Oil falls more than 1% after Trump urges OPEC not to cut supply

CNBC

  • Oil prices fell more than 1 percent on Tuesday, with benchmark Brent crude slipping below $70 per barrel and U.S. crude under $60.
  • The move comes after U.S. President Donald Trump put pressure on OPEC not to cut supply to prop up the market.
  • The U.S.-dollar hovered near 16-month highs on Tuesday, making oil more expensive for importers using other currencies.

Oil prices fell more than 1 percent on Tuesday, with benchmark Brent crude slipping below $70 per barrel and U.S. crude under $60, after U.S. President Donald Trump put pressure on OPEC not to cut supply to prop up the market.

The U.S.-dollar hovered near 16-month highs on Tuesday, making oil more expensive for importers using other currencies.

Brent crude oil futures was down $1.03 at $69.09 per barrel by 0900 GMT. West Texas Intermediate (WTI) crude oil futures was $1.00 lower at $58.93. Both benchmarks are down 20 percent since peaking at four-year highs in early October.

“Sky-high production in the U.S., coupled with incremental barrels coming from Saudi Arabia and Russia, is starting to impact oil market balances,” Bank of America/Merrill Lynch analysts said in a note to clients, adding: “Crude oil inventories are starting to increase once again.”

Trump has made it clear he wants oil prices to fall.

“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” the president said in a Twitter post on Monday.

That led to a sharp price drop on Monday and the sell-off continued into Tuesday.

“This tweet certainly did not help prices,” ING commodities strategist Warren Patterson said.

Extraction from American shale fields over the last decade has propelled U.S. oil production to record highs this year with crude output now at 11.6 million barrels per day (bpd), helping make the United States self-sufficient in energy.

Merrill Lynch says U.S. crude production will break through 12 million bpd in 2019, supporting oil exports to the rest of the world.

Oil production is not just rising in the United States. Kazakhstan said on Tuesday its oil output rose 4.8 percent to 74.5 million tonnes in the first 10 months of 2018, equivalent to 1.82 million bpd.

Top crude exporter Saudi Arabia has watched with alarm how supply has started to outpace consumption, fearing a repeat of a glut that brought a price crash in 2014.

Saudi Energy Minister Khalid al-Falih said on Monday the Organization of the Petroleum Exporting Countries agreed there was a need to cut oil supply next year by around 1 million bpd from October levels to prevent oversupply.

Dutch bank ING said an abundance of global supply as well as the threat of economic slowdown meant “cuts over 2019 are unavoidable.”

“It is becoming clearer that as we move closer towards 2019, the market will see a sizeable surplus at least over the first half of 2019,” ING said.

Oil prices drop, Brent moves further away from 4-year high

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  • On Tuesday, Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly that the U.S. would ensure that oil markets are well supplied before sanctions on Iran are reimposed.
  • U.S. President Donald Trump also restated calls on the Organization of the Petroleum Exporting Countries to raise oil production and curb price increments.

Brent oil edged further away from a four-year high on Wednesday and U.S. crude fell, after the U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices.

Brent crude futures were down 43 cents, or 0.5 percent, at $81.44 a barrel by 0041 GMT, after gaining nearly 1 percent the previous session. Earlier on Tuesday, Brent hit its highest since November 2014 at $82.55 per barrel.

U.S. crude futures were down 40 cents, or 0.6 percent at $71.88 a barrel. They rose 0.3 percent on Tuesday to close at their highest level since mid-July.

However, Brent is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007, when a six-quarter run led to a record-high of $147.50 a barrel.

“We will ensure prior to the reimposition of our sanctions that we have a well supplied oil market,” Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly.

In a speech at the UN, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices.

He also accused Iran of sowing chaos and promised further sanctions on the OPEC member after restrictions on its oil exports are imposed from early November.

The so-called ‘OPEC+’ group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so.

Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday that OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another”.

Also weighing on sentiment was an industry report showing U.S. crude stocks unexpectedly climbed last week.

Crude inventories rose by 2.9 million barrels in the week to Sept. 21 to 400 million, compared with analyst expectations for a decrease of 1.3 million barrels, the American Petroleum Institute said.

Oil prices mixed as Trump calls on OPEC to lower prices

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  • U.S. President Trump urges OPEC to lower prices.
  • OPEC and its allies are set to gather on Sunday in Algeria.

Oil prices were mixed on Friday after falling in the previous session as U.S. President Donald Trump urged OPEC to lower crude prices ahead of its meeting in Algeria this weekend.

