Oil prices fall amid signs of slowing US demand, economic concerns

CNBC

Reuters

KEY POINTS
  • Front-month Brent crude futures were down 1% at $63.21 per barrel by 0538 GMT. Brent closed up 2.3% on Wednesday.
  • U.S. West Texas Intermediate crude futures were down 1% at $56.78 per barrel. WTI closed up 1.9% on Wednesday.
Reusable: Oil pump jack in North Dakota 150128
An oil pumpjack operates near Williston, North Dakota.
Andrew Cullen | Reuters

Oil prices fell more than 0.5% on Thursday, weighed down by data showing a smaller-than-expected decline in U.S. crude stockpiles and worries about the global economy.

Front-month Brent crude futures, the international benchmark for oil prices, were down 1% at $63.21 per barrel by 0538 GMT. Brent closed up 2.3% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were down 1% at $56.78 per barrel. WTI closed up 1.9% on Wednesday.

U.S. crude inventories dropped by 1.1 million barrels last week, the Energy Information Administration (EIA) said on Wednesday. That compared with analyst expectations for a decrease of 3 million barrels.

Inventories fell less than expected as U.S. refineries last week consumed less crude than the week before and processed 2% less oil than a year ago, the EIA data showed, despite being in the midst of the summer gasoline demand season.

That suggests oil demand in the United States, the world’s biggest crude consumer, could be slowing amid signs of a weakening economy. New orders for U.S. factory goods fell for a second straight month in May, government data showed on Wednesday, adding to the economic concerns.

The weak U.S. data followed a report of slow business growth in Europe last month as well.

“Tossing aside the short-term nature of fluctuations around the inventory data, it’s impossible to escape the economic reality that we are in the midst of a global manufacturing downturn,” said Stephen Innes, managing partner, Vanguard Markets.

The weakness in oil was offset slightly by the outlook for global supplies.

U.S. energy firms this week reduced the number of oil rigs operating for the first time in three weeks as drillers follow through on plans to cut spending this year.

Drillers cut five oil rigs in the week to July 3, bringing the total count down to 788, General Electric Co’s GE.N Baker Hughes energy services firm said in its closely followed report on Wednesday.

Global supply is also expected to contract as the Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to extend oil production cuts until March 2020.

Oil near late-2014 highs as Saudi pushes for higher prices, US crude stocks decline

CNBC

  • Oil prices remained close to highs touched the previous day that were last seen in late 2014.
  • The EIA said on Wednesday that commercial crude stocks fell by 1.1 million barrels last week.
  • Reuters reported that Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil prices on Thursday remained close to late 2014-highs reached in the previous session as U.S. crude inventories declined and as top exporter Saudi Arabia pushes for prices of $80 to $100 per barrel by continuing to withhold supplies.

Brent crude oil futures were at $73.82 per barrel at 0325 GMT, up 34 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 28 cents, or 0.4 percent, at $68.75 a barrel.

Brent on Wednesday marked its highest level since November, 2014 at $73.93 per barrel. WTI hit its strongest since December, 2014 at $68.91 a barrel.

Reuters reported on Wednesday that top oil exporter Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, which was seen as a sign that Riyadh will seek no changes to an OPEC supply-cutting deal that was introduced in 2017 to boost prices.

“The Saudis and their colleagues in OPEC need higher oil for their fiscal positions and the Kingdom is on a bold – and costly – reform program. So they might continue to squeeze the lemon while they have the chance,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Led by Saudi Arabia, the Organization of the Petroleum Exporting Countries (OPEC) and a group of other producers that includes Russia started to withhold output in 2017 to rein in oversupply that had depressed prices since 2014.

“We are rapidly transitioning from a market drowning in oil (2014-2016) to a new reality of undersupply and low storage levels,” said Richard Robinson, manager of the Ashburton Global Energy Fund.

Since the start of the voluntary restraint, crude inventories have been gradually declining from record levels towards long-term average levels.

Further supporting oil prices is an expectation that the United States will re-introduce sanctions against OPEC-member Iran, which could result in further supply reductions from the Middle East.

In the United States, the Energy Information Administration (EIA) said on Wednesday that commercial crude stocks fell by 1.1 million barrels in the week to April 13, to 427.57 million barrels, which is close to the five-year average level around 420 million barrels.

“Oil prices have the potential to rise another 15 percent over the remainder of 2018,” Robinson said.

With crude prices on the rise, those producers not participating in voluntary restraint are ramping up output.

U.S. crude production has jumped by a quarter since mid-2016,to a record 10.54 million barrels per day (bpd).

That’s more than Saudi Arabia produces. Only Russia churns out more oil, at almost 11 million bpd.

Oil prices fall on surprise US inventory rise; China crude volatile

CNBC

  • Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65.
  • Traders said the dips came after the American Petroleum Institute reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil prices fell on Wednesday, with Brent falling back below $70 per barrel and U.S. West Texas Intermediate crudes dipping below $65, pulled down by a report of increasing U.S. crude inventories that surprised many traders.

