Oil prices mixed; Brent eases as trade tensions weigh

CNBC

  • Oil prices were mixed on Monday with U.S. benchmark WTI nudging higher after four weeks of declines.
  • Brent began the week lower as the fallout from trade tensions weighed on markets.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil prices were mixed on Monday with U.S. benchmark WTI nudging higher after four weeks of declines, while Brent began the week lower as the fallout from trade tensions weighed on markets.

U.S. West Texas Intermediate (WTI) crude futures were up 15 cents, or 0.2 percent, at $68.84 a barrel by 0309 GMT. WTI fell 1.3 percent on Friday.

Brent crude futures fell 5 cents to $74.24 a barrel, after notching up a 1.7 percent weekly increase last week, the first gain in four weeks.

The U.S. economy grew at its fastest pace in nearly four years in the second quarter, but trade tensions remain high between Washington and Beijing despite an easing between the United States and the EU.

“Concerns around the U.S.-China trade wars continue to weigh on prices, while the halt in Saudi shipments through the Red Sea waterway has seemingly failed to provide a bullish fillip,” said Stephen Innes, head of trading APAC at OANDA Brokerage.

Oil prices are in a constructive period, says Helima Croft

Oil prices are in a constructive period, says Helima Croft  

Saudi Arabia last week said it was suspending oil shipments through the Red Sea’s Bab al-Mandeb strait, one of the world’s most important tanker routes, after Yemen’s Iran-aligned Houthis attacked two ships in the waterway.

U.S. energy companies added three oil rigs in the week to July 27, the first time in the past three weeks that drillers have increased activity, data released on Friday that showed.

Hedge funds trimmed their bullish wagers on U.S. crude for the second week in a row to the lowest in nearly a month, data also showed on Friday, as oil prices remained volatile amid trade tensions and geopolitical risks.

The speculator group cut its combined futures and options position in New York and London by 11,362 contracts to 412,289 in the week to July 24, the U.S. Commodity Futures Trading Commission said. That was the lowest level since late June, the data showed.2.4 percent.

Russian energy minister Alexander Novak said on Friday the market remained volatile and responded to verbal interventions, adding that the market had priced in risks related to U.S. sanctions against Iran.

Oil markets inch down after three days of gains

CNBC

  • 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.

Oil prices edge up as investors eye tight market

CNBC

  • Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed U.S. crude inventories fell to their lowest in more than three years.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed U.S. crude inventories fell to their lowest in more than three years.

Global benchmark Brent rose 37 cents, or 0.5 percent, to $77.48 a barrel by 0305 GMT. U.S. crude futures added 29 cents, or 0.4 percent, to $74.09.

Official data that came out on Thursday, a day later than normal due to the July 4 public holiday, showed inventories at Cushing, the delivery point for U.S. crude futures, fell to their lowest in 3-1/2 years.

“Cushing is clearly screaming out for crude, with the prompt few months more than $2 backwardated,” said Virendra Chauhan, an analyst at Energy Aspects in Singapore.

Backwardation refers to a market situation that suggests tightness as prices for immediate delivery are higher than those for later dispatch.

Investors are also focusing on how much exports from Saudi Arabia and other Gulf states will rise, Chauhan said.

The Organization of the Petroleum Exporting Countries and other countries agreed earlier this month to a modest increase in output to dampen a rally in oil prices, which recently hit a 3-1/2 year high.

An increase in supply will reverse some of the output cuts that OPEC and other major producers put in place in early 2017 to end several years of supply glut.

The tightness at Cushing and the potential increase in Gulf exports “both have implications for how quickly the prompt overhang in the market can clear, and thus provide some direction for prices,” Chauhan said.

U.S. producers are continuing to bring more rigs into oilfields already producing at record levels. The U.S. rig count, an early indicator of future output, was up by five in the week to July 6, according to General Electric Co’s Baker Hughes energy services firm.

That brings the total count to 863, up 100 from last year.

Concerns that oil prices will be weighed down by a trade conflict between the U.S. and China have faded to some extent, analysts said.

The United States and China exchanged the first salvos in what could become a protracted trade war on Friday, slapping tariffs on $34 billion worth of each others’ goods and giving no sign of willingness to start talks aimed at a reaching a truce.

US crude rises 1.2 percent, settling at $73.80, but posts weekly loss on supply concerns

CNBC

  • Saudi Arabia raised oil supply sharply in June, while U.S. crude inventories rose unexpectedly last week.
  • The United States implemented tariffs on Chinese goods on Friday.
  • South Korea has stopped loading Iran oil as U.S. sanctions loom.

