Crude oil prices ease on prospects of higher world supplies

CNBC

  • Crude oil futures lost more ground on Monday.
  • Prices came under pressure from record U.S. output and expectations of higher OPEC supplies.

Oil

Lucy Nicholson | Reuters

Crude oil futures lost more ground on Monday as the market was weighed down by U.S. output climbing to a record-high and expectations that OPEC members will raise supplies.

Global benchmark Brent was down 34 cents, or 0.4 percent, at $76.45 a barrel by 0531 GMT, falling for a second session.

U.S. West Texas Intermediate (WTI) crude futures dipped 3 cents to $65.78 a barrel. Last week, the market lost around 3 percent, adding to a near 5-percent decline from a week before.

“Crude oil remained under pressure as the market remained focused on the discussion between OPEC members about whether they should increase production later this year,” ANZ said in a note.

“In the U.S., the data also presented a gloomy picture. Crude oil production rose to another record, while drilling activity picked up again.”

“We are going into summer, the high demand season, and I think we are going to see a fall in U.S. crude oil inventories, but shale oil output is growing. Which one is going to win is the issue,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

Saudi Arabia, effective leader of the Organization of the Petroleum Exporting Countries (OPEC), and Russia have discussed boosting output to compensate for supply losses from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.

Oil market is doing something it hasn't done in 3 years — and it's bullish for crude

Oil market is doing something it hasn’t done in 3 years — and it’s bullish for crude  

Russia’s largest oil producer Rosneft will be able to restore 70,000 barrels per day (bpd) of oil output in just two days if global production limits are lifted, Renaissance Capital wrote in a client note.

U.S. crude production climbed in March to 10.47 million barrels per day (bpd), a monthly record, the Energy Information Administration said on Thursday.

U.S. drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015, General Electric’s Baker Hughes energy services firm said on Friday. That was the eighth time drillers have added rigs in the past nine weeks.

Hedge funds and other money managers cut their bullish wagers on U.S. crude futures and options, according to data released on Friday, as oil prices slumped on oversupply fears.

The speculator group cut its combined futures and options position in New York and London by 50,937 contracts to 370,980 during the week to May 29, the U.S. Commodity Futures Trading Commission said.

Oil prices rise as US President Trump set to meet North Korea’s Kim

CNBC

  • Crude oil futures rose on Friday.
  • Asian stock markets gained on news that North Korean leader Kim Jong Un will meet with U.S. President Donald Trump.
  • Beside geopolitics, oil markets were mainly concerned with soaring output from the United States.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Crude oil futures rose on Friday as Asian stock markets gained on news that North Korean leader Kim Jong Un will meet with U.S. President Donald Trump.

The two will likely meet by May and Kim has pledged to refrain from further nuclear or missile tests, South Korea’s national security chief said late on Thursday after briefing White House officials on talks between Seoul and Pyongyang.

The White House said Trump would accept the invitation at a place and time to be determined.

The news lifted Asian stocks markets, and pulled crude oil futures along with them, traders said.

Brent crude futures were at $63.95 per barrel at 0102 GMT, up 34 cents, or 0.5 percent, from their previous close.

U.S. West Texas Intermediate (WTI) crude futures were at $60.39 a barrel, up 27 cents, or 0.45 percent. WTI also fell by more than 2 percent the previous session.

Beyond geopolitics, oil markets were mainly concerned with soaring output from the United States, which has risen by 23 percent since mid-2016, to 10.37 million barrels per day (bpd).

That’s more than top exporter Saudi Arabia produces. Only Russia pumps more, at almost 11 million bpd.

“It seems only a matter of time before the U.S. becomes the biggest oil producer in the world. The main question which keeps investors busy is when exactly this will be reached,” Hans van Cleef, senior energy economist at Dutch bank ABN Amro, said in a note to investors.

Crude oil falls, hits one week low

Crude oil falls, hits one week low  

Unlike Middle East producers, where output is largely dictated by state-owned oil companies, U.S. producers drill and sell purely based on economics. If prices remain at current levels or rise further, U.S. drillers are profitable and will raise output; if prices stumble, U.S. production will fall.

“The correlation between the U.S. oil production and the oil prices will remain considerable,” van Cleef said.

