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

CNBC

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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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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.

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

CNBC

  • 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

CNBC

  • 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.