Oil prices climb as Middle East tensions simmer

CNBC

Reuters

KEY POINTS
  • Brent futures were up 25 cents, or 0.4%, at $65.45 a barrel by 0325 GMT.
  • West Texas Intermediate crude was up 37 cents, or 0.6%, at $57.80 a barrel.
Reusable: Oil pump jack leased by Devon Energy 150922
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil prices climbed on Monday as tensions remain high between Iran and the United States, with U.S. Secretary of State Mike Pompeo saying “significant” sanctions on Tehran would be announced.

Brent futures were up 25 cents, or 0.4%, at $65.45 a barrel by 0325 GMT.

West Texas Intermediate crude was up 37 cents, or 0.6%, at $57.80 a barrel.

U.S. President Donald Trump said last week that he called off a military strike to retaliate for Iran’s downing of an unmanned U.S. drone, and he said on Sunday that he was not seeking war with Iran.

But Pompeo also said “significant” sanctions on Iran would be announced on Monday aimed at further choking off resources that Tehran uses to fund its activities in the region.

“The Middle East clashes should support oil prices at the start of the week as crude markets will wait to see Iran’s response to the threat of additional sanctions, ” said Edward Moya, senior market analyst at OANDA in New York.

Oil prices surged last week after Iran shot down a drone that the United States claimed was in international airspace and Tehran said was over its territory.

Amid the escalating tensions, Brent racked up a gain of about 5% last week, its first weekly gain in five weeks, and WTI jumped about 10%, its biggest weekly percentage gain since December 2016.

Trump said he had aborted a military strike on Iran because such a response to Tehran’s downing of the unmanned U.S. surveillance drone would have caused a disproportionate loss of life.

Iranian officials told Reuters that Tehran had received a message from Trump through Oman overnight warning that a U.S. attack on Iran was imminent.

“We’re prepared to negotiate with no preconditions,” Pompeo told reporters on Sunday. “They know precisely how to find us. I am confident that at the very moment they’re ready to truly engage with us we’ll be able to begin these conversations. I’m looking forward to that day.”

Meanwhile, U.S. energy companies last week increased the number of oil rigs operating for the first time in three weeks.

Companies added one oil rig in the week to June 21, bringing the total count to 789, Baker Hughes said in a closely followed report on Friday.

Oil prices fall on surging US crude supply, economic slowdown

CNBC

Reuters

KEY POINTS
  • International benchmark Brent futures were at $71.44 per barrel at 0424 GMT, down 29 cents, or 0.4 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents, or 0.5 percent, from their previous settlement.
RT: Oil Russia Bashneft company 150128
Sergei Karpukhin | Reuters

Oil prices fell on Thursday, pressured as U.S. crude stockpiles surged to their highest levels in almost 17 months amid record production and as economic concerns cast doubt over growth in demand for fuel.

International benchmark Brent futures were at $71.44 per barrel at 0424 GMT, down 29 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents, or 0.5 percent, from their previous settlement.

U.S. crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

U.S. crude oil production remained at a record 12.2 million barrels per day (bpd), making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

There are also concerns that an economic slowdown will soon dent fuel consumption after the International Monetary Fund this week downgraded its global growth forecast to the lowest in a decade.

Despite the surge in U.S. supply and the economic concerns, global oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), U.S. sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

”(Oil markets will remain tight) as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Brent and WTI have risen by around 30 and 40 percent respectively since the start of the year.

“Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya,” said Stephen Innes, head of trading at SPI Asset Management.

Beyond the short-term outlook for oil markets, a lot of attention is on the future of demand amid the rise of alternative fuels for transport.

“We believe global demand has another 10 million barrels bpd of growth, with over half from China,” Bernstein Energy said in a note on Thursday.

Current oil demand stands around 100 million bpd.

Bernstein said it expected oil demand to peak around 2030, but added that “we expect a long plateau rather than a sharp decline” in consumption after that.

“While no industry lasts forever, the age of oil is far from over,” Bernstein said.

