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.

Oil Prices Bounce After A Tough Week

Oilprice.com

Oil

Oil has had a bumpy week, but following the news that Trump would allow some keep exceptions to the tariffs, along with a strong jobs report and falling U.S. oil rig count, crude prices bounced back on Friday.

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Friday, March 9, 2018

Oil posted some steep losses mid-week after the EIA reported another crude oil inventory increase. Some fears about U.S. steel tariffs, and follow up tit-for-tat protectionist measures, also weighed on crude sentiment. But news that Trump would allow some exceptions to the tariffs, as well as a strong jobs report and a falling U.S. oil rig count sent oil prices bouncing back up on Friday.

Saudi Aramco CEO: Oil industry needs $20 trillion in investment. Over the next 25 years, the oil industry will need another $25 trillion in investment just to meet expected demand, while also accounting for natural depletion at existing fields, Aramco’s CEO Amin Nasser said at the CERAWeek Conference on Tuesday. The sentiment came after the IEA warned that the oil market will be short on supply in the 2020s without an increase in upstream spending. In fact, there is a growing chorus of analysts who agree with the basic premise that the oil market could be well-supplied in the near-term because of U.S. shale, but faces supply risks in the early- to mid-2020s because of low upstream investment. “I am not losing any sleep over peak oil demand or stranded resources,” Nasser added.

OPEC production dips to 9-month low. Total OPEC production dropped to 32.14 million barrels per day in January, according to Argus Media, a 9-month low. That was largely the result of a sharp decline in output from Nigeria and Venezuela, and OPEC officials waived away concerns about the drop. “There is no plan to do anything (about Venezuela’s output) at this point,” Saudi oil ministry adviser Ibrahim Al-Muhanna said at the CERAWeek Conference. “The market has not reached the point of balance … there is no need to address it this year.” Related: The Mysterious Chinese Company Looking To Buy Rosneft

Oil and gas eye steel tariff exemption. After vociferously opposing President Trumps’ steel tariffs, some in the energy industry were somewhat relieved when the White House said it would allow certain companies and industries to apply for an exemption if they cannot procure enough steel domestically. Many parts of the energy industry, including pipeline construction, involves a special type of steel that is difficult to source in the U.S. A long list of companies warned that the tariffs could have a negative impact on oil and gas. For instance, Royal Dutch Shell (NYSE: RDS.A) said that the duties could impact the company’s decision to move forward on a major oil project in the Gulf of Mexico.

Mexico eyes heavy oil production. Mexico’s energy regulator said this week that heavy oil production could offer the country a “short-term investment opportunity.” More heavy oil would be readily taken up by U.S. refiners, especially because heavy oil supply has dipped elsewhere, aside from Canada. “The margin between WTI and heavy Canadian crude is at its narrowest in several years,” Zepeda said at the CERAWeek Conference on Tuesday. “The Gulf coast refineries were designed to process heavy oil from Mexico and Venezuela, where its production has been in decline. Heavy oil in the Gulf of Mexico is going to be in high demand.” Still, increasing production would require farming out some work to the private sector, which is not in Pemex’s near-term plans.

MBS to London. Saudi Crown Prince Mohammed bin Salman visited London this week to discuss some foreign policy issues with the British Prime Minister, but analysts see one key objective of the trip was to try to build a relationship with the west and tamp down investor concern after last year’s purge of the Saudi elite. MBS will also want to curry favor with international investors as the Kingdom prepares its IPO of Saudi Aramco. Saudi Arabia is still mulling the location of the public offering, deciding between London, New York and Hong Kong.

ExxonMobil CEO: Oil prices could fall if demand falters. While everyone is worried about U.S. shale supply undercutting oil prices, ExxonMobil’s CEO Darren Woods says economic growth, which is bolstering oil demand, is the key. Strong global growth is what’s “really driving demand at levels much higher than recent history,” Woods said. He warned that the oil market will suffer from oversupply if demand “starts to tail off.”

Oil industry shrugs off peak oil demand, but climate concerns rising. Top oil industry officials dismissed concerns about a rapidly approaching peak in oil demand at the CERAWeek Conference, but what was notable was how much climate change came up at the event. In particular, Royal Dutch Shell’s (NYSE: RDS.A) CEO Ben van Beurden warned about the risks to the oil industry form climate change. “There may not be total unity behind the Paris Agreement any longer, but there is no other issue with the potential to disrupt our industry on such a deep and fundamental level,” van Beurden said.

Citi: Oil to drop below $60 by summer. Citi’s Ed Morse says that U.S. shale is going to flood the market, pushing Brent prices into the $50s within a few months. Others disagree. Gary Ross, global head of oil analytics and chief energy economist at S&P Global Platts, told the WSJ that WTI could jump into the $70s later this year because of soaring demand. Needless to say, analysts have a wide range of opinions about what to expect in the oil market over the next few quarters.

Related: Saudis Hint They Could Delay Aramco IPO Until 2019

Shell and Blackstone to spend $10 billion for BHP’s shale unit. Royal Dutch Shell (NYSE: RDS.A) is partnering with private equity giant Blackstone (NYSE: BX) to make a $10 billion bid for BHP’s (NYSE: BBL) shale assets. It would represent Shell’s largest deal since its $50 billion purchase of BG Group nearly three years ago.

ExxonMobil announces spending increase. ExxonMobil (NYSE: XOM) said it would dramatically increase spending in order to boost oil and gas production in the coming years, but the move was not received well by the oil major’s shareholders. The spending increase, which would see capex jump by about a third this year to $24 billion and steadily rise to $30 billion by the early 2020s, was met with a 3% selloff in the company’s share price. Exxon said it would double earnings by 2025 and would focus on its discoveries in Guyana, the Permian, along with LNG and its downstream refining and petrochemical units.