International benchmark Brent crude for November delivery was up 5 cents at $78.75 a barrel by 0424 GMT.

U.S. West Texas Intermediate crude for October delivery fell 8 cents to $70.24 a barrel.

Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to lower prices, saying on Twitter “they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices.”

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iran supplies due to U.S. sanctions.

Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore, said Trump’s remarks just days before the OPEC meeting put “a focus on the likely supply impacts of U.S.-led Iran sanctions.”

“The market had until that point been trading fluidly with the assumption that Saudi Arabia is now comfortable with Brent at $80 or even higher, which is challenging the market’s long-held supposition that prompt Brent between $70 and $80 was OPEC’s sweet spot,” Innes added.

Brent has been trading just below $80 a barrel, backed by concerns of supply shortages from looming U.S. sanctions against Iran, which are set to take effect in November.

“Iranian crude exports are coming earlier and bigger-than-expected, at a time seasonal demand is strong. With spare capacity also falling sharply, the market remains exposed to supply-induced price shocks,” according to a report by ANZ Bank.

Although supply worries have pushed up oil prices, OPEC and its allies were not likely to agree to an official increase in crude output at this weekend’s meeting, OPEC sources said.

Oil prices drop as escalating US-China trade war clouds demand outlook

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  • Market watching trade war impact on crude demand.
  • U.S. sanctions on Iran continue to support prices.
  • U.S. shale output expected to rise in October.

Oil markets fell on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for crude demand from the two countries, which are the world’s top two oil consumers.

Brent crude futures dropped 44 cents, or 0.6 percent, to $77.61 per barrel by 0424 GMT.

U.S. West Texas Intermediate (WTI) crude was down 28 cents, or 0.4 percent, to $68.62 per barrel.

U.S. President Donald Trump on Monday said he would impose 10 percent tariffs on about $200 billion worth of Chinese imports.

“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.

Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week while China’s refiners used about 11.8 million bpd in August, according to government data from the countries, the most among the world’s countries.

The tariffs are likely to limit economic activity in both the China and the United States and that should lower oil demand growth as less fuel is consumed to move goods for trade.

The countries are the world’s two largest economies.

However, potential supply cuts caused by U.S. sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.

Sanctions affecting Iran’s petroleum sector will come into force from Nov. 4.

Iranian crude oil export loadings have declined by 580,000 bpd in the past three months, Bank of America Merrill Lynch analysts said in a note to clients.

Meanwhile, oil output from seven major U.S. shale formations is expected to rise by 79,000 bpd to 7.6 million bpd in October, the U.S. Energy Information Administration said on Monday.

Technical analysis from Reuters market analyst Wang Tao showed that U.S. oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signalling a dissipation of positive outlook.

Brent may fall more than $1 to $76.37 a barrel while WTI crude prices may revisit the Sept. 14 low of $67.94, he wrote.

On Monday, Russia’s Energy Minister Alexander Novak said that OPEC and non-OPEC members will discuss all possible supply scenarios when they meet this month in Algeria. Russia, the world’s largest oil producer, and other producers in OPEC have kept in place a supply agreement to maintain prices while at the same time providing enough oil to the market.

Oil prices ease as trade row clouds demand outlook

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  • Oil prices dipped on Monday as worries that the U.S. could impose additional tariffs on China outweighed concerns over the supply impact of impending sanctions by Washington on Iran.
  • U.S. President Donald Trump is expected to announce fresh tariffs on Chinese imports worth approximately $200 billion as early as Monday, according to a source which spoke to Reuters.

Global oil prices eased in early Asian trading on Monday on concerns that the United States is poised to impose additional tariffs on China, outweighing supply fears from upcoming sanctions on Iran.

Brent crude oil futures dipped 16 cents, or 0.2 percent to $77.93 a barrel by 0035 GMT.

U.S. West Texas Intermediate (WTI) futures fell 20 cents or 0.3 percent, to $68.79 a barrel.

“The market’s expectation of shortages has cooled after data from last week showed increases in supplies, while investors have lowered the outlook for oil demand,” said Wang Xiao, head of crude research with Guotai Junan Futures.

U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early as Monday, a senior administration official told Reuters on Saturday.

The escalating trade row is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from upcoming U.S. sanctions on Iran over its nuclear program.

Refiners in India, Iran’s second largest crude buyer will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year.

Also weighing on oil prices, U.S. drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.