Oil slips as traders eye supply cut easing at OPEC meeting

CNBC

Reuters
KEY POINTS
  • Brent crude fell 27 cents to $42.97 a barrel by 0114 GMT.
  • U.S. West Texas Intermediate crude was at $40.27 a barrel, down 28 cents.
  • Oil was little changed last week as a resurgence of coronavirus cases prompted several U.S. states to impose tighter travel restrictions that could dampen oil demand recovery at the world’s largest consumer.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil slipped in early Asian trade on Monday as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices.

Brent crude fell 27 cents to $42.97 a barrel by 0114 GMT while U.S. West Texas Intermediate crude was at $40.27 a barrel, down 28 cents.

Oil was little changed last week as a resurgence of coronavirus cases prompted several U.S. states to impose tighter travel restrictions that could dampen oil demand recovery at the world’s largest consumer.

However, prices rose more than 2% on Friday after an upward revision by the International Energy Agency in its 2020 oil demand by 400,000 barrels per day.

Oil prices have recovered sharply from multi-decade lows in April after the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, cut output by a record 9.7 million barrels per day for three months since May.

OPEC’s Joint Ministerial Monitoring Committee (JMMC) will meet on Tuesday and Wednesday to recommend the next level of cuts.

OPEC and Russia were expected to ease their supply cuts as global oil demand has recovered and prices have bounced back.

“The planned easing of OPEC+ production cuts next month … and a potential rebound in U.S. production could add pressure on the supply side of the equation,” Stephen Innes, chief global markets strategist at AxiCorp said in a note.

Libya exported its first crude cargo in six months on Friday after a blockade by eastern forces, but then re-imposed force majeure on all oil exports on Sunday.

Its National Oil Corp accused the United Arab Emirates of instructing the eastern forces in Libya’s civil war to reimpose the blockade.

Oil prices head for weekly decline as coronavirus cases surge in U.S. and elsewhere

CNBC

Reuters
KEY POINTS
  • Oil prices fell on Friday, adding to steep losses from the previous session, and were headed for weekly declines on worries that renewed lockdowns would suppress demand.
  • Brent crude was down by 25 cents, or 0.6%, at $42.10 a barrel by 0341 GMT after falling more than 2% on Thursday.
  • U.S. oil fell 33 cents, or 0.8%, at $39.29 a barrel after a drop of 3% in the previous session.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices fell on Friday, adding to steep losses from the previous session, and were headed for weekly declines on worries that renewed lockdowns following a surge in coronavirus cases in the United States and elsewhere would suppress fuel demand.

Brent crude was down by 25 cents, or 0.6%, at $42.10 a barrel by 0341 GMT after falling more than 2% on Thursday.

U.S. oil fell 33 cents, or 0.8%, at $39.29 a barrel after a drop of 3% in the previous session.

Brent looks set for a weekly decline of nearly 2% and U.S. crude for a fall of more than 3%. Trading was quiet with Singapore on holiday for an election.

While many analysts are expecting economies and fuel demand to bounce back from the pandemic, record daily increases in coronavirus infections in the United States, the world’s biggest oil consumer, raised concerns about the pace of any recovery.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

More than 60,500 new Covid-19 cases were reported in the United States on Thursday, setting a daily record, with Americans being told to take new precautions. The tally was also the highest daily count yet for any country since the pathogen emerged in China late last year.

In Australia, the government on Friday will consider reducing the number of citizens allowed to return to the country from overseas, after authorities ordered a new lockdown of the country’s second-most populous city, Melbourne.

Oil inventories also remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.

U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure.

Oil prices inch higher on output cut support, but U.S. coronavirus spike caps gains

CNBC

Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel.
  • Brent crude futures rose 7 cents, or 0.2%, to $43.17, adding to a 0.7% gain on Monday.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images

Oil prices cautiously rose in early trade on Tuesday with major producers sticking to supply cuts, but gains were capped as U.S. coronavirus cases surged, potentially hampering a recovery in fuel demand.

U.S. West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel at 0103 GMT, recouping a 2 cent loss from Monday.

Brent crude futures rose 7 cents, or 0.2%, to $43.17, adding to a 0.7% gain on Monday.

The market is still being supported by a bigger-than-expected drawdown in U.S. crude stockpiles reported last week and by record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, AxiCorp strategist Stephen Innes said.

However, traders are also closely watching prospects for U.S. fuel demand, with 16 states reporting record increases in new cases of COVID-19 in the first five days of July, according to a Reuters tally. Florida confirmed a record 11,000 cases in a single day, more than any European country reported in one day at the height of the crisis.

