Oil set for biggest monthly fall since November as trade conflicts spread

CNBC

Reuters

KEY POINTS
  • Front-month Brent crude futures, the international benchmark for oil prices, were at $66.28 at 0311 GMT, down by 59 cents, or 0.9%, from last session’s close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $56.08 per barrel, down 51 cents, or 0.9%, from their last settlement. WTI earlier marked its lowest since March 8 at $55.66 a barrel.
Reusable: Oil pump jack leased by Devon Energy 150922
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil prices fell on Friday and were on track for their biggest monthly fall since November as trade conflicts spread and U.S. crude output returned to record levels.

Front-month Brent crude futures, the international benchmark for oil prices, were at $66.28 at 0311 GMT, down by 59 cents, or 0.9%, from last session’s close.

U.S. West Texas Intermediate (WTI) crude futures were at $56.08 per barrel, down 51 cents, or 0.9%, from their last settlement. WTI earlier marked its lowest since March 8 at $55.66 a barrel.

The drops mean that crude oil futures are on track for their biggest monthly loss since last November.

U.S. President Donald Trump ramped up trade tensions globally by vowing to slap tariffs on all goods from Mexico, firing up fears over economic growth and appetite for oil.

The Mexico trade dispute adds to a trade war between the United States and China, which many analysts expect to trigger a recession.

“All is not well with the economic world, at least according to bond and commodity traders,” Michael McCarthy, chief market strategist at futures brokerage CMC Markets in Australia, wrote in a note published on Friday.

“These (price) moves signal deteriorating sentiment about the outlook for global growth,” he said.

US output back to record

Crude prices have also been under pressure from a much smaller-than expected decline in U.S. stockpiles and U.S. crude oil production’s return to its record 12.3 million barrels per day.

The U.S. Energy Information Administration (EIA) said U.S. crude stocks fell by around 300,000 barrels last week, to 476.49 million barrels.

That was much less than the 900,000-barrel decline analysts forecast in a Reuters poll and well below the 5.3 million-barrel drawdown the American Petroleum Institute (API) reported on Wednesday.

Meanwhile, top oil exporter Saudi Arabia has raised production in May, a Reuters survey found, but not by enough to compensate for lower Iranianexports which collapsed after the United States tightened the screws on Tehran.

Washington will sanction any country which buys oil from Iran after the expiration of waivers on May 2, U.S. Special Representative for Iran Brian Hook said on Thursday.

Oil prices tumble by more than 2 percent after Trump announces new tariffs on Chinese goods

Reuters
  • U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.
  • Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Oil prices tumbled by more than 2 percent on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking derailing months of trade talks between the world’s two biggest economies.

U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.

Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.

Trump on Sunday said on Twitter he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures.

The Wall Street Journal reported that Beijing is considering canceling all trade talks with Washington.

“Trump has taken the proverbial sledgehammer to the walnut this morning … by threatening to slap a 25 percent tariff on a mind-boggling $525 billion of Chinese goods by this Friday,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the United States the world’s biggest producer ahead of Russiaand Saudi Arabia.

The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, data from oil services firm Baker Hughes showed on Friday.

Oil prices steady after steep drop on Trump’s OPEC tweet

CNBC

 | 
Reuters
KEY POINTS

  • Oil prices steady after steep drop on President Donald Trump’s renewed pressure campaign on OPEC.
  • OPEC-led production cuts and U.S. sanctions on Iran and Venezuela are supporting prices.
  • Analysts polled by Reuters expect U.S. crude stockpiles to rise for a sixth week.
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A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
Getty Images

Oil traded roughly flat on Tuesday as Saudi Arabia and the rest of OPEC were expected to stick to their policy of cutting production, despite renewed pressure from U.S. President Donald Trump.

Prices slid on Monday, when many traders were out of the office attending International Petroleum Week, a series of industry events in London, after Trump called on OPEC to ease its efforts to boost the oil market. Prices were “getting too high,” the president said.

“Yesterday was a typical price action you see during IP Week when you have a headline,” said Olivier Jakob, oil analyst at Petromatrix. “But I don’t think it will change anything in current OPEC supply policy.”

Brent crude, the global benchmark, rose 28 cents to $65.04 around 10:10 a.m. ET (1510 GMT), after losing 3.5 percent on Monday. U.S. West Texas Intermediate crude fell 1 cent to $55.47, stabilizing after a roughly 3-percent fall.

Expectations that U.S. crude inventories had risen for a sixth straight week limited the rally.

U.S. crude stocks were seen 3.6 million barrels higher in weekly inventory reports, underlining that supply is adequate in the world’s top consumer. The first such report is due at 4:30 p.m. ET (2130 GMT) from the American Petroleum Institute, following by more comprehensive government figures on Wednesday morning.

Oil is up about 20 percent since the start of the year, when OPEC and non-member producers, such as Russia, began cutting production in an effort to reduce a global glut.

Saudi Arabia and other OPEC members are likely to be cautious about relaxing their supply-cut plan, Jakob said, after a boost in output in the second half of last year ahead of U.S. sanctions on Iran led to a steep slide in prices.

“Will the kingdom budge and increase production or at least keep it steady,” said PVM’s Tamas Varga. “Just two weeks after announcing deeper cuts, it would be a capitulation.”

An OPEC source, in comments to Reuters on Tuesday, agreed with the analysts’ views.

U.S. sanctions against OPEC members Iran and Venezuela have also contributed to the gains and are providing a floor for prices, analysts say.

Optimism about a U.S.-China trade deal also helped prices to rally.

Trump on Monday said he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences.

— CNBC’s Tom DiChristopher contributed to this report.

Oil prices firm on hopes for US-China trade deal

CNBC

Reuters

KEY POINTS
  • President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods originally scheduled for later this week thanks to progress in trade talks and said if progress continued, he and Chinese President Xi Jinping would seal a deal.
  • Both the international benchmark Brent and U.S. crude futures contracts saw gains.

Oil prices rose on Monday as Washington and China appeared to edge closer to a trade deal, dampening fears over the outlook for global economic growth.

International Brent crude oil futures were at $67.26 a barrel at 0005 GMT, up 14 cents, or 0.2 percent, from their last close. They ended Friday little changed after touching their highest since Nov. 16 at $67.73 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $57.38 per barrel, up 11 cents, or 0.2 percent, from their last settlement. WTI futures climbed 0.5 percent on Friday, having marked their highest since Nov. 16 at $57.81 a barrel.

“Crude prices continue to be supported on optimism a trade deal will be reached in the coming days by the world’s two largest economies, said Edward Moya, senior market analyst, OANDA.

President Donald Trump said on Sunday he would delay an increase in U.S. tariffs on Chinese goods scheduled for later this week thanks to progress in trade talks and said if progress continued, he and Chinese President Xi Jinping would seal a deal.

Signs of reduced global oil supply also supported crude prices.

U.S. energy firms this week cut the number of oil rigs operating for the first time in three weeks week after U.S. crude production hit an all-time high, boosting exports to a record-peak and stockpiles to their highest in over a year.

Meanwhile, Mexico’s Pemex produced 1.62 million barrels of crude per day in January, less than any month in almost three decades, the state-owned oil company said on Friday, underscoring the challenges facing a government that vows to pump far more in a few years.

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.