Oil declines on global demand worries despite hopes on trade talks

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Reuters
KEY POINTS
  • Brent crude was down 18 cents, or 0.3%, at $60.20 a barrel by 0442 GMT.
  • U.S. West Texas Intermediate (WTI) was off by 14 cents, or 0.3%, at $54.95.
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Oil futures fell on Friday as concerns about global growth and slowing demand lingered despite hints of progress on U.S.-China trade talks, setting up prices for weekly losses after days of swinging back and forth.

Brent crude was down 18 cents, or 0.3%, at $60.20 a barrel by 0442 GMT, while U.S. West Texas Intermediate (WTI) was off by 14 cents, or 0.3%, at $54.95.

Brent has traded in a range of nearly $5 this week and is heading for its first weekly loss in five. U.S. crude has traded similarly and is heading for its first loss in three weeks.

Gloom over the economic impact of the trade dispute between Washington and Beijing has left investors shrugging off a strong commitment from Organization of the Petroleum Exporting Countries (OPEC) producers to trim output.

“Again it is a battle between the forces of OPEC and those of slowing global growth and thus demand,” said Greg McKenna, strategist at McKenna Macro.

The weak confidence in the markets was reflected by economists in a Reuters poll who predicted the U.S.-China trade spat will worsen or at best stay the same over the coming year.

Nearly 80% of more than 60 economists said U.S.-China trade relations would either worsen or stay the same by the end of next year. The median probability of a U.S. recession in the next two years held at a high of 45%, and the chance of one in the next 12 months held at 30%.

Still, President Donald Trump said on Thursday he would not rule out an interim deal with China on trade, though he prefers a comprehensive agreement.

Asian stocks advanced on Friday on the signs of progress in U.S.-China trade talks, while aggressive stimulus from the European Central Bank also helped counter worries about a global economic slowdown.

In oil markets, however, concern over whether Trump can achieve progress on the trade dispute has overshadowed OPEC’s Thursday agreement to trim output by asking members Iraq and Nigeria to bring their production back in line with targets.

OPEC is striving to prevent a glut amid soaring U.S. production and a slowing global economy.

OPEC+ has over-complied on average with its agreed cut of 1.2 million barrels per day (bpd) as Iranian and Venezuelan exports collapsed due to sanctions.

“With OPEC’s production curbs and ongoing constraints on sanctioned countries, we see the market tightening in Q4 2019. This should help stabilise prices,” ANZ Research said in a note.

“However, trade tensions and reduced risk of tougher sanctions on Iran and Venezuela will limit the upside,” it said.

Those trade tensions are hitting the shipping sector as the flow of goods and commodities slows, the International Energy Agency said on Thursday.

That will lead to weaker growth than previously expected in oil demand from the shipping sector next year despite a shift to cleaner fuel, the agency said.

Oil gains on hopes for US-China trade war thaw

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Reuters
KEY POINTS
  • Brent crude futures rose 45 cents, or 0.7%, to $61.26 a barrel by 0504 GMT.
  • U.S. West Texas Intermediate (WTI) futures gained 50 cents, or 0.9%, to $56.25 a barrel.
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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 Thursday, recouping some of the heavy losses in the previous session, supported by easing trade tensions between Washington and Beijing and a drop in U.S. crude stockpiles to the lowest in nearly a year.

Brent crude futures rose 45 cents, or 0.7%, to $61.26 a barrel by 0504 GMT, while U.S. West Texas Intermediate (WTI) futures gained 50 cents, or 0.9%, to $56.25 a barrel.

The rise came after China moved to exempt some U.S. anti-cancer drugs and other goods from tariffs, while President Donald Trump announced a delay to scheduled tariff hikes on billions of dollars’ worth of Chinese goods.

The concessions also preceded a planned meeting in coming days aimed at defusing the long-running trade row between the world’s two largest economies.

“The postponement of the next round of China tariffs by President Trump … has the global growth story back in full swing,” said Jeffrey Halley, senior market analyst at OANDA.

That said, “further rallies in Asia look limited today” ahead of the European Central Bank (ECB) rate review.

The ECB meets later on Thursday and is expected to ease policy to support flagging growth.

The price upswing on Thursday came after both of the principal global benchmarks fell sharply in the previous day following a report that President Trump had weighed easing sanctions on Iran, a move that would potentially boost global crude supply at a time of rising concerns about oil demand.

Boosting the market’s good mood, the U.S. Energy Information Administration said on Wednesday that U.S. crude oil stockpiles fell last week to the lowest in nearly a year, as refineries raised output and imports fell.

“Historical inventory patterns suggest that stocks should begin to hit seasonal bottom sometime in the next two-three weeks,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Crude inventories fell for a fourth straight week, decreasing 6.9 million barrels in the week to Sept. 6 – more than double analysts’ expectations of a 2.7 million-barrel draw down.

At 416.1 million barrels, U.S. crude oil inventories were at their lowest since October 2018, and about 2% below the five-year average for this time of year, the EIA said.

Crude stocks at the Cushing, Oklahoma, delivery hub fell 798,000 barrels to 39.3 million barrels, their lowest since November 2018.

Refinery crude runs rose by 114,000 bpd, EIA data showed.

Refinery utilization rates rose by 0.3 percentage point to 95.1% of total capacity.

