Oil prices rise for first time in three days, but trade war drags 

CNBC

  • Oil has been caught in this month’s global financial market slump.
  • The ongoing U.S.-China trade war has continued to weigh on the demand outlook for oil.

Oil prices climbed for the first time in three days on Wednesday, but rising supply and fears over the outlook for demand amid the U.S.-China trade war kept pressure on the market.

Brent crude futures had gained 47 cents, or 0.6 percent, to $76.38 a barrel by 0441 GMT. They fell 1.8 percent on Tuesday, at one point touching their lowest since Aug. 24 at $75.09 a barrel.

U.S. West Texas Intermediate (WTI) crude futures advanced 16 cents, or 0.2 percent, to $66.34 a barrel on Wednesday. They dropped 1.3 percent the day before, after hitting their weakest since Aug. 17 at $65.33 a barrel.

Both crude benchmarks have fallen about $10 a barrel from four-year highs reached in the first week of October, and are on track to post their worst monthly performance since July 2016.

“Everyone thought we were going to go into the $90s, but now we are heading for the $60s,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, referring to Brent prices.

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade scrap between the world’s two largest economies.

U.S. President Donald Trump said on Monday that he thinks there will be “a great deal” with China on trade but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible.

Trump said he would like to make a deal now but that China was not ready. He did not elaborate.

The United States has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods.

In a bearish signal, the American Petroleum Institute reported U.S. crude inventories rose 5.7 million barrels last week, more than analyst forecasts for a 4.1 million-barrel build.

Investors will look to official government data on U.S. inventories due on Wednesday.

Oil production from Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand.

The United States is set to impose new sanctions on Iranian crude from next week, and exports from the Islamic Republic have already begun to fall.

Saudi Arabia and Russia have said they will pump enough crude to meet demand once the sanctions kick in.

“(After the recent drop in oil prices), this is not the time to back off, if Trump wants to put the screws on Iran,” Nunan said.

Brent oil prices dips on rising supply, global market woes

CNBC

  • Global stock markets were hit by renewed concerns about the U.S.-China trade war.
  • Meanwhile, the oil markets also saw signs of rising crude supply from top producers ahead of U.S. sanctions on Iran’s petroleum exports.

Brent oil prices dipped on Tuesday, weighed down by ongoing weakness in global stock markets and by signs of rising global supply despite looming sanctions on Iran’s crude exports.

Front-month Brent crude oil futures were at $77.05 a barrel at 0428 GMT, down 29 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were firmer, however, at $67.16 a barrel, up 12 from their last settlement.

Oil has been caught up in broad financial market slumps this month, with stocks falling again on Monday after reports Washington was planning an additional $257 billion worth of tariffs on Chinese goods if upcoming talks between Presidents Donald Trump and Xi Jinping fail to end a trade war between the world’s two largest economies.

High oil prices are hurting consumers and could dent demand, the executive director of the International Energy Agency (IEA) said on Tuesday.

“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down,” said IEA chief Fatih Birol.

Oil was also being weighed down by signs of rising supply from top producers.

“A Saudi pledge to produce as much oil as possible, and the stock market rout, have sharply reduced concerns about the Nov. 4 implementation of U.S. sanctions against Iran,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Russia has also indicated that it will provide enough oil to meet demand once U.S. sanctions hit Iran from next week.

In a sign that oil supply remains ample despite the looming U.S. sanctions against Iran’s petroleum exports, crude output from the world’s top 3 producers, Russia, the United States and Saudi Arabia, reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed.

That’s an increase of 10 million bpd since the start of the decade and means that these three producers alone now meet a third of global crude demand.

Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year.

Despite that, Hansen said “given the yet unknown impact on Iran’s ability to produce and export (amid sanctions) … we could see some speculative buying emerge ahead of Nov. 4.”

Iran’s seaborne crude exports, by contrast, have fallen from a 2018-peak of just over 2.5 million bpd in May to around 1.5 million bpd in September and October, Eikon data showed.

Oil prices claw back previous losses as Iran sanctions return to focus

CNBC

  • Saudi Energy Minister Khalid al-Falih said on Tuesday that the country would step up to “meet any demand that materialises to ensure customers are satisfied.”
  • The pledge by Saudi Arabia comes amid an expected supply disruption in the crude markets from impending U.S. sanctions against Iran which go into effect from Nov. 4.
  • Meanwhile, the Bank of Kunlun in China is set to stop handling payments from Iran, appearing to bow to U.S. pressure.

Oil prices on Wednesday clawed back some of their hefty losses from the day before as the looming U.S. sanctions against Iran came back into focus.

Front-month Brent crude oil futures were at $76.76 a barrel at 0452 GMT, 32 cents, or 0.4 percent, above their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $66.58 a barrel, up 15 cents, or 0.2 percent, from their last settlement.

