Oil prices extend fall on China, global demand concerns

REUTERS

SINGAPORE (Reuters) – Oil prices fell on Tuesday, after heavy losses in the previous session, as two days of weak Chinese data added to worries about the top crude oil importer’s energy demand growth.

Brent crude LCOc1 fell 42 cents, or 0.71%, to $58.93 a barrel by 0720 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 dropped 44 cents, or 0.82%, to $53.15.

China has been hit by poor economic data for two straight days. The National Bureau of Statistics (NBS) reported on Tuesday that China’s factory gate prices declined at the fastest pace in more than three years in September.

That followed customs data on Monday that showed Chinese imports had contracted for a fifth straight month.

The U.S.-China trade dispute also continued to cast a shadow on the global economy, despite claims of progress toward a deal, leaving unanswered questions over future oil demand.

Taken all together that was enough to outweigh any support oil prices might have received from worries about possible escalation of geopolitical tensions in the Middle East.

“Demand-side concerns emerging from the Sino-U.S. trade war have continued to weigh on oil prices,” said Abhishek Kumar, head of analytics at Interfax Energy in London.

“China’s weak economic data is a manifestation of the trade dispute,” he said.

On Monday U.S. President Trump imposed sanctions on Turkey and demanded the NATO ally stop a military incursion in northeast Syria that is rapidly reshaping the battlefield of the world’s deadliest ongoing war.

Prices could also get a boost this week as investors are expecting a drawdown in crude inventories in the United States.

“This week … markets are expecting to see a draw (on) U.S. stockpiles and possibly further escalations in the Middle East,” said Edward Moya, senior market analyst at OANDA.

The next weekly U.S. oil inventory reports are due out from industry group the American Petroleum Institute and the U.S. Energy Information Administration on Oct. 16.

Reporting by Seng Li Peng; Editing by Tom Hogue

Oil prices settle after turbulent week as Saudi Arabia reassures on output

CNBC

Reuters
KEY POINTS
  • Brent crude futures rose 8 cents to $63.68 a barrel by 0139 GMT.
  • U.S. West Texas Intermediate (WTI) crude was up 12 cents to $58.23 a barrel.
GP: Oil crude pump 190919
A heavy crude oil pump.
Jsmes Hall | EyeEm | Getty Images

Oil prices edged higher in early Asian trade on Thursday after days of turbulence, with markets soothed by Saudi Arabia’s pledge to restore full production by end-September at facilities knocked out in drone and missile attacks last weekend.

Brent crude futures rose 8 cents to $63.68 a barrel by 0139 GMT while U.S. West Texas Intermediate (WTI) crude was up 12 cents to $58.23 a barrel.

The steadying of nerves, after a 2% drop on Wednesday and a 14% plunge on Monday, came after Saudi Arabia set out the timeline to full operation and also said it had managed to restore supplies to customers at levels prior to the attacks by drawing from its oil inventories.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by bitter regional rival Iran. U.S. President Donald Trump said there were many options short of war with Iran and added that he had ordered the U.S. Treasury to “substantially increase sanctions” on Tehran.

“Prices may have found equilibrium for now,” said Michael McCarthy, chief markets analyst at CMC Markets in Sydney. Quick recovery in Saudi oil production would confirm disruption could be temporary, he said.

Meanwhile oil analytics firm Kayrros estimated Saudi Arabia lost about 3.4 million barrels per day (bpd) of oil output after crude oil inventories plunged nearly 10 million barrels as of Sept. 16 compared with pre-attack levels.

Still, the head of the International Energy Agency said on Wednesday it does not see a need to release emergency oil stocks as markets are well supplied.

While tensions in the Middle East remained elevated, the White House’s response on Wednesday to Saudi producing evidence that it said implicated Iran in the attacks pointed to a more measured approach in handling the region’s issues, said McCarthy at CMC Markets.

