Oil prices lower on US-China trade tension

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures fell as low as $18.32 a barrel and were down $1.46, or 7.6%, at $18.27 at 0008 GMT. The benchmark contract rose 17% last week.
  • Brent crude futures were down 90 cents, or 3.4%, at $25.54, after touching a low of $25.53. Brent rose about 23% last week following three consecutive weeks of losses.
GP: Dozens Of Oil Tankers Sit Off The California Coast As Demand For Crude Plummets During Pandemic
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell in early trade on Monday, paring last week’s gains, on worries the global oil glut may persist as U.S.-China trade tension could hold back an economic recovery even as coronavirus pandemic lockdowns start to ease.

U.S. West Texas Intermediate (WTI) crude futures fell as low as $18.32 a barrel and were down $1.46, or 7.6%, at $18.27 at 0008 GMT. The benchmark contract rose 17% last week.

Brent crude futures were down 90 cents, or 3.4%, at $25.54, after touching a low of $25.53. Brent rose about 23% last week following three consecutive weeks of losses.

The market found support last week as major oil producers led by Saudi Arabia and Russia were set to begin cutting production on May 1, while the top two U.S. producers, Exxon Mobil Corp and Chevron Corp, each said they would cut output by 400,000 barrels per day this quarter.

The output cuts combined with the loosening of business restrictions in some U.S. states and cities around the world were expected to ease the global fuel glut and pressure on storage tanks, helping to drive prices up last week.

U.S drillers cut 53 oil rigs in the week to May 1, bringing the total count down to 325, the lowest since June 2016, energy services firm Baker Hughes said on Friday.

However comments by U.S. President Donald Trump threatening to consider raising tariffs on China to retaliate for the spread of the coronavirus renewed fears that trade tensions could crimp an economic recovery and put a lid on oil price gains.

“The resumption of the trade war will be detrimental to oil prices over the long term,” said Stephen Innes, chief global market strategist at financial services firm AxiCorp.

Oil mixed as shrinking China economy overshadows Trump plan to ease US coronavirus lockdown

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Reuters
KEY POINTS
  • Brent was up by 55 cents, or 2%, at $28.37 a barrel by 0406 GMT, while U.S. crude for May delivery, which expires on April 21, was down 13 cents, or 0.7%, at $19.74 a barrel.
GP: Oil Pumping Jacks
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 prices were mixed on Friday after the weakest Chinese economic data in decades showed the impact of the coronavirus pandemic, offsetting some earlier gains on optimism for President Donald Trump’s early plans to revive the U.S. economy.

Brent was up by 55 cents, or 2%, at $28.37 a barrel by 0406 GMT, while U.S. crude for May delivery, which expires on April 21, was down 13 cents, or 0.7%, at $19.74 a barrel. The more active June contract was up $1, or 4%, at $26.53.

China’s economy shrank for the first time since at least 1992 in the first quarter, as the coronavirus outbreak paralysed production and spending and punched a huge hole in global demand for crude and refined products.

That data was released after Trump laid out a three-stage process for ending lockdowns to stop the spread of the coronavirus that has now killed more than 32,000 Americans and nearly 140,000 worldwide.

“Oil markets found baseline support from President Trump’s U.S. reopening plan,” said Stephen Innes, market strategist at AxiTrader. Still, downside risk remains the dominant factor, he said.

Both oil benchmarks are heading for a second consecutive week of losses, with U.S. oil around 18-year lows: Analysts have slashed forecasts for prices and demand due to the spread of the coronavirus and oversupply concerns.

The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for 2020 global oil demand and warned it may not be the last revision downward. OPEC now sees a contraction of global demand of 6.9 million barrels per day (bpd), compared with a small increase predicted last month, due to the coronavirus outbreak.

“Downward risks remain significant, suggesting the possibility of further adjustments, especially in the second quarter,” OPEC said of the demand forecast.