U.S. WTI crude futures were at $64.86 a barrel by 0201 GMT, down 39 cents, or 0.6 percent, from their previous settlement.

Brent crude futures were at $69.75 per barrel, down 36 cents, or 0.5 percent.

Traders said the dips came after the American Petroleum Institute (API) late on Tuesday reported a surprise 5.3 million barrels rise in crude sticks in the week to March 23, to 430.6 million barrels.

Official U.S. inventory data will be published by the Energy Information Administration (EIA) late on Wednesday.

“We’ll see how the inventory data looks and whether these recent highs can be challenged again. For the moment it is looking like both WTI and Brent are stalling,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Wednesday’s price falls came despite top exporter Saudi Arabia saying it was working with top producer Russia on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years.

Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering greatly extending a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices.

“We are working to shift from a year-to-year agreement to a 10 to 20 year agreement,” the crown prince told Reuters in an interview in New York late on Monday.

AxiTrader’s McKenna said such an agreement between Russia and Saudi Arabia “effectively means an expansion” of the Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader but in which Russia is not a member.

In Asia, Shanghai crude oil futures saw their third day of trading continuing with high volume but also volatility.

Spot Shanghai crude futures were down by 4.4 percent on Wednesday,to 407.5 yuan ($64.93)per barrel by 0201 GMT.

In dollar-terms, that puts Chinese crude prices significantly below Brent and only slightly above U.S. WTI.

McKenna said he hoped Shanghai crude “gets a lot of traction and we end up with three established global benchmarks”, but he cautioned that “the first couple of days have been volatile.”

Oil prices rise on surprise U.S. crude inventory draw

REUTERS

* Brent crude oil futures near $70 per barrel

* Ongoing OPEC-led supply restraint has been supporting oil

* Weak dollar also supports oil prices

* Soaring U.S. production tempers bullish mood somewhat

By Henning Gloystein

SINGAPORE, March 22 (Reuters) – Oil prices rose on Thursday, lifted by a surprise draw on U.S. crude inventories as well as ongoing dollar weakness which makes oil cheaper in global markets and potentially spurs demand.

U.S. West Texas Intermediate (WTI) crude futures were at $65.39 a barrel at 0021 GMT, up 22 cents, or 0.3 percent, from their previous close.

Brent crude futures were at $69.65 per barrel, up 18 cents, or 0.3 percent.

Both benchmarks are hovering just below their highest levels since early February, having risen around 10 percent from March lows.

Some support for crude futures came from currency markets, where the dollar fell as Federal Reserve officials stuck to their view of three rate increases for 2018, even as they delivered an expected quarter point rate hike.

In oil markets, U.S. crude inventories C-STK-T-EIA fell 2.6 million barrels in the week to March 16, to 428.31 million barrels, the Energy Information Administration (EIA) said late on Wednesday.

“Oil … had a big session overnight although this wasn’t just a function of the interest rate move. Inventory data for last week showed a surprise crude draw as well as significant drawdowns in both gasoline and distillates inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Further supporting oil prices has been supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which started in 2017 and is scheduled to go on for the rest of 2018.

The overall bullish mood is being somewhat tempered by U.S. crude production C-OUT-T-EIA, which climbed to a fresh record of 10.4 million barrels per day (bpd) last week, putting the United States ahead of top exporter Saudi Arabia and within reach of Russia’s 11 million bpd.

Reporting by Henning Gloystein; editing by Richard Pullin

Oil prices stable after 2-day decline, but rising US output drags

CNBC

  • Oil prices stabilized early on Wednesday after posting two days of falls at the start of the week.
  • Support on Wednesday came from a report that U.S. crude inventories are not rising as much as expected during the spring season that is starting.

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.

Oil prices stabilized early on Wednesday after posting two days of falls at the start of the week.

Support on Wednesday came from a report that U.S. crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

U.S. West Texas Intermediate (WTI) crude futures were at $60.86 a barrel at 0033 GMT, up 15 cents, or 0.25 percent, from their previous close.

Brent crude futures were at $64.70 per barrel, up 6 cents, or 0.1 percent.

U.S. crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday. That compared with analysts’ expectations for an increase of 2 million barrels.

Refinery crude runs rose by 85,000 barrels per day (bpd), API data showed.

Despite this, general market conditions remain weak, and crude prices have not managed to return to their early 2018 highs of over $70 per barrel for Brent and almost $67 a barrel for WTI.

“The ever-expanding U.S. supply continues to pose significant downside risk to oil prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

U.S. crude oil production has risen by almost a quarter since mid-2016 and output soared past 10 million bpd in late 2017, overtaking production by top exporter Saudi Arabia.

U.S. crude production, pushed up largely by shale oil drilling, is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA).

Official weekly U.S. crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday.

Outside the United States, Libya’s Zawiya oil terminal returned to normal operations late on Tuesday after workers who were blocking ships from docking agreed to end a one-day strike, two sources said.

Zawiya exports crude from Libya’s giant El Sharara oilfield, which produces 300,000 bpd, more than a quarter of the North African country’s output.