Separately, weekly data from the Energy Information Administration on U.S. oil inventories provided a mixed snapshot.

Crude oil stockpiles at the world’s largest oil producer rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks in Cushing, Oklahoma, the delivery point for benchmark futures, fell to the lowest since October 2018.

Oil surges as Saudi attack focuses market on supply risks

CNBC

Reuters
KEY POINTS
  • Benchmark Brent crude futures rose by as much as 19.5% to $71.95 per barrel, the biggest intra-day jump since Jan. 14, 1991.
  • U.S. West Texas Intermediate (WTI) futures climbed by as much as 15.5% to $63.34 a barrel, the biggest intra-day percentage gain since June 22, 1998.
Reusable: Oil well pump jack Permian Basin Texas
An oil well owned an operated by Apache Corporation in the Permian Basin is shown in Garden City, Texas, Feb. 5, 2015.
Getty Images

Oil prices surged on Monday, with Brent crude posting its biggest intra-day percentage gain since the start of the Gulf War in 1991, after an attack on Saudi Arabian oil facilities on Saturday shut in the equivalent of 5% of global supply.

Benchmark Brent crude futures rose by as much as 19.5% to $71.95 per barrel, the biggest intra-day jump since Jan. 14, 1991. The front-month contract was at $66.20 per barrel, up $5.98, or 9.9%, from their previous close, at by 0343 GMT.

U.S. West Texas Intermediate (WTI) futures climbed by as much as 15.5% to $63.34 a barrel, the biggest intra-day percentage gain since June 22, 1998. The front-month contract was at $59.73 a barrel, up $4.88, or 8.9%, at 0343 GMT.

Saudi Arabia is the world’s biggest oil exporter and the attack on the state-owned producer Saudi Aramco’s processing facilities at Abqaiq and Khurais has cut output by 5.7 million barrels per day. The company has not given a timeline for the resumption of full output.

A source close to the matter told Reuters the return to full oil capacity could take “weeks, not days.”

Saudi Arabia’s oil exports will continue as normal this week as the kingdom taps into stocks from its large storage facilities, an industry source briefed on the developments told Reuters on Sunday.

“How the United States and Saudi Arabia deal with the situation will be closely watched,” said Margaret Yang, market analyst at CMC Markets in Singapore.

“If higher oil prices are here to stay, Asia’s oil reliant economies such as China, Japan, India, South Korea and the Philippines will start to feel the pain as higher energy and raw material prices add on the cost burden,” Yang added.

U.S. President Donald Trump said he approved the release of oil from the U.S. Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined due to the attack.

The attack on plants in the heartland of Saudi Arabia’s oil industry, including the world’s biggest petroleum-processing facility at Abqaiq, came from the direction of Iran, and cruise missiles may have been used, according to a senior U.S. official. Initial reports indicated the attack came from Yemen.

Trump also said the United States was “locked and loaded” for a potential response to the attack on Saudi Arabia’s oil facilities.

Risk premium

ANZ Research said in a note that the market would price in “a sizable global geopolitical risk premium”.

“Any expectation that the market had about the U.S. easing sanctions on Iran following President Trump’s dismissal of John Bolton will quickly dissipate.

This should see Brent crude test the $70 per barrel mark in the short term,” ANZ Research said.

Saudi Arabia is set to become a significant buyer of refined products after the attacks, consultancy Energy Aspects said in a note.

Saudi Aramco will likely buy significant quantities of gasoline, diesel and possibly fuel oil while cutting liquefied petroleum gas exports.

U.S. gasoline futures rose as much 12.9%, while U.S. heating oil futures rose by as much as 10.8%. China’s Shanghai crude oil futures rose to its trading limit, gaining 8% at the open.

Meanwhile, Saudi Aramco has told one Indian refinery there will be no immediate impact on oil supplies as it will deliver crude from other sources and has adequate inventory, a source with the refinery said.

Other Asian buyers such as Thailand have also said the attack would have no immediate impact on oil imports.