Oil edges higher amid tightening global supply, gains capped by economic slowdown

CNBC

Reuters

KEY POINTS
  • International benchmark Brent futures were at $70.66 per barrel at 0158 GMT, up 5 cents from their last close.
  • U.S. West Texas Intermediate (WTI) crude oil futures were at $64.10 per barrel, up 12 cents, or 0.2 percent, above their last settlement.
RT: Oil Iraq OPEC flames 161014
Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016.
Essam Al-Sudani | Reuters

Oil prices crept higher on Wednesday, supported by supply cuts by producer club OPEC and U.S. sanctions against oil exporters Iran and Venezuela, but restricted by expectations that an economic slowdown could soon dent fuel consumption.

International benchmark Brent futures were at $70.66 per barrel at 0158 GMT, up 5 cents from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $64.10 per barrel, up 12 cents, or 0.2 percent, above their last settlement.

Both benchmarks hit five-month highs on Tuesday, before easing on global growth worries. [nL3N21S064]

Overall, oil markets have been tightened this year by U.S. sanctions on oil exporters Iran and Venezuela, as well as supply cuts by the producer club of the Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers, a group known as OPEC+.

As a result, Brent and WTI crude oil futures have risen by around 40 percent and 30 percent respectively since the start of the year.

“The global oil market is clearly moving back towards balance thanks to OPEC+ production cuts. OPEC production has fallen 1.98 million barrels per day (bpd) from October levels,” ING bank said in a note.

The Dutch bank said the reduction was not only down to voluntary supply cuts, which the group started this year to prop up prices.

“Venezuelan oil output is estimated to have fallen from 1.19 million bpd in October to 890,000 bpd in March, while output from Iran has fallen from 3.33 million bpd to 2.71 million bpd due to sanctions. Declines from these two exempt countries account for almost 47 percent of the reduction seen from OPEC,” ING said.

Despite the OPEC-led cuts, not all regions are in tight supply.

Oil production in the United States has risen by more than 2 million barrels per day since early 2018, to a record 12.2 million bpd.

“WTI has not seen the same strength (as Brent)… given the relatively more bearish fundamentals in the U.S. market,” said ING bank.

“U.S. crude oil inventories remain stubbornly high,” it added.

U.S. crude stocks rose by 4.1 million barrels in the week to April 5, to 455.8 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.

On the demand side, there are concerns that an economic slowdown will soon hit fuel consumption.

The International Monetary Fund (IMF) warned on Tuesday that the global economy was slowing more than expected and that a sharp downturn may be looming.

In its third downgrade since October, the IMF said the global economy will likely grow 3.3 percent this year, the slowest expansion since 2016. The forecast cut 0.2 percentage point from the IMF’s outlook in January.

Oil at five-month highs amid OPEC-led supply cuts, US sanctions

CNBC

Reuters

KEY POINTS
  • International benchmark Brent futures were at $70.72 per barrel at 0225 GMT on Monday, up 38 cents, or 0.5 percent from their last close.
  • U.S. West Texas Intermediate (WTI) crude were up 37 cents, or 0.6 percent, at $63.45 per barrel.
Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil prices rose to their highest level since Nov. 2018 on Monday, driven up by OPEC’s ongoing supply cuts, U.S. sanctions against Iran and Venezuela and strong U.S. jobs data.

International benchmark Brent futures were at $70.72 per barrel at 0225 GMT on Monday, up 38 cents, or 0.5 percent from their last close.

U.S. West Texas Intermediate (WTI) crude were up 37 cents, or 0.6 percent, at $63.45 per barrel.

Brent and WTI both hit their highest levels since November last year at $70.76 and $63.48 per barrel, respectively, early on Monday.

“Brent prices increased more than 30 percent year-to-date as OPEC+ continued to cut supply for 4 months in a row and optimism over U.S.-Chinatrade talks helped to buoy the demand outlook, ” U.S. bank J.P.Morgan said in a note released over the weekend.

The Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up prices.

Energy consultancy FGE said OPEC-led supply cuts meant “excess inventories are disappearing and the market looks healthy,” adding that “the market is poised for prices to rise to $75 per barrel or higher” for Brent.

Traders said strong U.S. jobs data from Friday also helped lift Asian markets early on Monday.

Oil prices have further been driven up by U.S. sanctions against OPEC-members Iran and Venezuela.

“Sanctions can cut 500,000 bpd of Venezuelan exports. Add that to a cut in Iran waivers and prices can rise substantially,” FGE said.

There remain, however, some factors that could bring prices down later this year.

Russia is a reluctant participant in its agreement with OPEC to withhold output, and Russian oil production may increase again if a deal with the producer club is not extended once it expires before July 1, Energy Minister Alexander Novak said on Friday.

Russian oil output reached a record high of 556 million tonnes, or 11.16 million barrels per day (bpd), last year.

In the United States, crude oil production reached a record 12.2 million bpd in late March.

U.S. crude exports have also risen, breaking through 3 million bpd for the first time earlier this year.

“With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports,” FGE said.

There also still remain concerns about the health of the global economy, especially should China and the United States fail to resolve their trade dispute soon.

“Global (trade) demand has weakened, and existing tariffs on Chinese goods shipments to the U.S. are providing an additional drag,” credit rating agency Moody’s said on Monday, although it added that Chinese monetary stimulus measures would likely support growth over 2019.

Oil prices dip amid economic concerns, but on track for weekly gain

TOKYO (Reuters) – Oil prices fell on Friday, with Brent slipping away from the $70 mark reached the previous day, pulled down by worries about progress in the U.S.-China trade talks.

International benchmark Brent futures dropped 15 cents, or 0.2 percent, to $69.25 a barrel by 0455 GMT, having touched $70.03 in the previous session, the highest since Nov. 12.

U.S. West Texas Intermediate (WTI) crude was down 1 cent at $62.09. The contract fell 36 cents in the previous session, having hit $62.99 on Wednesday, its highest since Nov 7.

Weighing on prices are concerns that an economic slowdown could dent fuel consumption, traders said.

The United States and China, the world’s two biggest oil consumers, could be close to a deal to end their trade dispute though some hurdles remain.

U.S. President Donald Trump on Thursday said the two sides were “very close to making a deal,” though the United States remains hesitant to lift $250 billion in tariffs that China is seeking to have removed.

Prices for thermal coal and natural gas, the main power generation fuels, have already fallen sharply amid a marked slowdown in consumption.

Still, Brent is heading for a second week of gains, while WTI is on track for a fifth consecutive weekly rise.

Brent has gained nearly 30 percent this year, while WTI has risen nearly 40 percent, underpinned by production cuts and U.S. sanctions against Iran and Venezuela.

The Organization of the Petroleum Exporting Countries (OPEC) and producer allies such as Russia, together known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) this year to prop up prices.

Consultancy Rystad Energy said ongoing OPEC-led supply cuts would support oil prices towards the second half of this year and into 2020.

“We retain our bullish stance for the second half of 2019 and first half of 2020 as we anticipate OPEC+ to extend production cuts through 2019, while we also expect bullish oil market effects due to the introduction of IMO 2020 regulations on sulfur content in marine fuels,” said Bjornar Tonhaugen, head of oil market research at Rystad.

The International Maritime Organization (IMO) will mandate all shippers use fuel with a reduced sulfur content, resulting in a sharp increase in diesel consumption and the use of low-sulfur fuel oil.

Somewhat undermining the OPEC-led efforts to prop up the market is surging U.S. oil production, which according to official data rose to a record 12.2 million bpd last week.

As a result, U.S. crude oil stockpiles soared last week, the Energy Information Administration said on Wednesday.

Reporting by Aaron Sheldrick in TOKYO and Henning Gloystein in SINGAPORE; editing by Richard Pullin and Christian Schmollinger