OPEC and other producers including Russia, in a grouping known as OPEC+, over the weekend agreed on production cuts of nearly 10 million bpd, after an earlier cooperation agreement collapsed.

ConocoPhillips said on Thursday it will reduce planned North American output by 225,000 bpd, the largest cut so far by a major shale oil producer to deal with the unprecedented drop in demand.

“This highlights that the market will see meaningful cuts from outside the OPEC+ group without the need for mandated cuts,” said ING bank in a note on Friday. “Instead, market forces will do the job, with the low price environment forcing producers to cut back.”

Still, even allowing for another 10 million bpd of cuts supposed to come from producers like the United States and Norway due to weak prices, there is still a mismatch between supply and demand of around 10 million bpd, most analysts say.

Oil prices climb as US ramps up economic support measures

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Reuters
KEY POINTS
  • Brent crude oil futures for May delivery rose by 62 cents, or 2.3%, to $27.65 a barrel by 0346 GMT while West Texas Intermediate (WTI) crude futures gained 76 cents, or 3.3%, to $24.12.
  • Both price benchmarks had risen over $1 earlier before pulling back slightly.
GP: Oil production facilities 200205 ASIA
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 Tuesday on hopes that the United States will reach a deal soon on a $2 trillion coronavirus aid package which could blunt the economic impact of the outbreak and in turn support oil demand.

Brent crude oil futures for May delivery rose by 62 cents, or 2.3%, to $27.65 a barrel by 0346 GMT while West Texas Intermediate (WTI) crude futures gained 76 cents, or 3.3%, to $24.12. Both price benchmarks had risen over $1 earlier before pulling back slightly.

“Oil is clawing its way higher mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.

“WTI crude volatility will remain high and traders should not be surprised if this rally eventually gets faded.”

The U.S. Federal Reserve on Monday rolled out an extraordinary array of programs to backstop an economy reeling from restrictions on commerce that scientists say are needed to slow the coronavirus pandemic.

While a $2 trillion coronavirus economic stimulus package remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, U.S. Treasury Secretary Steven Mnuchin voiced confidence that a deal would be reached soon.

The expected stimulus pushed the U.S. dollar lower as it will increase the cash supply. The dollar index, which measures the greenback against six major currencies, fell 0.5% on Tuesday.

A weaker greenback boosts dollar-denominated oil prices since buyers paying in other currencies will pay less for their crude.

Still, the overall crude demand outlook remains low as long as travel restrictions are in place and governments curtail commercial activities to prevent the coronavirus spread.

Prices and profit margins for motor and aviation fuels globally are under severe pressure from a plunge in demand as countries enforce lockdowns and airlines ground planes, forcing more refineries to reduce output and lower their crude oil demand.

Concerns over oil demand were also stoked by a doubling of new coronavirus cases in China, the world’s biggest oil importer, caused by a jump in infected travelers returning home from overseas. That is raising the risk of transmissions in Chinese cities and provinces that had seen no new infections in recent days.

“While the anticipated lengthy absence of air traffic presents a significant obstacle in its own right, … the expected ramp in supply, which suggests storage will fill very quickly, and then prices will plummet as physical demand continues to evaporate,” said Stephen Innes, chief global markets strategist at AxiCorp.

Oil falls for fifth day on demand concerns as coronavirus spreads

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Reuters
KEY POINTS
  • Brent crude was down 63 cents, or 1.2%, at $52.80 a barrel at 0414 GMT. The contract earlier fell to as low as $52.57, the lowest since Jan. 2, 2019.
  • West Texas Intermediate (WTI) futures fell by 65 cents, or 1.3%, to $48.08 a barrel. It earlier fell to as low as $47.84, the lowest since Jan. 4, 2019.
GP: Oil production facilities 200205 ASIA
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 for a fifth day on Thursday to their lowest since January 2019 as a growing number of new coronavirus cases outside of China fuelled fears of a pandemic which could slow the global economy and lower crude demand.

