Oil prices slip as demand outlook, trade dispute weigh

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Reuters
KEY POINTS
  • Oil prices dipped on Monday amid worries about an economic slowdown and the Sino-U.S. trade war, which have led to a cut in the growth outlook for oil demand.
  • International benchmark Brent crude futures were at $58.35 a barrel by 0249 GMT, down 18 cents, or 0.3%, from their previous settlement.
  • U.S. West Texas Intermediate (WTI) futures were at $54.29 per barrel, down 21 cents, or 0.4%, from their last close.
RT: Oil drilling rig oil workers Midland, Texas 190219 1
A drilling crew secures a stand of drill pipe into the mouse hole on a drilling rig near Midland, Texas February 12, 2019.
Nick Oxford | Reuters

Oil prices dipped on Monday amid worries about an economic slowdown and the Sino-U.S. trade war, which have led to a cut in the growth outlook for oil demand.

International benchmark Brent crude futures were at $58.35 a barrel by 0249 GMT, down 18 cents, or 0.3%, from their previous settlement.

U.S. West Texas Intermediate (WTI) futures were at $54.29 per barrel, down 21 cents, or 0.4%, from their last close.

Both benchmarks fell last week, with Brent losing more than 5% and WTI falling about 2%.

“Oil prices are falling at the start of the trading week due to lower demand forecasts published last week and  pessimism about a U.S.-China trade deal,” said Alfonso Esparza, senior market analyst at OANDA in Toronto.

The U.S.-China trade dispute rocked global equity markets last week, while a surprise build in U.S. crude stocks added downward pressure to oil prices, which have lost around 20% from their 2019 peaks reached in April.

Goldman Sachs said in a note on Sunday that fears of the U.S.-China trade war leading to a recession were increasing and it expected a trade deal between the two countries to happen before the 2020 U.S. presidential election.

Mounting signs of an economic slowdown and a ratcheting up of the trade row have caused global oil demand to grow at its slowest pace since the financial crisis of 2008, the International Energy Agency (IEA) said on Friday.

The Paris-based agency cut its 2019 and 2020 global oil demand growth forecast to 1.1 million and 1.3 million barrels per day (bpd), respectively.

Elsewhere, Russia’s oil production rose to 11.32 million bpd on August 1-8, up from 11.15 million bpd on average in July, according to two industry sources familiar with the energy ministry data.

In July, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia agreed to extend their supply cuts until March 2020 to prop up oil prices.

In a sign of lower production in the United States, the weekly U.S. oil rig count, an early indicator of future output, fell for a sixth week in a row as producers cut spending on new drilling and completions.

Oil prices rise amid bigger-than-expected fall in US stockpiles

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Reuters

KEY POINTS
  • West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT.
  • Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95.
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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
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Oil prices rose on Wednesday, led by U.S. crude after an industry group reported that U.S. stockpiles fell for a fourth week in a row, alleviating concerns about oversupply amid global trade tensions.

West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT. Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95.

The U.S. and global benchmarks have gained this year as the Organization of the Petroleum Exporting Countries (OPEC) and big producers such as Russiahave honored commitments to cut output.

Investors have also been on the lookout for any signs that unrelenting production from the United States is being consumed.

U.S. crude stockpiles fell more than forecast last week, while gasoline inventories decreased and distillate stocks built, data from industry group the American Petroleum Institute (API) showed on Tuesday.

Crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million, compared with analyst expectations for a decrease of 3.1 million barrels, according to the data.

Official figures from the government’s Energy Information Administration (EIA) are due later on Wednesday.

“Prices are finely balanced right now as investors await fresh stimulus,” said Fawad Razaqzada, technical analyst at FOREX.com. “The stimulus could come in the form of a sharp change in U.S. crude oil inventories.”

Oil prices have been under pressure from concerns about global economic growth amid growing signs of harm from the U.S.-China trade war that has rumbled on over the last year. Lower economic growth typically means reduced demand for commodities such as oil.

“Global economic growth remains under pressure, with the latest manufacturing surveys weakening,” NAB said in a note.

“This is likely to impact demand for commodities, although stimulus measures may in some cases support commodity demand,” NAB said, citing China as an example.

Still, U.S. crude oil production is forecast to rise to a record of 12.36 million barrels per day (bpd) in 2019 from the high of 10.96 million bpd last year, the EIA’s Short Term Energy Outlook said on Tuesday.

OPEC and allied producers led by Russia agreed last week to extend their supply-cutting deal until March 2020. Brent has risen nearly 20% in 2019, supported by the pact and tensions in the Middle East, especially the row over Iran’s nuclear program.