Saudi Aramco considers massive spending spree on shale. Bloomberg reports that Aramco could begin producing shale gas this month from its North Arabia basin. Aramco says the assets are similar in size to the Eagle Ford, and the company could spend as much as $300 billion to develop oil and gas projects, including shale gas, over the next 10 years.

By Tom Kool for Oilprice.com

Oil steady as investors avoid risk assets on equities decline, stronger dollar weighs

CNBC

  • Oil prices were little changed on Thursday after falling in the previous two sessions.
  • U.S. crude inventories rose by 3 million barrels last week, compared with analyst expectations for a build of 2.1 million barrels, data from the EIA showed.

Oil prices were little changed on Thursday after falling in the previous two sessions as investors shied away from riskier assets amid volatile equity markets and the U.S. dollar gained, limiting overall interest in commodities.

Both global benchmark oil futures fell sharply on Wednesday after crude and gasoline inventories in the United States rose unexpectedly.

U.S. West Texas Intermediate crude for April delivery was up 8 cents at $61.72 a barrel by 0403 GMT after settling down 2.2 percent in the previous session.

Brent crude for May delivery, the new front-month contract, was down 3 cents at $64.70. The April contract expired on Wednesday down 1.3 percent.

Both benchmark contracts fell nearly 5 percent in February, the first monthly decline in six months.

“An extended large decline in equities has been prompting investors to avoid risk assets such as oil,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Some industry sources said Wednesday’s decline was also due to profit-taking by market participants at the end of the month after oil hit a three-week high earlier this week.

The U.S. dollar index, which measures the greenback against six major currencies, increased for a second day on Wednesday and was slightly higher on Thursday. A stronger U.S. dollar limits demand for dollar-denominated commodities such as oil since investors paying in other currencies must pay a higher price.

U.S. crude inventories rose by 3 million barrels last week, compared with analyst expectations for a build of 2.1 million barrels, weekly data by the Energy Information Administration (EIA) showed.

Gasoline stocks also rose by 2.5 million barrels against expectations for a 190,000-barrel drop, which pushed gasoline futures sharply lower. Distillate stockpiles, which include diesel and heating oil, fell by 1 million barrels, versus expectations for a 709,000-barrel drop.

Oil field workers on a rig in Tioga, North Dakota.

Crude oil inventories up 3 million barrels  

Soaring U.S. crude production has also kept a lid on oil prices this year, even though producers, led by the Organization of the Petroleum Exporting Countries and Russia, have reduced output.

U.S. crude oil production rose to a record 10.057 million barrels per day(bpd) in November and retreated slightly in December to 9.949 million bpd, the EIA said on Wednesday.

“Despite the expanding output curbs by OPEC and non-OPEC members such as Russia, the market has been focusing more on rising U.S. output since around late January,” Akuta added.

OPEC, meanwhile, is doing its part to keep a lid on prices. The group’s oil output fell in February to a 10-month low as the United Arab Emirates joined other Gulf members in over-delivering on the reduction pact, a Reuters survey found on Wednesday.

Oil prices may find some support as the U.S. is considering oil-related sanctions on OPEC member Venezuela to pressure its socialist President Nicolas Maduro, a U.S. official said on Wednesday.

The sanctions could target a military-run oil services company and restrict insurance coverage for Venezuelan oil shipments ahead of the country’s elections on April 22.

Oil dips away from 3-year highs on signs of overheated market

CNBC

  • Oil inched away from three-year highs on signs a 13-percent rally since early December may have run its course
  • Oil markets have so far been generally supported by a production cut led by OPEC and Russia
  • Despite this, more bearish signals are appearing

An oil pump jack in the oil town of Gonzales, Texas.

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

Oil inched away from three-year highs on Thursday on signs that a 13-percent rally since early December may have run its course, although a surprise drop in U.S. production and lower crude inventories offered prices some support.

U.S. West Texas Intermediate (WTI) crude futures were at $63.50 a barrel at 0529 GMT, 7 cents below their last settlement, but still close to a December-2014 high of $63.67 per barrel reached the previous day.

Brent crude futures were at $69.10 a barrel, 10 cents below their last finish, albeit also still close to the previous day’s peak of $69.37 a barrel – the highest level since an intra-day spike in May 2015.

“In Q1, the balance of risk to Brent lies to the downside, with prices overheating, record net-length built into the futures market and fundamentals set to weaken seasonally,” BMI Research said in a note.

The mounting downward pressure on prices is also showing in the physical oil market, where OPEC’s No.2 and No.3 producers, Iran and Iraq, this week cut their supply prices to remain competitive with customers.

Oil markets have so far been generally supported by a production cut led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia that started in January last year and is set to last through 2018.

Oil pumps are seen in Lake Maracaibo, in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela.

Iran and Venezuela present biggest risk to oil in 2018: ClearView Energy Partners  

More immediate price support came overnight from the United States, where crude inventories fell almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels.

That’s slightly below the five-year average of just over 420 million barrels.

U.S. production fell 290,000 barrels per day to 9.5 million bpd, the EIA said, foiling expectations of U.S. output breaking through 10 million bpd.

Ample fuel

Despite this, more bearish signals are appearing. Fuel inventories in Asia and the United States remain ample, and in some cases are rising.

U.S. gasoline stocks rose 4.1 million barrels, EIA data showed, more than expected.

In Asia’s oil trading hub Singapore, average refinery profit margins have fallen below $6 per barrel this month, their lowest seasonal level in five years, resulting in lower feedstock crude orders.

With the crude price up by more than 13 percent since early December, some analysts expect a downward price correction following the recent bull-run.

“Markets are getting a bit fatigued, and a healthy correction could be on the cards,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.