Oil prices rise, head for weekly gain amid cautious hopes for fuel demand recovery

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REUTERS
KEY POINTS
  • Brent crude was up 14 cents, or 0.3%, at $45.10 by 0043 GMT, heading for a gain of about 1.6% this week.
  • West Texas Intermediate had gained 12 cents, or 0.3%, to $42.36. The U.S. benchmark is heading for a gain of nearly 3% this week.
  • The International Energy Agency has reduced its oil demand forecast for this year, and said lower air travel due to the pandemic would cut global oil consumption this year by 8.1 million barrels per day.
A view of the Marathon Petroleum Corp's Los Angeles Refinery in Carson, California, April 25, 2020.
A view of the Marathon Petroleum Corp’s Los Angeles Refinery in Carson, California, April 25, 2020.
Robyn Beck | AFP | Getty Images

Oil prices advanced on Friday and were heading for a second week of gains amid growing confidence that demand for fuel is starting to pick up despite the coronavirus pandemic that has slammed economies worldwide.

Brent crude was up 14 cents, or 0.3%, at $45.10 by 0043 GMT, heading for a gain of about 1.6% this week.

West Texas Intermediate had gained 12 cents, or 0.3%, to $42.36. The U.S. benchmark is heading for a gain of nearly 3% this week.

“The situation has improved some, but the market dynamics are still less than stellar,” said Robert Yawger, director of energy futures at Mizuho Securities, adding “the market is oversupplied”.

Prices have been bolstered this week by U.S. government data showing crude oil, gasoline and distillate inventories all fell last week as refiners ramped up production and demand for oil products improved.

Still, the International Energy Agency has reduced its oil demand forecast for this year, and said lower air travel due to the Covid-19 pandemic would cut global oil consumption this year by 8.1 million barrels per day.

The Organization of the Petroleum Exporting Countries said earlier this week that world oil demand is likely to drop by 9.06 million bpd this year, a bigger decline than the 8.95 million bpd decline expected a month ago.

OPEC and allies including Russia, collectively called OPEC+, cut output since May by around 10% of typical global demand to tackle the fallout from the global health crisis.

Meanwhile, Russian Energy Minister Alexander Novak said he does not expect quick decisions on output cuts when an OPEC+ group monitoring committee meets next week, Russian news agencies reported on Thursday.

Oil edges lower after OPEC report, U.S. stocks draw support

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REUTERS
KEY POINTS
  • Brent crude was down 8 cents at $45.35 a barrel by 0726 GMT, after a gain of around 2% in the previous session.
  • West Texas Intermediate oil was down by 4 cents at $42.62 a barrel after gaining 2.6% on Wednesday.
  • U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March, data from the Energy Information Administration showed.
  • Crude output fell to 10.7 million barrels per day from 11 million bpd.
A heavy crude oil pump.
A heavy crude oil pump.
Jsmes Hall | EyeEm | Getty Images

Crude oil prices slipped on Thursday after OPEC said it expected fuel demand to fall more than expected, although U.S. government data showing a fall in inventories suggested demand is returning despite the coronavirus pandemic.

Brent crude was down 8 cents at $45.35 a barrel by 0726 GMT, after a gain of around 2% in the previous session. West Texas Intermediate oil was down by 4 cents at $42.62 a barrel after gaining 2.6% on Wednesday.

The Organization of the Petroleum Exporting Countries said in a monthly report that world oil demand will fall by 9.06 million bpd this year, more than the 8.95 million bpd decline expected a month ago.

“OPEC released a bearish monthly forecast which indicated that world oil demand will fall more steeply in 2020 than previously forecasted due to the coronavirus and there are doubts about next year’s recovery,” said Avtar Sandu, senior manager commodities at Phillip Futures.

Still, U.S. crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, a government report showed.

U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March, data from the Energy Information Administration showed, while crude output fell to 10.7 million barrels per day from 11 million bpd.

Crude inventories fell by 4.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.9 million-barrel drop.

The EIA’s downward revision on Tuesday to a key U.S. oil production forecast for this year is helping support prices.

U.S. crude production is forecast decline by 990,000 bpd this year to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month, which indicated that world oil demand remains questionable.

Increasing uncertainty over a stalemate in Washington on a stimulus package to support recovery from the deepest impact of the coronavirus pandemic may also weigh on prices, analysts said.

Oil prices bolstered by bigger-than-expected drop in U.S. crude stocks

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Reuters
KEY POINTS
  • Oil prices moved higher on Wednesday after an industry report showed that U.S. crude inventories fell more than analysts had expected.
  • It bolstered hopes that fuel demand in the world’s biggest economy can weather the coronavirus pandemic.
  • Brent crude was up 15 cents, or 0.3%, at $44.65 a barrel by 0206 GMT, after falling around 1% on Tuesday.
  • West Texas Intermediate oil was up 9 cents, or 0.2%, at $41.70 a barrel, having dropped 0.8% in the previous session.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil prices moved higher on Wednesday after an industry report showed that U.S. inventories of crude fell more than analysts had expected, bolstering hopes that fuel demand in the world’s biggest economy can weather the coronavirus pandemic.

Brent crude was up 15 cents, or 0.3%, at $44.65 a barrel by 0206 GMT, after falling around 1% on Tuesday.

