Crude futures firm as US stockpiles of oil products gain

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Reuters
KEY POINTS
  • Brent crude futures were up 13 cents, or 0.2%, at $63.80 a barrel by 0237 GMT. They fell 1.1% on Wednesday.
  • U.S West Texas Intermediate crude futures were down 1 cent at $56.77. The U.S. benchmark dropped 1.5% in the previous session.
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Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil prices steadied on Thursday after falling in the previous session when official data showed U.S. stockpiles of products like gasoline rose sharply last week, suggesting weak demand during the peak driving season.

Brent crude futures were up 13 cents, or 0.2%, at $63.80 a barrel by 0237 GMT. They fell 1.1% on Wednesday.

U.S West Texas Intermediate crude futures were down 1 cent at $56.77. The U.S. benchmark dropped 1.5% in the previous session.

Oil prices have fallen this week as worries over a Middle East conflict have eased, oil production in the Gulf of Mexico has resumed after a storm and worries have emerged over Chinese economic growth.

The “easing of tensions between the U.S. and Iran, mixed Chinese growth data and storm-hit operations getting back online are all pressuring oil prices downward, ” said Alfonso Esparza senior market analyst at OANDA.

Japan’s exports fell for a seventh straight month in June, with shipments to China falling more than 10%, while Japanese manufacturers’ business confidence fell to a three-year low.

On the oil supply front, data on Wednesday from the U.S. Energy Information Administration showed a larger-than-expected draw down in crude stockpiles last week, but traders focused on large builds in refined product inventories dragging prices down.

U.S. crude inventories fell 3.1 million barrels, the EIA said, more than analysts’ forecasts for a decrease of 2.7 million barrels.

However, gasoline stocks rose 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel drop. Distillate stockpiles grew by 5.7 million barrels, much more than expectations for a 613,000-barrel increase, the EIA data showed.

“Gasoline consumption is painfully weak given U.S. consumers are in peak driving season,” said Stephen Innes, managing partner at Vanguard Markets.

Crude production was disrupted last week by Storm Barry, which came ashore on Saturday in central Louisiana as a Category 1 hurricane, the first major storm to hit the U.S. Gulf of Mexico this season.

More than half of daily crude production in the Gulf of Mexico remained offline by Tuesday, as most oil companies were re-staffing facilities to resume production.

The market shrugged of another incident involving a tanker in the Middle East amid tensions between the United States and Iran.

U.S. officials say they are unsure whether an oil tanker towed into Iranian waters was seized by Iran or rescued after facing mechanical faults as Tehran asserts, creating a mystery at a time of high tension in the Middle East.

Oil prices edge lower as China’s GDP growth slows

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Reuters
KEY POINTS
  • Brent crude futures for September fell 21 cents to $66.51 a barrel by 0222 GMT.
  • U.S. crude for August was down 28 cents at $59.93 a barrel.
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Jerome Favre | Bloomberg | Getty Images

Oil prices slipped on Monday after China posted its slowest quarterly economic growth in at least 27 years, reinforcing concerns about demand in the world’s largest crude oil importer.

Brent crude futures for September fell 21 cents to $66.51 a barrel by 0222 GMT while U.S. crude for August was down 28 cents at $59.93 a barrel. Both contracts last week posted their biggest weekly gains in three weeks on cuts in U.S. oil production and diplomatic tensions in the Middle East.

Refineries in the path of Tropical Storm Barry continued to operate despite flood threats while the storm has slashed U.S. Gulf of Mexico crude output by 73%, or 1.38 million barrels per day.

An unwinding of the risk premium from tropical storm Barry, lower oil demand forecasts and a lack of news from the Middle East may have led to a muted oil price reaction, Stephen Innes, managing partner at Bangkok-based Vanguard Markets, said.

China’s economic growth slowed to 6.2% in the second quarter from a year earlier, in line with analysts’ expectations, with demand at home and abroad faltering as the Sino-U.S. trade war bites.

Still, China’s industrial output and retail sales beat forecasts, “suggesting that the economy in China is healthier than we previously been pricing,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

In the Middle East, Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran is ready to hold talks with the United States if Washington lifts sanctions and returns to the 2015 nuclear deal it quit last year.

Meanwhile Britain has offered to facilitate the release of the detained Iranian oil tanker Grace 1 if Tehran gave guarantees that it would not go to Syria.

Oil prices drop amid slowing global economy, trade disputes

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Reuters

KEY POINTS
  • Brent crude futures were down 21 cents, or 0.3%, at $63.90 a barrel by 0343 GMT. They fell 12 cents on Monday.
  • U.S. West Texas Intermediate crude futures were down 25 cents, or 0.4%, at $57.41 a barrel. They rose 15 cents in the previous session.
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A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
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Oil fell on Tuesday amid worries over the outlook for demand after the latest signs that international trade disputes have been dragging on the global economy, although the potential for conflicts in the Middle East offered support to prices.

Brent crude futures were down 21 cents, or 0.3%, at $63.90 a barrel by 0343 GMT. They fell 12 cents on Monday.

U.S. West Texas Intermediate crude futures were down 25 cents, or 0.4%, at $57.41 a barrel. They rose 15 cents in the previous session.

Oil prices are being pressured by ongoing worries about demand as the U.S.-China trade war, heading into its second year, dampens prospects for global economic growth, which strongly impacts oil demand growth. The countries are the world’s two largest oil consumers.

Japan’s core machinery orders fell by the most in eight months, data showed on Monday, in a sign the global trade tensions are taking a toll on corporate investment.

Japanese government figures on Tuesday also showed that real wages in the country fell for a fifth straight month. The country is the fourth-largest crude user in the world.