Oil slips to $71, hit by talk of higher OPEC+ production

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Reuters

KEY POINTS
  • Analysts expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase.
  • Oil fell Monday after comments from Russia raised concern the OPEC-led supply-cutting pact may not be renewed.
  • OPEC and its allies are due to meet in June to decide whether to continue the arrangement.
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Andrew Burton | Getty Images

Brent oil slipped to around $71 a barrel on Tuesday, pressured by expectations of higher U.S. inventories and concern about Russia’s willingness to stick with OPEC-led supply cuts.

Analysts on average expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase. The first of this week’s stockpile reports is due at 2030 GMT from the American Petroleum Institute.

“We have already seen these inventories going higher in the last week’s print,” said Naeem Aslam, chief market analyst at TF Global Markets in London.

“The rising inventory data has raised many questions for investors – no one wants to see the oil glut again.”

Brent crude, the global benchmark, was down 12 cents at $71.06 a barrel at 0801 GMT. U.S. West Texas Intermediate (WTI) crude gained 6 cents to $63.46.

While OPEC-led supply cuts have boosted Brent by more than 30 percent this year, gains have been limited by worries that slowing economic growth could weaken demand for fuel.

Oil also fell on Monday after comments from Russia raised concern the OPEC-led supply-cutting pact may not be renewed. Russia and the producer group may decide to boost output to fight for market share with the United States, TASS news agency ited Finance Minister Anton Siluanov as saying.

The Organization of the Petroleum Exporting Countries and other producers including Russia, an alliance known as OPEC+, have been cutting output since Jan. 1. They decide in June whether to continue the arrangement.

“There is a growing concern that Russia will not agree on extending production cuts and we could see them officially abandon it in the coming months,” said Edward Moya, senior market analyst at OANDA.

Oil edges lower as supply concerns check losses

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Reuters

KEY POINTS
  • Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.
  • Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.
RT: Oil refinery Libya 131218
Ismail Zitouny | Reuters

Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.

Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close. Brent closed up 1 percent on Friday when prices hit a high of $71.87 a barrel, the highest since Nov. 12.

U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.

The head of Libya’s National Oil Corp warned on Friday that renewed fighting could wipe out crude production in the country.

“Supply side issues remained a concern for the market. Libyan rebel leader Khalifa Haftar moved forces closer to Tripoli,” ANZ Bank said in a research note.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet in June to decide whether to continue withholding supply. OPEC, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from Jan. 1 for six months.

OPEC’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.

Russia’s Finance Minister Anton Siluanov was quoted by the TASS news agency as saying on Saturday that Russia and OPEC may decide to boost production to fight for market share with the United States but this would push oil prices as low as $40 per barrel.

Oil slips from five-month highs as economic worries counter tight market

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Reuters

KEY POINTS
  • International benchmark Brent futures touched their strongest level since last November at $71.34 per barrel on Tuesday, before losing ground to $70.96 per barrel by 0158 GMT, down 14 cents, or 0.2%, from their last close.
  • U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.36, 4 cents below their last settlement.
RT: Offshore oil rig Norway 160211
An offshore oil rig off the coast of Norway.
Nerijus Adomaitis | Reuters

Oil prices eased on Tuesday, slipping away from 5-month highs reached earlier in the session as a sluggish economic outlook countered an otherwise tight market.

International benchmark Brent futures touched their strongest level since last November at $71.34 per barrel on Tuesday, before losing ground to $70.96 per barrel by 0158 GMT, down 14 cents, or 0.2%, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.36, 4 cents below their last settlement.

Despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude prices from rising even higher, traders said.

And while fears of a global recession ebbed following strong U.S. jobs figures and improved Chinese manufacturing data late last week, Bank of America Merrill Lynch said there was still a “significant slowing in growth globally” in 2019.

The bank said it expects Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.

Despite the economic concerns, global oil markets are tight, and Brent and WTI crude oil futures have risen by 40% and 30% respectively since the start of the year.

“Renewed fighting in Libya … has seen Brent crude break above $70 per barrel, ” said Ole Hansen, head of commodity strategy at Saxo Bank.

Libya is a significant supplier of oil to Europe, producing around 1.1 million barrels per day (bpd) of crude in March.

A warplane attacked Tripoli’s only functioning airport on Monday as eastern forces advancing on the Libyan capital disregarded international appeals for a truce in the latest of a cycle of warfare since Muammar Gaddafi’s fall in 2011.

Hansen said the fighting in Libya added to an already tense market, which has been tightened this year by U.S. sanctions on oil exporters Iran and Venezuelaas well as supply cuts led by the producer club of the Organization of the Petroleum Exporting Countries (OPEC).