Crude oil futures stable on Russian data ahead of US stocks report

S&P GLOBAL, PLATTS

Singapore — Crude oil futures were stable to higher during mid-morning trade in Asia Tuesday, with the Brent futures contract largely unchanged on the back of stable production data from Russia and the NYMEX WTI contract edging higher ahead of the release of weekly US inventory reports.

At 10:30 am Singapore time (0230 GMT), ICE November Brent crude futures were down a marginal 3 cents/b (0.04%) from Monday’s settle at $78.12/b, while the NYMEX October light sweet crude contract was 26 cents/b (0.37%) higher than Friday’s settle at $70.06/b. The US market was closed Monday for Labor Day.

“WTI appears to be catching up with Brent’s climb on Monday while the US markets were closed,” said Vandana Hari, founder Vanda Insights. “Brent appears to be taking a pause this morning after touching three-month highs,” she added.

Russia’s crude and condensate production averaged 11.21 million b/d in August, dipping 8,000 b/d from July, when the country cranked up production significantly, according to preliminary data released Sunday by the Central Dispatching Unit, the energy ministry’s statistics arm.

Russia started raising oil output in June after the the OPEC/non-OPEC coalition agreed to ease production caps in effect since 2017. Russia’s production in August was estimated at 253,000 b/d above the level envisaged under the initial production cut deal, energy minister Alexander Novak said Monday. “In September, the output is expected at the level of July, August,” Novak was quoted as saying by Prime news agency.

“Russia is also unable to significantly expand its production which, following an increase in the summer, is now close to its post-Soviet record high,” said Commerzbank analysts in a note. “It therefore remains unclear whether OPEC will be able to absorb a potentially massive fall in Iranian oil exports due to the US sanctions,” they added.

Meanwhile, NYMEX WTI prices were trading slightly higher during the Asian morning session ahead of the release of weekly US crude inventory data, which will be delayed this week by the Labor Day holiday.

The larger-than-expected draw in US crude inventories for the week ended August 24 has been keeping prices supported, analysts said.

Preliminary reports on last week’s US crude inventory levels are due for release by the American Petroleum Institute on Wednesday and the more definitive numbers by the US Energy Information Administration on Thursday.

Elsewhere, analysts from BNP Paribas have lowered their forecasts for oil prices for the rest of the year in light of stable demand-supply expectations.

“We do not expect oil demand to be materially impacted in the next 6-9 months by economic uncertainty linked to US/China trade tensions and recent concerns over emerging markets,” said Harry Tchilinguirian, senior oil strategist at BNP Paribas.

On the impact of the loss of Iranian crude barrels in the market as a result of the US sanctions, Tchilinguirian said that although an initial supply gap was likely to emerge, given average inventory levels in the OECD, the oil market was expected to resolve the supply gap through higher prices.

“We see WTI averaging $68/b in 2018 and Brent at $74/b. In 2019, we see WTI averaging $74/b and Brent at $79/b,” Tchilinguirian added.

Market participants were also watching Tuesday for developments in the US-China trade war, with the US expected to announce another round of tariffs on Chinese goods.

“We might see renewed downward pressure on crude later this week if the US goes ahead with imposing tariffs on $200 billion worth of Chinese imports,” Hari said.

As of 0230 GMT, the US Dollar Index was up 0.12% at 95.185.

Oil prices drop on oversupply concerns as OPEC output increased in July

CNBC

  • Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years.
  • A report showed OPEC’s output in July rose to its highest for 2018.

An oil pumpjack works at dawn in the Permian Basin oil field on January 20, 2016 in the oil town of Andrews, Texas.

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An oil pumpjack works at dawn in the Permian Basin oil field on January 20, 2016 in the oil town of Andrews, Texas.

Oil prices fell on Tuesday, with Brent futures set for their biggest monthly loss in two years, on oversupply concerns after a report showed OPEC’s output in July rose to its highest for 2018.

September Brent crude futures fell 46 cents, or 0.6 percent, to $74.51 a barrel by 0356 GMT after rising nearly 1 percent on Monday. The September contract expires today and the more-active October contract was down 0.5 percent to $75.20.

U.S. West Texas Intermediate crude futures (WTI) were down 43 cents, or 0.6 percent, at $69.70 a barrel, after rising more than 2 percent in the previous session.

For the month, Brent futures are set to drop 6.2 percent, the most since July 2016, while WTI futures set to decline 5.9 percent to, the biggest monthly drop since March 2017.

A Reuters survey showed the Organization of the Petroleum Exporting Countries (OPEC) increased production in July.

OPEC hiked production by 70,000 barrels per day (bpd) to 32.64 million bpd, the most this year. The group has pledged to reduce the amount of oil output they are curtailing to offset the loss of Iranian supply as looming sanctions have already started to cut exports from OPEC’s third-largest producer.

Commodities tomorrow:

Weaker dollar helps crude push over $70  

U.S. President Donald Trump appeared to soften his approach to Iran, saying on Monday he would meet with President Hassan Rouhani without any preconditions.

This was only a week after he threatened on Twitter to unleash severe consequences on the country.

The United States has indicated that it wants Iranian exports cut to zero under the sanctions it pledged to reintroduce in May and that would go fully into effect in November.

While the market was softer on Tuesday, some support for prices might be found in inventory data to be released this week.

Six analysts polled ahead of reports from the American Petroleum Institute, an industry group, and the U.S. Department of Energy’s Energy Information Administration estimated, on average, that crude stocks fell about 3.2 million barrels in the week ended July 27.

“Inventories are getting really tight at Cushing,” Greg McKenna, chief market strategist at AxiTrader said. “Inventory data is of uber-import right now.”

The API is scheduled to release its data for last week at 4:30 p.m. EDT (2030 GMT) on Tuesday, and the EIA report is due at 10:30 a.m. EDT on Wednesday.

Energy information company Genscape said that inventories at Cushing, Oklahoma, the delivery point for the WTI futures contract, rose almost 200,000 barrels, or nearly 1 percent, from Tuesday to Friday last week, according to traders.

Oil markets inch down after three days of gains

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  • Oil prices edged down on Friday after three days of gains.
  • Prices were still supported by Saudi Arabia’s halt on transporting crude through a key shipping lane, falling U.S. inventories and easing trade tensions between Washington and Europe.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices edged down on Friday after three days of gains, but were still supported by Saudi Arabia’s halt on transporting crude through a key shipping lane, falling U.S. inventories and easing trade tensions between Washington and Europe.

Brent futures were down 6 cents at $74.48 a barrel by 0043 GMT, after gaining 0.8 percent on Thursday.

U.S. West Texas Intermediate futures were also 6 cents lower, at $69.55, after posting a nearly 0.5-percent gain the previous session.

U.S. President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU’s executive body, struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers.

A trade war would likely hit demand for commodities like oil, which is used heavily in shipping, construction and other economic activity.

Meanwhile, Saudi Arabia said it was “temporarily halting” oil shipments through the Red Sea shipping lane of Bab al-Mandeb after an attack by Yemen’s Iran-aligned Houthi movement.

Any move to block the Bab al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal and the SUMED crude pipeline that link the Red Sea and Mediterranean.

An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 towards Europe, the United States and Asia, according to the U.S. Energy Information Administration.

However, Saudi Arabia has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab al-Mandeb’s closure.

US oil falls for sixth day as supply fears mount

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  • U.S. oil prices fell for a sixth day on Friday after Iran announced plans to boost production and U.S. crude output hit record highs.

Oil fracking California

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U.S. oil prices fell for a sixth day on Friday after Iran announced plans to boost production and U.S. crude output hit record highs, adding to concerns about a sharp rise in global supplies.

The falls come amid a rout in global share markets as inflation fears grip investors.

U.S. West Texas Intermediate (WTI) crude was down 63 cents, or 1 percent, at $60.52 by 0015 GMT. On Thursday, it closed down 64 cents, or 1 percent, to settle at $61.15, its lowest close since Jan. 2.

Brent futures were yet to trade. On Thursday, Brent fell 70 cents, or 1.1 percent, to settle at $64.81 a barrel, their lowest close since Dec. 20.

OPEC member Iran on Thursday announced plans to increase production within the next four years by at least 700,000 barrels a day.

The U.S. Energy Information Administration (EIA) this week said crude production last week rose to a record high of 10.25 million barrels per day (bpd).

At that level, U.S. production would overtake current output in Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.

OPEC and other producers, including Russia, have cut production since January 2017 to force down global inventories, but these cuts have been offset by rising U.S. oil production.

US oil prices extend gains on compliance with output cuts

CNBC

  • U.S. oil rose for a third day on Friday after a survey showed strong compliance with output cuts by OPEC and others.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil rose for a third day on Friday after a survey showed strong compliance with output cuts by OPEC and others including Russia, offsetting concerns about surging U.S. production.

Brent futures, the global benchmark, were up 19 cents, or 0.3 percent, at $69.84 a barrel by 0352 GMT.

U.S. West Texas Intermediate (WTI) crude was up 28 cents, or 0.4 percent, at $66.08 a barrel.

Production by the Organization of the Petroleum Exporting Countries (OPEC) rose in January from an eight-month low as higher output from Nigeria and Saudi Arabia offset a further decline in Venezuela and strong compliance with a supply reduction pact, a Reuters survey showed.

OPEC pumped 32.4 million barrels per day (bpd) in January, the survey found, up 100,000 bpd from December. Last month’s total was revised down by 110,000 bpd to the lowest since April 2017.

Even so, adherence by producers included in the deal to curb supply rose to 138 percent from 137 percent in December, the survey found, suggesting commitment is not wavering even as oil prices hit their highest level since 2014.

“It underscores the commitment of the cartel, and their Russian partners, to keep a floor under the oil price,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

That is drawing investors’ focus away from the rise in U.S. production.U.S. crude output surpassed 10 million bpd in November for the first time since 1970, the Energy Information Administration said this week.