Oil prices pegged back by mounting concern over US economy

CNBC

Reuters
KEY POINTS
  • Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT.
  • U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel.
RT: india oil tankers man crossing rail cars Kolkata
A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata.
Rupak De Chowdhuri | Reuters

Oil prices fell on Thursday for the first time in three days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of U.S. economy.

Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT while U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel. Oil prices rose around 1.5 percent in the previous session.

Concerns about a slowdown in economic growth due to the trade war raging between the United States and China, along with the potential hit to oil demand, are keeping prices in check.

Daly said on Thursday she believes the U.S. economy has “strong” momentum, but uncertainty and a global growth slowdown are having an impact.

Daly was speaking to reporters after a speech in Wellington, New Zealand and said she was in “watch and see” mode in assessing the need for another U.S. interest-rate cut.

U.S. President Donald Trump said on Monday he believed China was sincere about wanting to reach a trade deal, but concerns arose on Tuesday after China’s foreign ministry declined to confirm a telephone call between the two countries on trade.

“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.

The market shrugged of a big drop in U.S. inventories, which fell last week by 10 million barrels, compared with analysts’ expectations for a decrease of 2.1 million barrels, the Energy Information Administration said.

U.S. gasoline stocks fell by 2.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 388,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 2.1 million barrels, versus expectations for a 918,000-barrel increase, the EIA data showed.

The crude draw down confirms “that OPEC supply cuts are effectively working by depleting U.S. reserves,” said Stephen Innes, managing partner at Valour Markets.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been restraining supply for most of the period since Jan. 1, 2017. The alliance, known as “OPEC+”, in July renewed the pact until March 2020.

U.S. weekly crude production also rose 200,000 barrels per day to a new record at 12.5 million bpd in the week to Aug. 23.

Oil rises as US-China trade comments calm markets

CNBC

Reuters
KEY POINTS
  • Brent crude was up by 25 cents, or 0.4%, at $58.95 a barrel by 0214 GMT, after falling 1% in the previous session, dropping for a third day in a row.
  • U.S. crude was up by 30 cents or 0.6% at $53.94 a barrel, having also dropped 1% on Monday for a fourth day of declines.
RT: PDVSA oil company Venezuela and pedestrian 171103
A woman walks past a mural with the corporate logo of the state oil company PDVSA in Caracas, Venezuela November 3, 2017.
Marco Bello | Reuters

Oil prices rose on Tuesday after U.S. President Donald Trump predicted a trade deal with China after positive comments by Beijing, calming nerves after a round of tit-for-tat tariff hikes had sent markets reeling.

Brent crude was up by 25 cents, or 0.4%, at $58.95 a barrel by 0214 GMT, after falling 1% in the previous session, dropping for a third day in a row.

U.S. crude was up by 30 cents or 0.6% at $53.94 a barrel, having also dropped 1% on Monday for a fourth day of declines.

Trump on Monday said he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations, settling global markets.

“For now, the street is in thrall to the President’s comments, with financial markets doing abrupt changes of direction on his words that wouldn’t look out of place in Fast and the Furious film,” said Jeffrey Halley, senior market analyst at OANDA.

Oil prices have fallen around 20% from a 2019 high reached in April, in part because of worries that the U.S.-China trade conflict is hurting the global economy, which could dent demand for oil.

China’s Commerce Ministry said last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.

In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

“Unless you believe a trade deal will happen the slowdown in the global economy continues … and earnings all over the globe will be under pressure,” said Greg McKenna, strategist at McKenna Macro.

The measures are prompting reactions from Chinese companies, with Sinopec seeking a tariff exemption for importing U.S. oil in the coming months, sources told Reuters.

Meanwhile, U.S. crude oil and gasoline inventories likely fell last week, while distillate stockpiles rose, a preliminary Reuters poll showed on Monday.

Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.1 million barrels in the week to Aug. 23.