Oil fracking California

Getty Images

Oil prices were mixed on Friday, with short-covering pushing up U.S. crude futures while Brent slipped on global trade tensions and increased Saudi production.

U.S. West Texas Intermediate crude futures ended Friday’s session up 86 cents, or 1.2 percent, to $73.80 a barrel. Global benchmark Brent was down 23 cents at $77.16 a barrel by 2:29 p.m.

For the week, WTI posted a loss of about a half a percent, while Brent was on track for a decline of about 3 percent.

“We have a little bit of a rally that’s materialized” for WTI, said Bob Yawger of director of energy futures at Mizuho in New York. The rally appears to be a “short covering situation — we were down almost 2 percent yesterday,” said Yawger.

U.S. crude futures slipped on Thursday after data showed an unexpected 1.3 million-barrel build in crude inventories.

Michael Rothman talks about oil market trends

Michael Rothman talks about oil market trends  

Brent, meanwhile, was “still having difficulty gaining independent bullish traction,” said Jim Ritterbusch, president of Ritterbusch and Associates in a note.

“Increased Saudi crude availability that is being enhanced by reduced OSPs (official selling prices) into Europe and other regions is providing a strong counter against curtailed Libyan export activities,” Ritterbusch wrote.

In addition to reducing the price of its August barrels, Saudi Arabia also told the Organization of the Petroleum Exporting Countries (OPEC) that it increased production by almost 500,000 barrels per day last month.

Output cuts by OPEC and allies since January 2017 have reduced a crude glut.

Involuntary drops in supply in Venezuela, Angola and Libya have made the cutbacks even bigger, although OPEC — led by Saudi Arabia — has since agreed to a modest increase in output.

“The more that Saudi Arabia adds to the market, the less of a supply cushion we have — that’s a bullish twist to a bearish development,” said Yawger at Mizuho.

An imminent shift in global oil trade flows was also affecting prices.

Trump accuses OPEC of driving gas prices higher

Trump accuses OPEC of driving gas prices higher  

U.S. tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday. Beijing has vowed to respond in kind.

China has indicated that it could place a tariff of 25 percent on U.S. oil. If that happens, “Chinese demand would then shift to other suppliers. Because the oil market is already in tight supply due to the numerous outages, this would drive international prices (Brent) further up,” Commerzbank said in a note.

Renewed U.S. sanctions on Iran against its oil exports look set to tighten supply further.

South Korea, a major buyer of Iranian oil, will not lift any Iranian crude and condensate in July for the first time since August 2012, three sources familiar with the matter said.

Meanwhile, the market continued to watch rising U.S. crude output. This week’s oil drilling rig count, an indicator of future production, rose by 5 rigs to a total of 863.

Brent drops by 2 percent as traders expect output rise after OPEC deal

CNBC

  • Global benchmark Brent fell by more than 2 percent in early trade on Monday.
  • That followed an expected output increase that was agreed at OPEC’s headquarters in Vienna on Friday.
  • Brent futures were down 2.2 percent at $73.9 at 0035 GMT, from their last close.

Brent crude oil prices fell by more than 2 percent early on Monday as traders factored in an expected output increase that was agreed at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Friday.

Brent crude futures , the international benchmark for oil prices, were at $73.90 per barrel at 0035 GMT, down 2.2 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $68.36 a barrel, down 0.3 percent, supported by a slight drop in U.S. drilling activity.

Prices initially jumped after the deal was announced as it was not seen boosting supply by as much as some had expected.

OPEC and non-OPEC partners including Russia have since 2017 cut output by 1.8 million barrels per day (bpd) to tighten the market and prop up prices.

Largely because of unplanned disruptions in places like Venezuela and Angola, the group’s output has been below the targeted cuts, which it now says will be reversed by supply rises especially from OPEC leader Saudi Arabia.

Britain’s Barclays bank said OPEC’s and Russia’s commitments would take “the market from a -0.2 million bpd deficit in H2 2018 to a 0.2 million bpd surplus”.

Energy consultancy Wood Mackenzie said the agreement “represents a compromise between responding to consumer pressure and the need for oil-producing countries to maintain oil prices and prevent harming their economies”.

In the United States, U.S. energy companies last week cut one oil rig, the first reduction in 12 weeks, taking the total rig count to 862, Baker Hughes said on Friday.

That put the rig count on track for its smallest monthly gain since declining by two rigs in March with just three rigs added so far in June, although the overall level remains just one rig short of the March 2015 high from the previous week.