Oil prices creep up on demand recovery, tempered by virus outbreaks

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.
  • Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices rose on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite a surge in coronavirus infections in some U.S. states and indications of a revival in U.S. crude production.

U.S. West Texas Intermediate (WTI) crude futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.

Brent crude futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.

Overall, commodities markets were taking a positive view on the global recovery on Friday despite worries about coronavirus flare-ups, said Michael McCarthy, chief market strategist at CMC Markets.

“It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,” he said.

Analysts said satellite data showing strong pick-ups in traffic in China, Europe and across the United States pointed to a recovery in fuel demand.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.

However, there are fears a spike in Covid-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

“The risk of a fresh outbreak could hit the recovery in demand,” ANZ Research said in a note.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

WTI would have to be between $36 and $41 a barrel for a majority of producers to restore output, nearly a third said in the survey. Another 27% said prices would have to range between $41 and $45 per barrel.

Oil prices slides as U.S. crude stockpile growth heightens oversupply fears

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Reuters
KEY POINTS
  • Brent crude was down 29 cents, or 0.7%, at $42.34 a barrel by 0335 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.9%, to $40.02 a barrel.
Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil futures dropped on Wednesday, extending losses from the previous day, after U.S. crude stockpiles grew more than expected, adding to worries about oversupply.

Brent crude was down 29 cents, or 0.7%, at $42.34 a barrel by 0335 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.9%, to $40.02 a barrel.

U.S. crude inventories rose by a much bigger than expected 1.7 million barrels last week, according to industry group the American Petroleum Institute (API), well ahead of analysts’ expectations for a 300,000-barrel build.

However, U.S. gasoline and distillate inventories fell, the data showed, feeding optimism that fuel consumption is picking up as some economies ease lockdowns imposed to contain the coronavirus pandemic.

U.S. government data will be released on Wednesday.

“Some investors took profits after the recent rally as they saw higher U.S. crude stockpiles,” Chiyoki Chen, chief analyst at Sunward Trading said.

On Tuesday, both Brent and WTI contracts traded at their highest levels since prices collapsed in early March.

Global oil consumption has started to recover as economies emerge from lockdown, while the Organization of the Petroleum Exporting Countries (OPEC) and allied producers — a grouping known as OPEC+ — have slashed output and U.S. shale producers have shut in wells.

Still, the market remains concerned about a rising number of coronavirus cases in the United States and elsewhere, said Kazuhiko Saito, chief analyst at Fujitomi Co.

New cases of Covid-19 rose 25% in the United States in the week ended June 21 and the death toll in Latin America passed 100,000 on Tuesday, according to a Reuters analysis and tally.

China, the world’s top crude importer, is also expected to slow crude imports in the third quarter, after record purchases in recent months, as higher oil prices hurt demand and refiners worry about a second virus outbreak.

“We expect Brent to be traded between $35-45 a barrel for the next week as concerns over a second wave of the coronavirus pandemic will limit gains, while reduced supply from OPEC+ will lend support,” Sunward’s Chen said.

Oil prices seesaw after Navarro walks back U.S.-China trade deal comment

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Reuters
KEY POINTS
  • Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.
  • Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.

Jangled nerves were also soothed to some degree after U.S. President Donald Trump later tweeted that the China trade deal was fully intact, adding he hoped China would continue to live up to the terms of the agreement.

Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.

U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Trump and his administration repeatedly have accused Beijing of not being transparent about the outbreak.

Prices had slid suddenly after Navarro told Fox News in an interview that the trade deal with China was “over”, linking the breakdown in part to Beijing not sounding the alarm earlier about the outbreak of the coronavirus pandemic.

He later issued a statement saying that he had been “speaking to the lack of trust” in the Chinese administration, the comments had been “taken wildly out of context” and the trade deal remains in place.

“These comments from Navarro came out of nowhere,” said Edward Moya, senior market analyst at brokerage OANDA. “Energy traders will likely remain sceptical of the relationship between the U.S. and China if the Chinese fail to quickly make up for the shortfall with their promises of agricultural goods (purchases).”

Prices had risen earlier in the session, with the reopening of some U.S. states and countries around the world after coronavirus lockdowns sustaining a rally as demand for fuel returns. In New York, streets were clogged with traffic as the worst affected city in the United States emerged from more than 100 days of lockdown.

Tensions in the Middle East also lent some support to oil prices.

The Saudi-led coalition in Yemen said early on Tuesday it intercepted three ballistic missiles launched by Yemen’s Houthis towards the Saudi Arabian cities of Najran and Jizan, according to the Saudi state TV.

On the supply side, meanwhile, U.S. and Canadian oil and gas drillers cut the number of the rigs they are operating to a record low. That leaves them with a steep slope to scale towards recovery in output even with higher prices to spur them on.

