

“The strength of OPEC+ cuts will be weighed against Iranian production levels in lieu of U.S. waivers till Q2 2019,” analyst Lu Jiaxuan said.

“Market confidence remains extremely delicate amidst looming economic uncertainties as investors contemplate on weaker fuel demand beyond 2018.”

China’s industrial output in November rose the least in nearly three years as the world’s second-largest economy lost further momentum.

Brent crude dips on global economy worries, US oil prices steady

CNBC

  • U.S. drillers cut four oil rigs in the week to Dec. 14, pulling the total count to the lowest since mid-October at 873, according to energy services firm Baker Hughes.
  • The U.S. Federal Open Market Committee is set to start a two-day meeting on Tuesday.

A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

Getty Images
A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.

Brent crude prices slipped on Monday amid concerns over demand in the wake of weaker growth in major economies, while U.S. oil markets held steady after U.S. drilling activity fell to its lowest level in about two months.

International Brent crude oil futures were at $60.16 per barrel at 0248 GMT, down 12 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $51.33 per barrel, up 13 cents, or 0.3 percent.

Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, while the country’s industrial output rose the least in nearly three years as the economy continued to lose momentum.

French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years, while Germany’s private sector expansion slowed to a four-year low in December.

But oil prices were supported after General Electric Co’s Baker Hughes energy services firm said on Friday that U.S. drillers cut four oil rigs in the week to Dec. 14, pulling the total count to the lowest since mid-October at 873.

“This, when combined with (expectations) Saudi Arabia is … to cut exports to the United States to draw down inventory builds (there) should provide a short-term base despite global slowdown fears, which continue to resonate,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

However, the current U.S. rig count, which serves as an early indicator of future output, is higher than a year ago when 747 rigs were active.

The Organisation of the Petroleum Exporting Countries and its Russia-led allies have agreed to curb output from January, in a move to be reviewed at a meeting in April. Saudi Arabia is OPEC’s de facto leader.

“The potential for a significant movement in the U.S. dollar clearly has an impact on oil pricing with the Fed meeting (this week). We’re looking outside the oil markets for its next major move,” said Michael McCarthy, chief markets strategist at CMC markets.

The U.S. Federal Open Market Committee (FOMC) is set to start a two-day meeting on Tuesday.