Brent eases from 2019 highs as markets await trade talks outcome

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  • International Brent crude oil futures were at $66.08 per barrel at 0220 GMT, off the 2019 high of $66.83 a barrel hit in the previous session.

Oil tanker

Jean-Paul Pelissier | Reuters

Brent crude oil prices eased away from 2019 highs on Tuesday on caution that economic growth may dent fuel demand this year, although supply cuts led by producer cartel OPEC still meant markets were relatively tight.

International Brent crude oil futures were at $66.08 per barrel at 0220 GMT, down 42 cents, or 0.6 percent from their last close, but still not far off the 2019 high of $66.83 a barrel hit in the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $55.71 per barrel. While that was up 12 cents from their last settlement, it was below the $56.33 2019 high from the previous day.

Traders said the slight downward correction was driven by concerns about the health of the global economy this year.

Bank of America Merrill Lynch said in a note that the Sino-American trade dispute was hurting economic growth globally.

“Addressing global trade tensions is key for improving the economic outlook,” it said in a note.

China’s vice premier and chief trade negotiator, Liu He, and U.S. Trade Representative Robert Lighthizer lead a round of trade talks this week in Washington.

Considering the economic outlook and supply and demand balances, the bank said it expects Brent prices to average between $50 and $70 per barrel, “anchored around $60.”

Despite some caution around trade, global oil markets remain relatively tight because of supply cuts led by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), with top crude exporter Saudi Arabia cutting the most.

Saudi seaborne crude exports fell in the first half of February, with departures standing at 6.204 million barrels per day (bpd), a 1.341 million bpd decline on the previous month and 0.91 million bpd decline on the year, data intelligence firm Kpler said.

Further providing oil markets with support are U.S. sanctions against petroleum exporters Iran and Venezuela.

Venezuela is a major crude supplier to U.S. refineries while Iran is a key exporter to major demand centres in Asia, especially China and India.

Oil prices rise on Beijing-Washington trade hopes, upbeat China data

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  • Both international benchmark Brent and U.S. crude futures gained.
  • Optimism that a trade deal could be reached between the United States and China was boosted when U.S. President Donald Trump said talks were going “very well”.
  • Markets were also supported by upbeat Chinese trade data, including for crude oil.

A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.

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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.

Oil prices rose on Thursday, buoyed by hopes that potential progress in the latest Sino-U.S. tariff talks would improve the global economic outlook, and as China’s trade figures including crude imports beat forecasts.

U.S. West Texas Intermediate (WTI) crude futures were at $54.16 per barrel at 0413 GMT, up 26 cents, or 0.5 percent, from their last settlement.

International Brent crude oil futures were up 37 cents, or 0.6 percent, at $63.98 a barrel.

Optimism that a trade deal could be reached between the United States and China was boosted when U.S. President Donald Trump said talks were going “very well”.

“The 90-day truce (on trade) agreed in December will run out on March 1, but given the progress of the talks there could be an extension, which is why there (is) rising optimism that the two leaders will meet later that month,” said Alfonso Esparza, senior market analyst, OANDA.

Markets were also supported by upbeat Chinese trade data, including for crude oil.

China’s crude oil imports in January rose 4.8 percent from a year earlier, customs data showed on Thursday, to an average of 10.03 million barrels per day (bpd), the third straight month that imports have exceeded the 10 million bpd mark.

Not all data pointed to tighter market conditions and higher prices.

Climbing U.S. oil stockpiles weighed on prices. U.S. crude oil inventories rose last week to the highest since November 2017 as refiners cut runs to the lowest since October 2017, the Energy Information Administration said on Wednesday.

Crude inventories built for a fourth week in a row, rising 3.6 million barrels to 450.8 million barrels in the week to Feb. 8. Analysts polled by Reuters forecast an increase of 2.7 million barrels.

U.S. crude oil production remained at a record of 11.9 million barrels per day (bpd).

The global oil market will struggle this year to absorb fast-growing crude supply from outside the Organization of the Petroleum Exporting Countries (OPEC), even with the group’s production cuts and U.S. sanctions on Venezuela and Iran, the International Energy Agency said in a report on Wednesday.

The IEA said it expected global oil demand this year to grow by 1.4 million bpd, while non-OPEC supply will grow by 1.8 million bpd.

Oil prices fall as U.S. rig count rise, trade concerns

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  • Both U.S. and Brent crude futures slipped.
  • In the United States, energy firms last week increased the number of oil rigs operating for the second time in three weeks, a weekly report by Baker Hughes said on Friday.

Oil tanker

Jean-Paul Pelissier | Reuters

Oil prices fell by around 1 percent on Monday as drilling activity in the United States, the world’s largest oil producer, picked up and financial markets were pulled down by trade concerns.

A refinery fire in the U.S. state of Illinois, which resulted in the shutdown of a large crude distillation unit, that could cause crude demand to fall also weighed on prices, traders said.

U.S. West Texas Intermediate (WTI) crude futures were at $52.09 per barrel at 0347 GMT, down 63 cents, or 1.2 percent, from their last settlement.

International Brent crude oil futures were down 49 cents, or 0.8 percent, at $61.61 a barrel.

In the United States, energy firms last week increased the number of oil rigs operating for the second time in three weeks, a weekly report by Baker Hughes said on Friday.

Companies added seven oil rigs in the week to Feb. 8, bringing the total count to 854, pointing to a further rise in U.S. crude production, which already stands at a record 11.9 million bpd.

WTI prices were also weighed down by the closure of a 120,000-barrels-per-day (bpd) crude distillation unit (CDU) at Phillips 66’sWood River, Illinois, refinery following a fire on Sunday.