Brent crude was down 63 cents, or 1.2%, at $52.80 a barrel at 0414 GMT. The contract earlier fell to as low as $52.57, the lowest since Jan. 2, 2019.

West Texas Intermediate (WTI) futures fell by 65 cents, or 1.3%, to $48.08 a barrel. It earlier fell to as low as $47.84, the lowest since Jan. 4, 2019.

In the five trading sessions through Thursday, Brent has dropped 11%, while WTI has declined 10.6%, their biggest five-day percentage losses since August 2019.

On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases.

The spread to large economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand growth will only 60,000 barrels per day in 2020, or “practically zero”, because of the widening outbreak.

U.S. President Donald Trump assured Americans on Wednesday evening that the risk from coronavirus remained “very low”. However, Asian share markets fell on Thursday morning, as investors fear the coronavirus spread will disrupt the global economy as quarantines and other measures taken to halt its advance slow trade and industry.

“Speculations that coronavirus may spread in the United States prompted a series of fresh selling,” said Kazuhiko Saito, chief analyst at Fujitomi Co.

If an outbreak “continues to worsen in the United States, oil prices will likely decline further, especially with U.S. gasoline prices already plunging,” Saito said.

The United States is the world’s largest oil producer and consumer.

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the Energy Information Administration said, which was less than the 2-million-barrel rise analysts had expected.

The crude market was also watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+.

OPEC+ plans to meet in Vienna over March 5-6.

Oil rises on short-covering despite growing fears over coronavirus

CNBC

Reuters
KEY POINTS
  • Brent crude rose 42 cents, or 0.8%, to $55.37 a barrel by 0154 GMT.
  • U.S. West Texas Intermediate crude gained 43 cents, or 0.9%, to $50.33 a barrel.
  • Still, both benchmarks are down nearly 7% since last Thursday’s close.
GP: Oil production as sun sets
Oil production in Azerbaijan
Vostok

Crude prices edged up on Wednesday as investors covered short positions after three sessions of losses, even as fears deepened that the rapid spread of the coronavirus will lead to a global pandemic.

Brent crude rose 42 cents, or 0.8%, to $55.37 a barrel by 0154 GMT, while U.S. West Texas Intermediate crude gained 43 cents, or 0.9%, to $50.33 a barrel. Still, both benchmarks are down nearly 7% since last Thursday’s close.

Fears of a pandemic escalated after the coronavirus spread to more countries, while Iran’s virus death toll rose to 16, the highest outside China, and infections worsened in South Korea and Italy.

In the United States, the Centers for Disease Control and Prevention said Americans should prepare for possible community spread of the virus.

“Investors unwound short positions after WTI dipped below a key support level of $50, as they have done a few times earlier this month,” said Hideshi Matsunaga, analyst at Sunward Trading.

“The reduction in Libya’s output and expectations for additional production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ are also lending support,” he said.

Oil output in Libya has fallen sharply since Jan. 18 because of a blockade of ports and oil fields by groups loyal to eastern-based commander Khalifa Haftar.

OPEC and its allies including Russia, a group known as OPEC+, are due to meet in Vienna over March 5-6.

Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partners would respond responsibly to the spread of the coronavirus.

Still, lingering worries that the rapidly spreading coronavirus will dent the global economy and oil demand are weighing on investor sentiment.

The International Energy Agency’s (IEA) outlook on global oil demand growth has fallen to its lowest level in a decade, IEA Executive Director Fatih Birol said on Tuesday, adding it could be reduced further due to the coronavirus outbreak.

U.S. crude inventories are expected to rise for a fifth week running. The American Petroleum Institute (API) said late Tuesday that crude stockpiles rose 1.3 million barrels last week. Government data due at 10:30 a.m. EST (1530 GMT) on Wednesday was expected to show a 2 million-barrel rise, according to a Reuters poll.

Meanwhile, the United States is preparing to impose more sanctions on Venezuela’s oil sector, President Donald Trump said on Tuesday, in an attempt to choke financing to President Nicolas Maduro’s government.