Brent closed down 4.3 percent and WTI dropped 4 percent in the previous session.

Saudi Energy Minister Khalid al-Falih said on Tuesday that despite expected supply disruptions from U.S. sanctions against Iran that kick in from Nov. 4, Saudi Arabia would step up to “meet any demand that materialises to ensure customers are satisfied”.

Despite this, analysts said markets remained tight because of the upcoming sanctions.

“We still see Brent reaching $85 per barrel by year-end,” said U.S. bank Morgan Stanley.

In China, Iran’s biggest oil buyer, the Bank of Kunlun is set to stop handling payments from the Islamic Republic next month, appearing to bow to U.S. pressure.

Kunlun is controlled by the financial arm of state-owned China National Petroleum Corp and is the main official channel for money flows between China and Iran.

With financial ties between the two countries effectively severed from November, Chinese oil firms will need to find alternatives to Iran’s crude.

China took in 800,000 barrels per day from Iran in August, the peak for this year, according to Refinitiv Eikon trade data.

While oil supply is tightening, the demand outlook for 2019 is darkening because of concerns of a slowing economy next year.

China’s state planner said on Wednesday it would step up financial support for regions most hit by the ongoing trade war between Washington and Beijing during which both sides have slapped import tariffs on hundreds of goods.

Meanwhile, South Korea’s KOSPI-100 equity index has now fallen by nearly 19 percent over the past year, the fastest rate of decline since the financial crisis of 2008/09.

The KOSPI-100 has typically correlated closely with growth in international trade, given the South Korean economy’s strong orientation towards exports.

Oil prices drop as escalating US-China trade war clouds demand outlook

CNBC

  • Market watching trade war impact on crude demand.
  • U.S. sanctions on Iran continue to support prices.
  • U.S. shale output expected to rise in October.

Oil markets fell on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for crude demand from the two countries, which are the world’s top two oil consumers.

Brent crude futures dropped 44 cents, or 0.6 percent, to $77.61 per barrel by 0424 GMT.

U.S. West Texas Intermediate (WTI) crude was down 28 cents, or 0.4 percent, to $68.62 per barrel.

U.S. President Donald Trump on Monday said he would impose 10 percent tariffs on about $200 billion worth of Chinese imports.

“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.

Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week while China’s refiners used about 11.8 million bpd in August, according to government data from the countries, the most among the world’s countries.

The tariffs are likely to limit economic activity in both the China and the United States and that should lower oil demand growth as less fuel is consumed to move goods for trade.

The countries are the world’s two largest economies.

However, potential supply cuts caused by U.S. sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.

Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4.

Iranian crude oil export loadings have declined by 580,000 bpd in the past three months, Bank of America Merrill Lynch analysts said in a note to clients.

Meanwhile, oil output from seven major U.S. shale formations is expected to rise by 79,000 bpd to 7.6 million bpd in October, the U.S. Energy Information Administration said on Monday.

Technical analysis from Reuters market analyst Wang Tao showed that U.S. oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signalling a dissipation of positive outlook.

Brent may fall more than $1 to $76.37 a barrel while WTI crude prices may revisit the Sept. 14 low of $67.94, he wrote.

On Monday, Russia’s Energy Minister Alexander Novak said that OPEC and non-OPEC members will discuss all possible supply scenarios when they meet this month in Algeria. Russia, the world’s largest oil producer, and other producers in OPEC have kept in place a supply agreement to maintain prices while at the same time providing enough oil to the market.

Oil prices ease as trade row clouds demand outlook

CNBC

  • Oil prices dipped on Monday as worries that the U.S. could impose additional tariffs on China outweighed concerns over the supply impact of impending sanctions by Washington on Iran.
  • U.S. President Donald Trump is expected to announce fresh tariffs on Chinese imports worth approximately $200 billion as early as Monday, according to a source which spoke to Reuters.

Global oil prices eased in early Asian trading on Monday on concerns that the United States is poised to impose additional tariffs on China, outweighing supply fears from upcoming sanctions on Iran.

Brent crude oil futures dipped 16 cents, or 0.2 percent to $77.93 a barrel by 0035 GMT.

U.S. West Texas Intermediate (WTI) futures fell 20 cents or 0.3 percent, to $68.79 a barrel.

“The market’s expectation of shortages has cooled after data from last week showed increases in supplies, while investors have lowered the outlook for oil demand,” said Wang Xiao, head of crude research with Guotai Junan Futures.

U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early as Monday, a senior administration official told Reuters on Saturday.

The escalating trade row is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from upcoming U.S. sanctions on Iran over its nuclear program.

Refiners in India, Iran’s second largest crude buyer will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year.

Also weighing on oil prices, U.S. drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.