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

Crude Oil Prices

Weekly Outlook: December 4 – 8

 
© Reuters.  Oil prices rise toward 2½-year highs on OPEC cuts© Reuters. Oil prices rise toward 2½-year highs on OPEC cuts

Investing.com – Oil finished higher on Friday, with prices climbing back toward their best level since July 2015 after OPEC and other crude producers agreed to extend existing output cuts until the end of 2018 to tighten global supplies.

But prices came off session highs as financial markets reeled from an ABC News report that added to concerns about President Donald Trump’s exposure to a probe into Russian meddling in last year’s campaign.

Brent crude futures, the benchmark for oil prices outside the U.S., jumped $1.10, or roughly 1.8%, to settle at $63.73 a barrel by close of trade. It rose to a session peak of $64.32, putting the contract within striking distance of a two-and-a-half-year high of $64.65.

Meanwhile, U.S. West Texas Intermediate (WTI) crude futures tacked on 96 cents, or around 1.7%, to end at $58.36 a barrel. That was the highest settlement since last Friday, when prices reached their strongest level since the summer of 2015 at $59.05.

For the week, Brent marked a climb of about 0.4%, while WTI lost 1%. They respectively gained 3.5% and 5.5% in November.

The Organization of Petroleum Exporting Countries (OPEC), along with some non-OPEC producers led by Russia, agreed on Thursday to extend current oil output cuts for a further nine months until the end of next year, as expected.

They also signaled a possible early exit from the deal should the market overheat and prices rise too far.

The deal to cut oil output by 1.8 million barrels a day (bpd) was adopted last winter by OPEC, Russia and nine other global producers. The agreement was due to end in March 2018, having already been extended once.

The OPEC-led production cuts have been one of the key catalyst supporting the recent rally in oil prices amid expectations that rebalancing in crude markets are well underway.

However, fears that rising U.S. output would dampen OPEC’s efforts to rid the market of excess supplies are prevented prices from rising much further, according to market participants.

U.S. energy companies added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric (NYSE:GE)’s Baker Hughes energy services firm said in its closely followed report on Friday.

Domestic U.S. output has rebounded by almost 15% since the most recent low in mid-2016, and increasing drilling activity for new production means output is expected to grow further, as producers are attracted by climbing prices.

U.S. oil production hit a new record of 9.68 million bpd last week, according to government data released during the week, bringing U.S. output close to levels of top producers Russia and Saudi Arabia.

In other energy trading, gasoline futures inched up 1.1 cents, or 0.7%, to end at $1.741 a gallon on Friday. It closed around 2.6% lower for the week.

Heating oil advanced 4.3 cents, or 2.3%, to $1.941 a gallon, marking a 0.6% weekly loss.

Meanwhile, natural gas futures added 3.6 cents, or 1.2%, to settle at $3.061 per million British thermal units. For the week, futures gained 8.8%, as traders reacted to forecasts calling for more heating demand through mid-December.

In the week ahead, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Tuesday

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday

The U.S. Energy Information Administration is to release weekly data on oil and gasoline stockpiles.

Thursday

The U.S. government will publish a weekly report on natural gas supplies in storage.

Friday

Baker Hughes will release weekly data on the U.S. oil rig count.

Norway’s $1 Trillion Wealth Fund Looks To Dump Oil & Gas Stocks

Oilprice.com

Norway

The global campaign to divest from fossil fuels may have just picked up its most significant ally to date – the largest sovereign wealth fund in the world.

Norway’s trillion-dollar sovereign wealth fund has proposed dropping investment for oil and gas companies. The plan, backed by the central bank, still needs approval by the finance ministry, but it would see the fund gradually divesting itself of oil and gas stocks over time. Currently, fossil fuel investments account for about 6 percent of the fund’s assets, or $37 billion.

“Our advice is to simply remove the oil and gas sector, as it is defined in the FTSE reference index, from the fund’s reference index,” Deputy Central Bank Governor Egil Matsen told Reuters in an interview. “That would mean all companies that the FTSE has classified with the sector, should be removed from our reference index.”

The global movement for fossil fuel divestment has been one of the fastest growing divestment campaigns ever witnessed. According to Fossil Free, a project of 350.org, an estimated 808 institutions from around the world have committed to divestment, totaling $5.57 trillion in assets. The type of groups are varied – about 27 percent of them are faith-based, another 20 percent are philanthropic foundations, 18 percent are government, 16 percent are education institutions, and 10 percent are pension funds.

But the potential move by Norway’s sovereign wealth fund is one of the most significant pledges yet, for a few reasons. First, the size of the fund, with $1 trillion in assets, is obviously notable. Second, the fund was built on oil and gas money, so a diversification away from fossil fuels has symbolic importance. But third, the justification for divestment, according to the fund, is not because of concerns over climate change, which is the usual reason why most other institutions have opted to divest.

Norway’s sovereign wealth fund wants out of fossil fuels in order to avoid exposure to oil price fluctuations.

The sovereign wealth fund is a massive investor in oil and gas, so the news of a shift in investment strategy is significant. According to Reuters, Norway’s sovereign wealth fund holds a 2.3 percent stake in Royal Dutch Shell, 1.7 percent stake in BP, 0.9 percent stake in Chevron and 0.8 percent of ExxonMobil.