“Summer driving demand in the U.S. is low, keeping gasoline demand subdued, and a reintroduction of lockdowns is a major headwind,” ANZ said in a note.

Data from the American Petroleum Institute industry group later on Tuesday and the U.S. Energy Information Administration on Wednesday are expected to show a 100,000 barrel rise in gasoline stockpiles, six analysts polled by Reuters estimated.

Meanwhile a U.S. court on Monday ordered the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to Midwest and Gulf Coast regions, over environmental concerns.

Market sources in the Bakken said the closure of the 570,000 barrels per day (bpd) pipeline while a thorough environmental impact statement is completed will likely divert some oil flows to transportation by rail.

Oil prices mixed as coronavirus spike casts shadow over U.S. demand

CNBC

Reuters
KEY POINTS
  • Brent crude rose 18 cents, or 0.4%, to $42.98 a barrel by 0252 GMT after a 4.3% gain last week,
  • U.S. West Texas Intermediate crude was at $40.42, down 23 cents, or 0.6%, from its previous settlement on Thursday.
Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices offered up a mixed market snapshot on Monday, with Brent crude edging higher, supported by tighter supplies, while U.S. benchmark WTI futures dropped on concern that a spike in coronavirus cases could curb oil demand in the United States.

Brent crude rose 18 cents, or 0.4%, to $42.98 a barrel by 0252 GMT after a 4.3% gain last week, while U.S. West Texas Intermediate crude was at $40.42, down 23 cents, or 0.6%, from its previous settlement on Thursday. U.S. markets were closed on Friday to mark July 4 holiday celebrations.

Amid rising numbers of coronavirus cases in 39 U.S. states, a Reuters tally showed that in the first four days of July alone, 15 states reported record increases in new COVID-19 infections with parties over the holiday weekend possibly leading to another spike.

“There will be some kind of decline in demand if cases were to increase as people will stay at home,” said Howie Lee, an economist at Singapore’s OCBC Bank. “The pace of U.S. demand recovery will not be as steep as expected.”

For now, analysts at ING bank said data for several cities in affected states show no significant reduction in road traffic week-on-week.

“We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the EIA (Energy Information Administration) report this week,” ING said in a note.

The implied volatility for Brent crude has dropped to the lowest since prices started collapsing in March as some in the market remain focused on tightening supplies as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest in decades with Russian output dropped to near targeted cuts.

OPEC and allies including Russia, collectively known as OPEC+, have pledged to slash production by a record 9.7 million barrels per day (bpd) for a third month in July. After July, the cuts are due to taper to 7.7 million bpd until December.

U.S. production, the world’s largest, is also falling. The number of operating U.S. oil and natural gas rigs fell to an all-time low for a ninth week, although the reductions have slowed as higher oil prices prompt some producers to start drilling again.

Oil rises after sharp drop in U.S. crude inventories

CNBC

Reuters
KEY POINTS
  • Brent crude rose 33 cents, or 0.8%, to $41.60 a barrel by 0044 GMT after declining more than 1% on Tuesday.
  • U.S. crude was up 42 cents, or 1.1%, at $39.69 a barrel, having dropped by 1.1% in the previous session.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Wednesday after an industry report showed crude inventories in the United States fell much more than expected, suggesting demand is improving even as the coronavirus outbreak spreads around the world.

Brent crude rose 33 cents, or 0.8%, to $41.60 a barrel by 0044 GMT after declining more than 1% on Tuesday. U.S. crude was up 42 cents, or 1.1%, at $39.69 a barrel, having dropped by 1.1% in the previous session.

U.S. crude and gasoline stocks declined more than expected last week, while distillate inventories rose, data released by the American Petroleum Institute (API) late on Tuesday showed. [API/S]

Crude inventories dropped by 8.2 million barrels to 537 million barrels, against analysts’ forecasts for a draw of 710,000 barrels.

“If the API estimates are vetted by the official government agency data due out tomorrow, this will be viewed as a definite bullish signal,” said Stephen Innes, chief global markets strategist at AxiCorp.

“The reports could go a long way to easing some of those lingering inventory concerns,” he said.

Inventory data from the U.S. government’s Energy Information Administration is due out later on Wednesday.

Still prices are likely to be capped, analysts said, as the world is awash with oil after the coronavirus caused demand for fuel to drop by around a third.

A Reuters poll of analysts indicated that oil prices will consolidate at around $40 a barrel this year, with a recovery potentially picking up in the fourth quarter.

The virus continues to spread around the world with ever increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after catching COVID-19.