“U.S. onshore production has now given up two full years of (volume) gains,” said Stephen Innes, chief global markets strategist, at AxiCorp. “It supports the market supposition that even with a rebound in price, the capital investment that had already been tapering off in Q1 isn’t flowing back quickly.”

U.S. oil rigs contracted for drilling dropped by 10 to 189 last week, their lowest since June 2009, according to weekly data from energy services firm Baker Hughes Co.

Gas rigs fell by three to 75, the lowest on record according to data going back to 1987.

Oil prices fall on demand concerns as coronavirus cases rise

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures dropped 2.1%, or 80 cents, to $37.16 a barrel at 0138 GMT, adding to a loss of 42 cents on Wednesday.
  • Brent crude futures fell 1.5%, or 61 cents, to $40.10 a barrel. The benchmark contract declined 25 cents on Wednesday.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices fell around 2% on Thursday as a spike in new coronavirus cases in China and the United States renewed fears that people would stay home, stalling a recovery in fuel demand even as lockdowns ease.

U.S. West Texas Intermediate (WTI) crude futures dropped 2.1%, or 80 cents, to $37.16 a barrel at 0138 GMT, adding to a loss of 42 cents on Wednesday.

Brent crude futures fell 1.5%, or 61 cents, to $40.10 a barrel. The benchmark contract declined 25 cents on Wednesday.

Worries about fuel demand rose after a surge in coronavirus cases led Beijing to cancel flights and shut schools and several U.S. states, including Texas, Florida and California, reported sharp increases in new cases.

A rise in U.S. crude stockpiles to a record high for a second week in a row also weighed on sentiment, even though U.S. government data showed inventories of gasoline and distillate, which include diesel and heating oil, fell.

“People are concerned about the coronavirus resurging in China and crude stockpiles rising,” said Lachlan Shaw, head of commodity research at National Australia Bank.

While prices dipped, they are likely to remain in the $35 to $40 band they have been trading in so far in June, with the Organization of the Petroleum Exporting Countries and its allies, a grouping called OPEC+, mostly sticking to promised supply cuts, U.S. shale producers holding back output, and fuel demand gradually improving, analysts said.

OPEC+ compliance with crude production cut commitments in May was 87%, two OPEC+ sources said on Wednesday.

However OPEC warned in a monthly report the market would remain in surplus in the second half of 2020 even as demand improves, as it now expects supply from outside the group to be about 300,000 barrels per day higher than earlier thought.

“OPEC’s dour assessment” added to negative sentiment, ANZ said in a note.

Oil slumps as U.S. crude stocks build amid virus resurgence fears

CNBC

Reuters
KEY POINTS
  • Brent crude futures were down 89 cents, or 2.2%, at $40.07 a barrel as of 0348 GMT.
  • U.S. West Texas Intermediate (WTI) futures fell $1.13, or 2.9%, to $37.25 a barrel.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices fell on Wednesday as data showed an increase in U.S. crude and fuel inventories, raising the prospect of oversupply as a potential second wave of the coronavirus pandemic threatened to halt any recovery of demand.

Brent crude futures were down 89 cents, or 2.2%, at $40.07 a barrel as of 0348 GMT, and U.S. West Texas Intermediate (WTI) futures fell $1.13, or 2.9%, to $37.25 a barrel.

Both benchmarks rose more than 3% on Tuesday, after the International Energy Agency (IEA) raised its 2020 oil demand forecast to 91.7 million barrels per day (bpd) and U.S. retail sales posted a record jump in May.

The rise in U.S. crude and fuel inventories, however, stoked concerns about a surplus and pressured oil prices, as the number of coronavirus infections surpassed 8 million globally and several U.S. states saw their case numbers spike.

“API data showed a build in crude inventories, and rising new coronavirus cases in the United States and China have dampened expectations of improving fuel demand in the world’s top two oil consumers,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

U.S. crude oil inventories rose by 3.9 million barrels in the week to June 12 to 543.2 million barrels, according to data from industry group the American Petroleum Institute, countering expectations for a fall of 152,000 barrels.

Gasoline stocks rose by 4.3 million barrels and distillate fuels, which include diesel and heating oil, rose 919,000 barrels.

Official data from the U.S. Department of Energy’s Energy Information Administration is due later on Wednesday.

An OPEC-led panel will meet on Thursday to further discuss ways to strengthen and review compliance with producers’ commitment to curb oil output.

Iraq reduced its oil exports by 8%, or 300,000 bpd, so far in June, indicating OPEC’s second-largest producer is stepping up efforts to adhere to its pledged cut.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed to cut output by 9.7 million bpd — about 10% of pre-pandemic demand — to the end of July.