Elsewhere, the head of Russian oil giant Rosneft, Igor Sechin, has written to the Russian President Vladimir Putin saying Moscow’s deal with the Organization of the Petroleum Exporting Countries (OPEC) to withhold output is a strategic threat and plays into the hands of the United States.

The so-called OPEC+ deal has been in place since 2017, aimed at reining in a global supply overhang. It has been extended several times and, under the latest deal, participants are cutting output by 1.2 million bpd until the end of June.

OPEC and its allies will meet on April 17 and 18 in Vienna to review the pact.

Analysts said economic concerns were also weighing on crude oil futures.

Vandana Hari of Vanda Insights said in a note that crude prices were dragged down “as China returned from a week-long Lunar New Year holiday and regional stock markets plunged into the red amid resurgent concerns over the U.S.-China trade dispute.”

Trade talks between the Washington and Beijing resume this week with a delegation of U.S. officials travelling to China for the next round of negotiations. The United States has threatened to increase tariffs already imposed on goods from China on March 1 if the trade talks do not produce an agreement.

Preventing crude prices from falling further have been U.S. sanctions on Venezuela, targeting its state-owned oil firm Petroleos de Venezeula SA (PDVSA).

“The issues in Venezuela continue to support prices. Reports are emerging that PDVSA is scrambling to secure new markets for its crude, after the U.S. placed additional sanctions on the country,” ANZ bank said on Monday.

Oil falls on economic slowdown, but OPEC output cuts offer some support

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  • Both international Brent and U.S. crude futures declined.
  • Weighing on financial markets, including crude oil futures, were concerns that trade disputes between the United States and China would remain unresolved, denting global economic growth prospects.
  • On Thursday, the European Commission sharply cut its forecasts for euro zone economic growth as it expects global trade tension and an array of domestic challenges.

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 markets fell on Friday, pulled down by an economic slowdown, although supply cuts led by producer club OPEC and U.S. sanctions against Venezuela provided crude with some support.

U.S. West Texas Intermediate (WTI) crude futures stood at $52.20 per barrel by 0351 GMT, down 44 cents, or 0.8 percent, from their last settlement. WTI dropped by around 2.5 percent the previous session.

International Brent crude oil futures were down by 44 cents, or 0.7 percent, at $61.19 per barrel, after falling 1.7 percent the previous session.

Weighing on financial markets, including crude oil futures, were concerns that trade disputes between the United States and China would remain unresolved, denting global economic growth prospects.

U.S. President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to strike a trade deal.

If there is no agreement between the world’s two biggest economies, Trump has threatened to increase U.S. tariffs on Chinese imports. Another round of talks is scheduled for next week in Beijing.

“Crude prices returned to the lows of the week as slower growth prospects…could signal a return (of reasons) for inventories to rise,” said Edward Moya, market analyst at futures brokerage Oanda.

On Thursday, the European Commission sharply cut its forecasts for euro zone economic growth as it expects global trade tension and an array of domestic challenges.

The Commission said growth this year would slow to 1.3 percent from 1.9 percent in 2018, before rebounding in 2020 to 1.6 percent.

Despite this, traders said crude prices were prevented from falling much further by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), adopted late last year with the aim of tightening the market and propping up prices.

As part of the cuts, Saudi Arabia – the world’s biggest crude exporter – cut its output in January by about 400,000 barrels per day (bpd) to 10.24 million bpd, according to OPEC sources.

That puts Saudi crude oil production almost 1.7 million bpd below that of the United States, which has been churning out around 11.9 million bpd in late 2018 and early 2019 – up by more than 2 million bpd from a year earlier.

Another risk to supply comes from Venezuela after the implementation of U.S. sanctions against the OPEC member’s petroleum industry in late January. Analysts expect this move to knock out 300,000-500,000 bpd of exports.

Yet for the time being, the sanctions impact on international oil markets was limited.

“The (Venezuela) disruption overall seems manageable both for the U.S. and the global market,” said Norbert Rücker, head of commodity research at Swiss bank Julius Baer. “The oil market sits on a comfortable cushion of supply.”

Oil falls as US maintains record output, inventories climb

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  • Both international Brent and U.S. crude futures slipped.
  • U.S. crude oil inventories climbed by 1.3 million barrels in the week that ended Feb. 1 to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.
  • Meanwhile, average weekly U.S. crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018.

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

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

Oil prices fell on Thursday after U.S. crude inventories rose and as production levels in the country held at record levels, but OPEC-led supply cuts and Washington’s sanctions against Venezuela supported markets.

U.S. West Texas Intermediate (WTI) crude futures were at $53.84 per barrel at 0247 GMT, down 17 cents, or 0.3 percent, from their last settlement.

International Brent crude oil futures were down by 26 cents, or 0.4 percent, at $62.43 per barrel.

U.S. crude oil inventories climbed by 1.3 million barrels in the week that ended Feb. 1 to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.

Meanwhile, average weekly U.S. crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018. The United States is currently the world’s largest oil producer, ahead of traditional top suppliers Russia and Saudi Arabia.

Countering the rising U.S. crude output and inventories are voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market and propping up prices.

Meanwhile, U.S. sanctions against Venezuela’s oil industry are expected to freeze the sales proceeds of 500,000 bpd of crude exports.

“The cumulative effect of OPEC-led output cuts along with additional U.S. sanctions on Venezuela’s state oil company … bolstered market sentiment,” said Benjamin Lu of Singapore-based brokerage Phillip Futures in a note on Thursday.

French Bank BNP Paribas cut its estimated average of 2019 prices for Brent to $68 per barrel and for WTI to $61 per barrel, both down by $8 from its previous outlook.

“We expect the oil price to rise in the first-half of 2019 on tightening supply conditions and decline in the second-half on weakening economic activity and an increase in U.S. crude exports to international markets,” said French bank BNP Paribas.