Oil prices steady as clouds gather over fuel demand, looser supply curbs

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Reuters
KEY POINTS
  • U.S. West Texas Intermediate (WTI) crude futures rose 1 cent to $40.76 a barrel at 0204 GMT.
  • Brent crude futures were steady at $43.37 a barrel.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices were unchanged on Friday, with trading marked by growing uncertainty about global recovery in fuel demand as new COVID-19 cases surge in several countries just as major producers get set to loosen production curbs.

U.S. West Texas Intermediate (WTI) crude futures rose 1 cent to $40.76 a barrel at 0204 GMT, while Brent crude futures were steady at $43.37 a barrel. