Oil logs strongest weekly performance in over 8 months

MarketWatch

Monthly IEA report, Syria tensions lift oil

Reuters

By

MyraP. Saefong

Markets/commodities reporter

SaraSjolin

Markets reporter

Crude-oil prices rose for a fifth straight session Friday, with U.S. benchmark crude tallying a gain of nearly 9% for the week, driven by fears of a U.S.-led military conflict in Syria.

A report from the International Energy Agency on Friday also indicated that OPEC soon will have succeeded in reaching its target for reducing the global supply glut.

May West Texas Intermediate crude CLK8, +0.48%  tacked on 32 cents, or 0.5%, to settle at $67.39 a barrel on the New York Mercantile Exchange. For the week, the U.S. oil benchmark rallied by roughly 8.6%, which was the strongest weekly percentage performance since late July of last year.

June Brent LCOM8, +0.83% added 56 cents, or 0.8%, to $72.58 a barrel on ICE Futures Europe. For the week, in the international benchmark was up about 8.2%.

On Friday, the IEA indicated that global oil stockpiles are dwindling and approaching the five-year average the Organization of the Petroleum Exporting Countries is targeting.

“It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished,’ but if our outlook is accurate, it certainly looks very much like it,” the IEA said in its report.

The Vienna agreement refers to the group of OPEC and non-OPEC countries that in 2016 agreed to cut output in an effort to reduce a global supply glut that had dragged oil prices substantially lower. The IEA report echoes the monthly data from OPEC earlier this week, which showed the group’s output declined by 201,000 in March and that the supply surplus is evaporating.

The IEA also noted that the continuing U.S.-China trade spat could dent oil demand.

Longer term, “we are bullish on oil prices as continued global economic growth drives demand higher by approximately 1.5% per year,” said Jay Hatfield, chief executive officer and founder of InfraCap. Global supply also “remains constrained by declines in Venezuela production, flat to declining production in offshore areas such as the North Sea, offset by steady growth in U.S. production of approximately 1 million barrels per day.”

Hatfield expects WTI to trade in the $60-70 range this year and $70-80 in 2019, “with more risk to the upside.”

Read: Here’s why Credit Suisse just boosted its oil price forecast by 18%

In the U.S., Baker Hughes BHGE, +1.37%  on Friday reported that the number of active domestic oil rigs edged up by 7 this week. The figure, which offers a peek at U.S. oil activity, was up a second straight week.

Still, market participants said crude futures have come under pressure amid fears that Russia may retaliate against the U.S. by imposing sanctions in response to sanctions levied against Moscow last week in response to what the U.S. said was attempts to subvert Western democracies, and malicious cyber activities.

“This news offset good news about the ratcheted down of trade tensions with China and the possibility the U.S. could be re-entering the [Trans-Pacific Partnership],” said Phil Flynn, senior market analyst at Price Futures Group, in a note.

The fear is that sanctions from Russia could hurt demand and push prices lower, he explained.

More broadly, the stellar weekly performances for both WTI and Brent this week come as geopolitical tensions have returned to the fore after a suspected chemical-weapons attack in Syria that killed civilians over the weekend. That matter is also complicated by Syria’s friendly ties with Russia, Iran and Turkey.

U.S. President Donald Trump on Wednesday warned Russia that he was ready to launch an imminent military attack on Syria, but toned down his rhetoric on Thursday.

Among energy products, gasoline RBK8, +0.34%  settled 0.5% higher at $2.065 a gallon, for a 5.7% gain on the week. May heating oil HOK8, +0.87% added 0.8% to $2.10 a gallon—up about 7.3% for the week.

May natural gas NGK18, +1.86%  rose 1.8% to $2.735 per million British thermal units, for a weekly rise of 1.3%.

Oil Prices Bristle As U.S. Rig Count Climbs

 Oilprice.com

Oil Prices Bristle As U.S. Rig Count Climbs

Baker Hughes reported a 10-rig increase to the number of oil and gas rigs this week. The total number of oil and gas rigs now stands at 1003, which is an addition of 164 rigs year over year.

The number of oil rigs in the United States increased by 11 this week, for a total of 808 active oil wells in the US—a figure that is 136 more rigs than this time last year. The number of gas rigs held steady this week, still at 194; 29 rigs above this week last year.

The oil and gas rig count in the United States has increased by 80 in 2018.

While US drillers seem determined to add rigs, Canada continued its brutal losing streak, with a decrease of 23 oil and gas rigs, after losing 168 rigs last week in the four weeks prior. At just 111 total rigs, Canada now has 21 fewer rigs than it did a year ago.

Oil prices were trading down on Friday, with West Texas Intermediate trading down $0.27 (-0.42%) at $63.27 at 9:17am EST. The Brent benchmark was trading down $.011 (-0.16%) at $68.22. Price pressures persisted on Friday as the China and US trade tiff heated up, with President Trump announcing billions in additional tariffs in a tit-for-tat measure after China’s latest round of tariffs. Also weighing on prices this week is the ever-present threat of climbing US crude oil production, which rose again in the week ending March 30, reaching 10.460 million bpd—the sixth build in as many weeks—well on its way to the 11 million bpd mark that analysts see coming in 2018.

At 8 minutes after the hour, WTI was trading at $62.41 (-1.78%) and Brent was trading at $67.43 (-1.32%).

By Julianne Geiger for Oilprice.com

Oil prices rise as OPEC seen continuing supply cuts through 2018

CNBC

  • Oil prices rose on Thursday as the producer cartel OPEC and other suppliers look set to continue withholding output for the rest of the year and potentially into 2019.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Oil prices rose on Thursday as the producer cartel OPEC and other suppliers look set to continue withholding output for the rest of the year and potentially into 2019.

U.S. WTI crude futures were at $64.63 a barrel at 0729 GMT, up 25 cents, or 0.4 percent, from their previous settlement.

Brent crude futures were at $69.76 per barrel, up 23 cents, or 0.3 percent.

The Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) together with a group of non-OPEC producers led by Russia started cutting output in 2017 to rein in oversupply and prop up the market.

Brent, off which OPEC prices most its crude exports, has risen by around a quarter since then, which has lead to speculation that the restraints on production may be lifted.

But sources at OPEC told Reuters this week that the group and its allies were set to keep their deal on cutting production for the rest of 2018.

Despite this, Brent remained below $70 and WTI under $65 per barrel, weighed by rising crude inventories and production in the United States.

Commercial U.S. crude inventories rose by 1.6 million barrels in the last week <C-STK-T-EIA> to 429.95 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Crude oil inventories up 1.6 million barrels

Crude oil inventories up 1.6 million barrels  

U.S. crude oil production hit a record, at 10.43 million barrels per day (bpd) <C-OUT-T-EIA>. That puts the United States ahead of top exporter Saudi Arabia. Only Russia pumps out more, at 11 million bpd.

In China, Shanghai crude oil futures <ISCc1> opened Thursday’s morning session down nearly 2 percent, pushing the new market near to parity with U.S. prices, before closing at 409.7 yuan ($65.18) per barrel at 0700 GMT.

The latest drop takes the fall since the contract’s launch on Monday to 10 percent.

Despite high volatility and lingering scepticism about Shanghai’s trading hours, along with doubts about the process for physical delivery of crude under contract, most analysts expect the contract to establish itself as a third global oil price benchmark next to Brent and WTI.

Goldman Sachs said in a note to clients that there was “finally, an exchange traded price for Chinese crude oil.”

Shanghai’s “start of trading was relatively successful (as)…it is the first onshore Chinese commodity contract that allows direct trading by foreign investors and is denominated in RMB (yuan), indirectly promoting the use of the Chinese currency,” Goldman said.

The U.S. bank said Shanghai crude futures represented 3 percent of combined WTI and Brent trading volumes since its launch on March 26.

Oil prices fall on surprise US inventory rise; China crude volatile

CNBC

  • Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65.
  • Traders said the dips came after the American Petroleum Institute reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65, pulled down by a report of increasing U.S. crude inventories that surprised many traders.

U.S. WTI crude futures were at $64.86 a barrel by 0201 GMT, down 39 cents, or 0.6 percent, from their previous settlement.

Brent crude futures were at $69.75 per barrel, down 36 cents, or 0.5 percent.

Traders said the dips came after the American Petroleum Institute (API) late on Tuesday reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.

Official U.S. inventory data will be published by the Energy Information Administration (EIA) late on Wednesday.

“We’ll see how the inventory data looks and whether these recent highs can be challenged again. For the moment it is looking like both WTI and Brent are stalling,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Wednesday’s price falls came despite top exporter Saudi Arabia saying it was working with top producer Russia on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years.

Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering greatly extending a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.

“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday.

AxiTrader’s McKenna said such an agreement between Russia and Saudi Arabia “effectively means an expansion” of the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader but in which Russia is not a member.

In Asia, Shanghai crude oil futures saw their third day of trading continuing with high volume but also volatility.

Spot Shanghai crude futures were down by 4.4 percent on Wednesday,to 407.5 yuan ($64.93)per barrel by 0201 GMT.

In dollar-terms, that puts Chinese crude prices significantly below Brent and only slightly above U.S. WTI.

McKenna said he hoped Shanghai crude “gets a lot of traction and we end up with three established global benchmarks”, but he cautioned that “the first couple of days have been volatile.”

Oil prices fall as U.S. trade dispute with China looms

CNBC

  • Oil prices reversed early gains on Monday as concerns of a looming trade dispute between the United States and China weighed on global markets.
  • U.S. crude futures were at $65.51 a barrel at 0255 GMT, down 0.6 percent, from their previous close.
  • Brent futures were down 0.3 percent at $70.24.
  • Crude was also squeezed by a rise in the number of U.S. rigs drilling for oil to a three-year high of 804, implying further rises in production.

Oil prices reversed earlier gains on Monday as concerns of a looming trade dispute between the United States and China weighed on global markets.

The possibility of a full-blown trade war between the United States and China battered Asian shares on Monday. The falls came after U.S. President Donald Trump last week signed a memorandum that could impose tariffs on up to $60 billion of imports from China.

U.S. West Texas Intermediate (WTI) crude futures were at $65.51 a barrel at 0255 GMT, down 37 cents, or 0.6 percent, from their previous close.

Brent crude futures were at $70.24 per barrel, down 21 cents, or 0.3 percent.

Crude was also squeezed by a rise in the number of U.S. rigs drilling for oil to a three-year high of 804, implying further rises in production, which has already jumped by a quarter since mid-2016 to 10.4 million barrels per day (bpd).

Earlier in the session, prices were lifted by statements from Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), that production cuts that have been in place since 2017 may be extended into 2019, as well as concerns that the United States may re-introduce sanctions against Iran.

“President Donald Trump continues to suggest the U.S. will pull out from (the) Iran nuclear deal, which raises the spectre of bringing back sanctions on the country and severely limiting Tehran’s ability to export crude oil,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

New future

Financial oil markets have long been dominated by Europe’s Brent and America’s WTI, despite Asia being the world’s biggest and fastest growing oil consumer, has so far not had a benchmark.

That possibly changed on Monday, as Asia saw the launch of Shanghaicrude oil futures.

Few analysts doubt that Asia is overdue a financial oil price benchmark, and that China with its vast consumer and production base is a prime location for it.

“The government (in Beijing) seems determined to support it, and I hear a number of firms are being asked or pressured to trade on it, which could help,” said Jeff Brown, President of energy consultancy FGE.

Despite this, Brown said there were concerns over regulatory interference, as seen in other Chinese financial commodity markets, including iron ore and coal.

“The fact that the government is encouraging the exchange and also is not shy about stepping in to occasionally change the rules may discourage international players,” Brown said.

That concern did not scare off global commodity trading giant Glencore, which according to Chinese brokerage Xinhu Futures carried out the first trade on the Shanghai crude oil futures.

Oil falls as dollar rises, US inventories expected to rise

CNBC

  • Dollar steadies against other leading currencies
  • Ongoing OPEC-led output cuts provide some support
  • Brent, WTI move in sync

An oil pump jack in the oil town of Gonzales, Texas.

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

Oil prices fell on Wednesday, weighed down by a rebound in the U.S. dollar from three-year lows hit last week and by an expected rise in U.S. crude production.

Brent crude futures were last down 71 cents at $64.54 a barrel by 1013 GMT, while West Texas Intermediate (WTI) crude futures fell 74 cents to $61.19 a barrel.

The premium of Brent over WTI widened to almost $3.60 a barrel, having neared its narrowest in six months on Tuesday as concern about a bottleneck of Canadian crude imports underpinned U.S. futures.

“A sense of harmony has returned this morning with both crude benchmarks ploughing a southerly furrow as the dollar gains further ground,” PVM Oil Associates analyst Stephen Brennock said.

The dollar rose against other major currencies, buoyed by the rise in short-term U.S. government bond yields their highest in over nine years and ahead of the release of the minutes of the Federal Reserve’s most recent policy-setting meeting, which may signal the pace of any interest-rate rises.

U.S. inventory data is due later in the day and stocks are expected to have risen by 1.3 million barrels in the week to Feb. 16, according to a Reuters poll.

RBC: Two offsetting stories at play in the oil market this year

RBC: Two offsetting stories at play in the oil market this year  

The Organization of the Petroleum Exporting Countries and other producers, including Russia, will discuss extending their existing cooperation for many more years when they meet in June as they seek to avoid major market shocks, the United Arab Emirates’ energy minister told Reuters on Tuesday.

The group has agreed to cut crude output by 1.8 million bpd throughout this year to force global inventories to drain.

Futures prices have also been dented by the physical markets, which are showing signs of seasonal weakness, given that most of the world’s refineries close, either partially or wholly, to conduct maintenance at this time of year and cut their crude intake as a result.

Differentials, or prices for physical barrels, have slid on both sides of the Atlantic and it is the cheaper sour, or more sulphourous, grades that have borne the brunt of the declines.

Prices for North Sea barrels on Tuesday recovered after hitting their lowest levels since mid-2017, as an overhang of surplus oil has materialised.

Light, sweet West African grades have proven to be the most resilient in the Atlantic basin, thanks in large part to demand from China, but Mediterranean crudes, including Russian Urals, have slid since the start of the year.

“European maintenance does not peak until May, two months later than last year, and demand in Q1 18 has been hobbled by unusually warm weather,” consultant Energy Aspects said.

Oil hits highest level in nearly two weeks on Asian equity recovery

CNBC

  • Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed by a recovery in Asian shares and by worries over tensions in the Middle East.
  • The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit.
  • Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.

Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed as Asian shares joined a global recovery in equity markets and by worries over tensions in the Middle East.

Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation.

U.S. West Texas Intermediate crude for March delivery was up 74 cents, or 1.2 percent, at $62.42 a barrel by 0217 GMT, after earlier touching its highest since Feb. 7.

London Brent crude was up 46 cents, or 0.7 percent, at $65.30, after rising more than 3 percent last week.

“The upside momentum since WTI hit last week’s low of $58 has been continuing,” said Tetsu Emori, CEO of Emori Capital Management in Tokyo.

“Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in U.S. rig count and a slight recovery in the dollar.”

Trading is expected to be slower than usual due market holidays in the United States as well as Greater China and India.

The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit.

That marked the first time since June that drillers added rigs for four consecutive weeks, and the figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a two-year crash.

Surging U.S. production is offsetting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) until the end of 2018.

Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply.

Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.