Oil prices rise after US confirms trade talks with China to start

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Reuters
KEY POINTS
  • Brent crude was up 21 cents, or 0.4%, at $60.91 a barrel by 0301 GMT. On Wednesday, Brent rose 4.2%.
  • West Texas Intermediate (WTI) was up 17 cents, or 0.3%, at $56.43 a barrel, having risen 4.3% the previous session, the biggest percentage gain in nearly two months.
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An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
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Oil prices rose on Thursday, rebounding from earlier losses, after the U.S. confirmed that talks with China to reach a trade agreement would be held in the coming weeks, giving hope that a dispute that has roiled global economies will be resolved.

The gains add to a surge in prices on Wednesday that had been driven by a survey showing activity in China’s services sector expanded at the fastest pace in three months in August, as new orders rose in the world’s second-biggest consumer of oil.

Brent crude was up 21 cents, or 0.4%, at $60.91 a barrel by 0301 GMT. On Wednesday, Brent rose 4.2%.

West Texas Intermediate (WTI) was up 17 cents, or 0.3%, at $56.43 a barrel, having risen 4.3% the previous session, the biggest percentage gain in nearly two months.

Both contracts were lower earlier in the Asian trading session after data late on Wednesday from the American Petroleum Institute (API) showed U.S. crude stocks rose last week, against expectations of a decline.

U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He and agreed to hold ministerial-level trade talks in Washington “in the coming weeks”, a USTR spokesman said late on Wednesday.

Shortly after in Beijing, China’s commerce ministry said the talks would be held and “both sides agreed that they should work together and take practical actions to create good conditions for consultations.”

As the trade war between the United States and China has rumbled on into a second year, evidence has been mounting that economies worldwide are being hit, prompting downgrades of oil demand growth expectations.

BP Plc’s Chief Financial Officer Brian Gilvary told Reuters on Wednesday that global oil demand is expected to grow by less than 1 million barrels per day in 2019 as consumption slows.

Still, supply looks set to stay constrained as Russian officials and sources from the Organization of the Petroleum Exporting Countries (OPEC) indicated the countries remain committed to an agreement to rein in production to support prices.

Crude inventories in the United States rose by 401,000 barrels in the week ended Aug. 30 to 429.1 million, compared with analysts’ expectations for a decrease of 2.5 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 238,000 barrels, while refinery crude runs fell by 306,000 barrels per day, API said.

Oil prices recover some ground, but economic concerns weigh

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Reuters
KEY POINTS
  • Brent crude was up 12 cents, or 0.21%, at $58.38 a barrel by 0425 GMT.
  • U.S. West Texas Intermediate gained 20 cents, or 0.37%, at $54.14 at barrel.
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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 recovered some ground on Wednesday after touching their lowest in close to a month during the previous session on concerns that a weakening global economy could depress demand.

Brent crude was up 12 cents, or 0.21%, at $58.38 a barrel by 0425 GMT, while U.S. West Texas Intermediate gained 20 cents, or 0.37%, at $54.14 at barrel.

Oil prices sunk to a nearly one-month low on Tuesday following data that showed U.S. manufacturing activity in August contracted for the first time in three years and euro zone manufacturing activity contracted for a seventh month in August.

But global markets bounced on Wednesday after a private survey showed that activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year.

China is the world’s second-largest oil consumer and largest importer.

“Given the tumble that we saw overnight it’s probably people locking in gains on shorts or perhaps establishing new longs in anticipation we might get an announcement from Beijing (on setting a date for trade talks with the United States),” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

A short position is when an investor sells futures in expectations of falling prices while a long position is when one buys futures to profit from rising prices.

U.S. President Donald Trump on Tuesday warned he would be “tougher” on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing trade disputes between the United States and China could trigger a U.S. recession.

“Market participants are becoming increasingly worried about recession risk,” said Stephen Innes, a market strategist at AxiTrader.

“Moreover, given that tariffs present a significant threat to U.S. growth and in turn, the health of the global economy, oil prices will remain under pressure especially if trade and tariff war shows no sign of abating.”

Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.

U.S. crude oil stockpiles likely declined for a third straight week, a preliminary Reuters poll showed on Tuesday.

On the supply side, Venezuela’s oil exports fell in August to their lowest level in 2019, internal reports and Refinitiv Eikon data showed, following tougher U.S. sanctions.

Oil falls as US, China add more tariffs in trade war

CNBC

Reuters
KEY POINTS
  • Brent crude was down 27 cents, or 0.5%, at $58.98 a barrel by 0324 GMT.
  • U.S. oil was down 2 cents at $55.083 at barrel.
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A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018.
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Oil prices were lower on Monday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude.

Brent crude was down 27 cents, or 0.5%, at $58.98 a barrel by 0324 GMT, while U.S. oil was down 2 cents at $55.083 at barrel.

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday — including footwear, smart watches and flat-panel televisions — as China put new duties on U.S. crude, the latest escalation in a bruising trade war.

U.S. President Donald Trump said the sides would still meet for talks later this month.

Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China and he again urged American companies to find alternate suppliers outside China.

Beijing’s levy of 5% on U.S. crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.

“The trade and tariff overhang is inescapable for oil markets, so while trade uncertainties persist, it will be difficult for oil to shrug off concerns about the threat to global demand,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

South Korea’s exports tumbled in August for a ninth consecutive month, on sluggish demand from its biggest buyer, China, and depressed prices of computer chips globally, government data showed on Sunday.

The bleak data clouded the outlook for Asia’s fourth-largest economy as a brewing trade dispute with Japan emerged as a new risk on top of the prolonged U.S.-China trade war.

Elsewhere, oil output from members of the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran, a Reuters survey found.

In the United States, energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.