But, as any energy investor would know, oil and gas stocks have been poor performers for the past few years. “It clearly stands out, perhaps not surprisingly, but not obviously, that indeed there is a substantial difference … in return between the oil and gas sector and the broad stock market in periods when the oil price changes substantially,” Matsen said. “Oil price exposure of the government’s wealth position can be reduced by not having the fund invested in oil and gas stocks.” The sovereign wealth fund, like other investors, would have been better off putting their money in other sectors of the global economy.

It isn’t just the most recent downturn that Norway is worried about. Over the long-term, peak oil demand looms. Pulling out of companies like Royal Dutch Shell and BP would make Norway’s wealth “less vulnerable to a permanent drop in oil and gas prices,” according to the country’s central bank, the FT reported.Related: Why Saudi Arabia Should Fear U.S. Oil Dominance

The sovereign wealth fund is seeded with revenues generated from oil and gas sales, so it is already vulnerable to oil price fluctuations. Moreover, the Norwegian government owns a substantial portion of Statoil, making the country even more dependent on oil and gas revenues. One way to reduce the country’s financial risk would be for the sovereign wealth fund to get out of the oil business.

Critics of the divestment campaign often note that liquidating one’s assets does very little to influence the actions of the oil and gas industry. After all, even if divestment dragged down the valuation of an oil company, its share price would merely be discounted for opportunistic investors to scoop up the asset on the cheap. But that was never the overarching goal. The objective of the divestment movement was to make fossil fuels so toxic in the minds of the public that it forces governments to change policies to force a transition towards cleaner energy. That fight is ongoing.

However, the proposal from the Norwegian sovereign wealth fund opens up an entirely new front on the oil and gas industry. Hard-headed central bankers are concerned about the long-term investment case for fossil fuels…unrelated from climate change. The largest sovereign wealth fund in the world simply doesn’t think it makes sense to hold onto oil and gas assets anymore.

By Nick Cunningham of Oilprice.com

Here are the world’s top 10 oil producers

CNBC

OPEC and Russian officials have called on some of the world’s leading oil producers, both inside and outside the cartel, to form a consensus and back a supply curb until the end of 2018.

OPEC is widely expected to defer an announcement regarding an extension to cuts at its next policy meeting in November. However, oil has sustained a rise above $60 a barrel in recent days as expectations of an extension to OPEC-led cuts beyond March supported prices.

CNBC takes a look at the world’s 10 leading oil producers being urged to back an ongoing effort to clear a global supply overhang.

— CNBC’s Tom DiChristopher contributed to this report.

1. Russia

Russia overtook Saudi Arabia as the world’s largest crude producer in December 2016. The non-OPEC producer pumped 10.34 m/bd in August, a modest decline from the month previous.

OPEC has been partnering with other major oil exporters, most notably Russia, to keep about 1.8 million barrels per day of supply off the market through March. The goal is to shrink global crude stockpiles and drain a glut that has weighed on prices for the last three years.

2. Saudi Arabia

OPEC kingpin Saudi Arabia pumped 9.95 m/bd in August, slipping below 10 m/bd for the first time since May.

The cartel’s biggest producer has provided the lion’s share of cuts since OPEC implemented the caps in January.

3. US

The U.S. produced 9.34 m/bd in August, its third consecutive monthly increase, according to data published by JODI.

OPEC General Secretary Mohammed Barkindo called on U.S. shale oil producers to help support plans to curb global oil supply in early October, warning that unprecedented measures may soon be necessary in order to rebalance the oil market.

North American shale drillers have helped production soar by nearly 10 percent in the U.S. this year, according to Reuters, despite OPEC and some other producers — including Russia — cutting supplies in a bid to prop up prices.

4. Iraq

Iraq, OPEC’s second-largest producer, pumped 4.38 m/bd in August, down from 4.4 m/bd in July.

Baghdad has yet to drive down output to levels it agreed to last winter.

5. Canada

Canada pumped 3.12 m/bd in August, according to data published by JODI, down slightly from the month previous.

6. Venezuela

Venezuela produced 2.1 m/bd in August, fractionally lower than the amount produced the previous month.

At the start of October, Venezuela’s Oil Minister Eulogio del Pino said the OPEC and non-OPEC coalition would try to recruit up to 16 more oil-producing countries to try and bolster rebalancing efforts.

The current deal, which runs through March, sees OPEC and 10 other non-OPEC countries pledge to keep 1.8 m/bd off the market.

7. Nigeria

Nigeria pumped around 1.99 m/bd in August, according to a JODI estimate.

Africa’s biggest producer has said it would consider production limits once its output stabilizes above that level. OPEC gave Nigeria and Libya a waiver because internal conflicts caused big production declines in both countries last year.

8. Mexico

Mexico produced 1.94 m/bd in August, the third straight month the country had decreased oil supply.

Ahead of OPEC’s plan to extend a production cut through to the end of 2018, Mexico’s deputy energy minister reportedly said the country had not yet been consulted by the cartel.

Several non-OPEC producers, including Mexico, supported the organization in order to try and drain a global inventory glut last year.

9. Angola

Angola, OPEC member and Africa’s second largest oil producer, pumped 1.68 m/bd in August. It was the third consecutive month the country had increased oil production.

10. Norway

Norway pumped 1.57 million barrels per day (m/bd) in August, down from 1.62 m/bd in July, according to the latest data published on the website of the Joint Organizations Data Initiative (JODI).