As much as on production, oil prices will depend on demand.

“Global demand will continue to grow by 1.5 million barrels per day in both 2018 and 2019. This would offer enough room for U.S. oil producers to increase production and for OPEC and her allies to minimalize the production cuts towards the end of 2019,” van Cleef said.

The Middle East-dominated Organization of the Petroleum Exporting Countries(OPEC) and Russia since 2017 have been leading an effort to withhold production to prop up prices.

Oil prices hit highest since 2014, but analysts warn of overheated market

CNBC

  • Oil prices hit their highest levels since 2014 on Wednesday
  • A broad global market rally has also been fueling investment into crude oil futures
  • Amid the general bull-run, which has pushed up crude prices by more than 13 percent since early December, there are indicators of an overheated market

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices hit their highest levels since 2014 on Wednesday due to ongoing production cuts led by OPEC as well as healthy demand, although analysts cautioned that markets may be overheating.

A broad global market rally, including stocks, has also been fueling investment into crude oil futures.

U.S. West Texas Intermediate (WTI) crude futures were at $63.40 a barrel at 0100 GMT – 44 cents, or 0.7 percent, above their last settlement. They marked a December-2014 high of $63.53 a barrel in early trading.

Brent crude futures were at $69.15 a barrel, 33 cents, or 0.5 percent, above their last close. Brent touched $69.29 in late Tuesday trading, its strongest since an intra-day spike in May 2015 and, before that, in December 2014.

“The extension of the OPEC agreement … and declining inventories are all helping to drive the price higher,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

In an effort to prop up prices, the Organization of the Petroleum Exporting Countries (OPEC) together with Russia and a group of other producers last November extended an output cut deal that was due to expire in March this year to cover all of 2018.

The cuts, which have mostly targeted Europe and North America, was aimed at reducing a global supply overhang that had dogged oil markets since 2014.

The American Petroleum Institute said late on Tuesday that crude inventories fell by 11.2 million barrels in the week to Jan. 5, to 416.6 million barrels.

Official U.S. Energy Information Administration data is due at 1530 GMT on Wednesday.

Overheated?

Amid the general bull-run, which has pushed up crude prices by more than 13 percent since early December, there are indicators of an overheated market.

Oil in the first two quarters

Oil in the first two quarters  

In the United States, crude oil production is expected to break through 10 million barrels per day (bpd) this month, reaching levels only Russia and Saudi Arabia have.

In Asia, the world’s biggest oil consumer region, refiners are suffering from high prices and ample fuel supplies.

“One area of concern, particularly in Asia, is that of (low) refining margins … This drop in margins could reduce Asian refiners’ demand for incremental crude in the near term and weigh on global prices,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

Average Singapore refinery margins this week fell below $6 per barrel, their lowest seasonal value in five years, due to high fuel availability but also because the recent rise in feedstock crude prices dented profits.

Asian oil prices are higher than in the rest of the world. While Brent and WTI are still below $70 per barrel, the average price for Asian crude oil grades has already risen above that level, to $70.62 per barrel, Thomson Reuters Eikon data showed.

Oil prices close 2017 at 2½-year high above $60

MarketWatch

Natural-gas futures fall 21% in 2017, but 11% weekly surge helps cap uglier fall

Reuters
Record-breaking snow in Erie, Pennsylvania seen in late December 2017

By

MARKDECAMBRE

BARBARAKOLLMEYER

MARKETS REPORTER

Crude-oil futures ended Friday trade on a decidedly upbeat note, settling above $60 for the first time in more than two years to wrap up 2017.

West Texas Intermediate crude on the New York Mercantile Exchange CLG8, +0.43% finished up 1%, or 58 cents, to $60.42 a barrel. That represents its first close above $60 since June 23, 2015, according WSJ Market Data Group. U.S. benchmark oil is up 12.5% in 2017, nearly 17% this quarter, 5.3% for the month, and 3.3% this week.

March Brent LCOH8, +0.70%  rose 71 cents, or 1.1%, to $66.87 a barrel. The international benchmark for crude has gained 18% this year, more than 16% over the last three months of the year, 5.2% for the month, and 0.6% for the week.