“The weaker global economic outlook is keeping oil prices under downward pressure, but tensions in the Middle East are enhancing awareness to possible supply risk and should keep a floor under oil in the medium term,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.

Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year.

Washington has imposed sanctions that eliminate benefits Iran was meant to receive in return for agreeing to curbs on its nuclear program under the 2015 deal with world powers.

The confrontation has brought the United States and Iran close to conflict. Last month, U.S. President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone over the Gulf, which followed attacks on two oil product tankers in the nearby Gulf of Oman by unidentified assailants.

Meanwhile, Goldman Sachs said growth in U.S. shale production was likely to outpace that of global demand at least through 2020, limiting gains in oil prices despite output curbs led by the Organization of the Petroleum Exporting Countries.

Industry and government data for release later on Tuesday and on Wednesday is expected to show that U.S. crude stockpiles fell for a fourth consecutive week, dropping 3.6 million barrels, according to a preliminary Reuters poll.

Oil prices steady, focus turns to G-20 gathering

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Reuters

KEY POINTS
  • Brent crude futures were up 5 cents, or 0.08%, at $66.60 per barrel by 0043 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures were down 2 cents, or 0.03%, at $59.41 a barrel.
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Sergei Karpukhin | Reuters

Oil prices were steady on Friday, with focus shifting to the G20 summit where a scheduled meeting between U.S. President Donald Trump and Chinese President Xi Jinping has stirred hopes that trade tensions could ease.

Brent crude futures were up 5 cents, or 0.08%, at $66.60 per barrel by 0043 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 2 cents, or 0.03%, at $59.41 a barrel.

The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between Trump and Xi on Saturday.

A trade dispute between the world’s two biggest economies has weighed on oil prices, fanning fears that slowing economic growth could dent demand for the commodity.

“While there are no expectations of a truce between the two parties, it will set the scene for the OPEC meeting a couple of days later,” ANZ Bank said in a note.

Trump said on Wednesday a trade deal with Chinese President Xi was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports should the two countries disagree. [nL2N23X1WK]

“Even if U.S.-China trade talks turn positive, we think OPEC will extend the current production cuts until the end of the year. However, deeper cuts look unlikely, given the rising supply issues, ” ANZ said.

The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts.

OPEC+ agreed to curb their oil output by 1.2 million barrels per day from Jan.1.

Russian President Vladimir Putin said in an interview with the Financial Times on Thursday that the OPEC-led supply cut helped stabilize oil markets and the future of the output deal was expected to be on the agenda at the G20 summit.

Tensions between the United States and Iran have also been keeping markets on edge.

A week after U.S. President Donald Trump called off air strikes on Iran at the last minute, the prospect that Tehran could soon violate its nuclear commitments has created additional diplomatic urgency to find a way out of the crisis.

Oil gains amid Middle East tensions, US-China trade deal hopes

CNBC

Reuters

KEY POINTS
  • Brent crude futures were up 3 cents at $62.17 a barrel by 0330 GMT. They rose 2% on Tuesday.
  • U.S. West Texas Intermediate crude gained 12 cents to $54.02 a barrel. The U.S. benchmark surged 3.8% in the last session.
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Jason Reed | Reuters

Oil prices extended gains on Wednesday after rising in the previous session on rekindled hopes for a U.S.China trade deal and on the potential for conflict between the U.S. and Iran in the Middle East after tanker attacks there last week.

Brent crude futures were up 3 cents at $62.17 a barrel by 0330 GMT. They rose 2% on Tuesday.

U.S. West Texas Intermediate crude gained 12 cents to $54.02 a barrel. The U.S. benchmark surged 3.8% in the last session.

In a post on Twitter, U.S. President Donald Trump said preparations were starting for him to meet Chinese President Xi Jinping at the G20 summit in Osaka, Japan, next week.

That comes after talks to reach a broad deal on trade between the United States and China broke down last month after Washington accused the Chinese of backing away from previously agreed commitments.

Interaction between the two sides since then has been limited, and Trump has threatened, repeatedly, to slap more tariffs on Chinese products in an escalation that businesses in both countries want to avoid.

“Global demand for crude got a boost on expectations that trade talks are showing some positive signs following President Trump’s tweets,” said Edward Moya, senior market analyst at OANDA in New York.

Both oil benchmarks gave up earlier gains in the Asian session after data showed that Japan’s exports fell for a sixth straight month in May as China-bound shipments weakened, underlining the impact of the trade war.

Tensions in the Middle East after last week’s tanker attacks remain high, with Trump saying he was prepared to take military action to stop Iran having a nuclear bomb but leaving open whether he would sanction the use of force to protect Gulf oil supplies.

Fears of a confrontation between Iran and the United States have mounted since last Thursday’s attacks, which Washington has blamed on Tehran. Iran has denied involvement.

Iran said this week it would breach internationally agreed curbs on its stock of low-enriched uranium within 10 days, possibly paving the way for the country to develop a nuclear weapon, adding that European nations still had time to save a landmark nuclear deal.

The U.S. is deploying about 1,000 more troops to the Middle East for what Washington said were defensive purposes, citing concerns about a threat from Iran.

Market participants are also waiting for a meeting between the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, a group known as OPEC+, to decide whether to extend a supply reduction pact that ends this month.

OPEC and non-OPEC states are discussing holding meetings on July 10-12 in Vienna, a date range proposed by Iran, OPEC sources said on Tuesday. OPEC itself, however, is considering meeting on July 1-2 though it is still saying meeting will be held on June 25-26 on its website.

U.S. crude stocks also fell by 812,000 barrels last week to 482 million, industry group the American Petroleum Institute said on Tuesday.

The report from the government’s Energy Information Administration are due later on Wednesday.