West Texas Intermediate oil was up 9 cents, or 0.2%, at $41.70 a barrel, having dropped 0.8% in the previous session.

“Oil prices are rising as the crude demand outlook improves,” said Edward Moya, senior market analyst at OANDA.

The American Petroleum Institute said on Tuesday that crude stocks fell by 4 million barrels last week, more than analysts’ expectations of a 2.9 million-barrel draw. Official government data is due on Wednesday.

Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices looking ahead.

Oil edges higher on hopes for U.S. stimulus, demand recovery

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REUTERS
KEY POINTS
  • Brent crude added 22 cents, or 0.5%, to $45.21 a barrel, as of 0441 GMT.
  • West Texas Intermediate U.S. crude  rose 32 cents, or 0.8%, to $42.26 a barrel.
  • Prices found support after U.S. President Donald Trump tweeted that top congressional Democrats wanted to meet with him on coronavirus-related economic relief.

 

Men work for Iraqi Drilling Company at Rumaila oilfield in Basra, Iraq,
Men work for Iraqi Drilling Company at Rumaila oilfield in Basra, Iraq,
Essam Al-Sudani | Reuters

Crude oil gained more ground on Tuesday, with prices underpinned by expectations of U.S. stimulus and a rebound in Asian demand as economies reopen.

Brent crude added 22 cents, or 0.5%, to $45.21 a barrel, as of 0441 GMT. West Texas Intermediate U.S. crude  rose 32 cents, or 0.8%, to $42.26 a barrel.

“Crude oil gained amid signs of further stimulus measures,” ANZ said in a note.

“U.S. lawmakers continued negotiations on the massive virus relief economic package with Treasury Secretary Steven Mnuchin saying there are areas where compromise is possible and a fair deal could be agreed upon. Sentiment was also boosted by comments from Saudi Aramco that demand is improving.”

Prices found support after U.S. President Donald Trump tweeted that top congressional Democrats wanted to meet with him on coronavirus-related economic relief.

The talks between Democrats and the Trump administration broke down last week.

A weaker U.S. dollar also helped support higher oil prices, said Energy Aspects analyst Virendra Chauhan.

After steadying on Monday the dollar was again slipping on Tuesday, easing 0.1% against a basket of currencies  and falling further against riskier currencies like the Australian dollar.

U.S. passenger airline traffic, which was hit hard by the coronavirus pandemic, was down 80% in June from a year earlier, official figures showed, but still nearly twice the levels of May.

On Sunday, Saudi Arabian Aramco CEO Amin Nasser said he sees oil demand rebounding in Asia as economies gradually open up.

China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of recovery in the world’s second-largest economy.

Energy companies have begun taking back millions of barrels of oil from the U.S. government’s emergency stockpile after renting storage in the facility to help manage a glut of crude this spring after energy demand collapsed during Covid-19 lockdowns, a Department of Energy website showed on Monday.

Oil prices rise 1% on Saudi Aramco’s upbeat demand view, Iraq output cut

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REUTERS
KEY POINTS
  • Oil prices climbed on Monday, supported by Saudi optimism on Asian demand and an Iraqi pledge to deepen supply cuts, although uncertainty over a deal to shore up the U.S. economic recovery capped gains.
  • U.S. West Texas Intermediate (WTI) crude futures rose 50 cents, or 1.2%, to $41.72 a barrel at 0301 GMT.
  • Global benchmark Brent crude futures were up 40 cents, or 0.9%, at $44.80 a barrel.
Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices climbed on Monday, supported by Saudi optimism on Asian demand and an Iraqi pledge to deepen supply cuts, although uncertainty over a deal to shore up the U.S. economic recovery capped gains.

U.S. West Texas Intermediate (WTI) crude futures rose 50 cents, or 1.2%, to $41.72 a barrel at 0301 GMT, while Brent crude futures were up 40 cents, or 0.9%, at $44.80 a barrel.

Both benchmark contracts fell on Friday, hurt by demand concerns, but Brent still ended the week up 2.5%, with WTI up 2.4%.

“Comments from the weekend from Aramco are the driver at the moment,” said Michael McCarthy, market strategist at CMC Markets and Stockbroking.

Saudi Arabian Aramco’s Chief Executive Amin Nasser said on Sunday he sees oil demand rebounding in Asia as economies gradually open up after the easing of coronavirus lockdowns.

“He painted a rosy picture on the outlook for demand in the Asian region,” McCarthy said.

On the supply side, Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months. The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and their allies, together called OPEC+.

The sharper cut will take Iraq’s total reduction to 1.25 million bpd this month and next.

“Saudi Arabia and Iraq forging better relationships over the oil deal are excellent for the compliance outlook,” AxiCorp market strategist Stephen Innes said in a note.

The Saudi and Iraqi energy ministers said in a joint statement that OPEC+ efforts would improve the stability of global oil markets, accelerate its balancing and send positive signals to the markets.

While hopes grew on stalled talks between U.S. Democrats and the White House on a new support package for cash-strapped U.S. states hit by the coronavirus pandemic, delays in reaching a deal weighed on the market.

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both said they were willing to restart talks on a deal to cover the rest of 2020.

“The longer this drags on the worse it is for the demand scenario,” McCarthy said.