The market has improved amid optimism about years of oversupply finally ebbing, capped by rising demand and the production-limit deal, led by the Organization of the Petroleum Exporting Countries, being extended through 2018. Both oil contracts rallied to end at 2½-year highs.

Moves for crude prices came as Baker Hughes on Friday reported a small drop in rig counts for the week, with rigs drilling for gas down by two to 182, while those drilling for oil remained unchanged at 747. Over the year, however, total rigs have climbed by 271 to a total rig count at 929.

On Thursday, the market took cues from inventory reports that showed a steady decline in U.S. crude stocks. The U.S. Energy Information Administration reported that domestic-crude supplies fell by 4.6 million barrels for the week ended Dec. 22, compared with a 6-million-barrel drawdown reported by the American Petroleum Institute late Wednesday.

Meanwhile, natural gas NGG18, +1.41%  for February jumped 3.9 cents, or 1.3%, to settle at $2.9530 per million British thermal units, after surging 6.4% on Thursday, posting the biggest daily rise since Dec. 21, 2016, according to FactSet. Natural-gas futures, however, have declined 21% in 2017, retreated 1.8% on the quarter, fell 2.4% on the month, but an 11% surge this week, amid freezing weather, helped mitigate more brutal losses.

January heating oil HOF8, +0.89% rose by about 2.34 cents, or 1.1%, to $2.0755 a gallon, marking a fresh 52-week high and the highest settlement since Feb. 27, 2015. Futures have gained 22% this year, about 15% this quarter, 10% in December, and 5.4% gain on the week.

Arctic cold air has been chilling portions of the U.S., with forecasts calling for a continuation of that weather into the first week of January. Record-cold levels were set in Minnesota and Michigan on Thursday, according to The Weather Channel. Cold weather could support further buying of natural gas and heating oil.

January gasoline RBF8, -0.06% rose 0.62 cent, or 0.4%, to $1.7992 a gallon. Gasoline futures are up 8.1% in 2017, 12% over the past three months, 4.1% on the month, with a 2.1% advance this week.

— Biman Mukherji contributed to this article

Crude Oil Prices Struggle, Gold May Return to the Offensive

NASDAQ

DailyFX.com –

Talking Points:

  • Crude oil prices struggle to find fuel to break range boundaries
  • Gold prices may return to the offensive following a brief pause
  • Haggling over US tax cut plan may inspire week-end volatility

Crude oil prices corrected gently higher but didn’t to make significant progress outside of recent ranges. Baker Hughes rig count data as well as ICE and CFTC speculative sentiment statistics are due out, but these are rarely market-moving. That makes continued consolidation likely into the week-end.

Gold prices paused to digest gains as expected following a sharp surge in the aftermath of the FOMC monetary policy announcement. A quiet data docket Friday hints the path of least resistance might favor the upside as “fade the Fed” dynamics re-emerge .

Politics may complicate things however as Congressional Republicans delay until Monday a tax cut plan reconciling proposals from the Senate and the House of Representatives. That’s after two senators planned to oppose it, with two more undecided. That’s two possibly lost votes too many to assure passage.

The absence of top-tier scheduled event risk might put the spotlight on Washington DC horse-trading. Headlines suggesting the voting math will work after all may stoke risk appetite, sending yields higher and hurting gold. A confirmed breakdown will probably produce the opposite result.

What are the long-term drivers of crude oil price trends? See our guide to find out!

GOLD TECHNICAL ANALYSIS – Gold prices continue to eye resistance at 1264.92, the 23.6% Fibonacci expansion, with a daily close above that targeting the 38.2% level at 1282.61. Alternatively, a turn below the 14.6% Fib expansion at 1241.36 exposes the December 12 low at 1236.32, followed by the 23.6% expansion at 1230.45.

Crude Oil Prices Struggle, Gold May Return to the Offensive Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices remain stuck in what is increasingly looking like a Triangle chart pattern. That setup typically precedes trend continuation, which is a bullish sign in this case. A daily close above the Triangle top (58.42) exposes the 23.6% Fibonacci expansion at 59.83. Alternatively, a push below the formation’s bottom (56.20) targets the 23.6% Fib retracement at 55.04.

Crude Oil Prices Struggle, Gold May Return to the Offensive Chart created using TradingView

— Written by Ilya Spivak, Currency Strategist for DailyFX.com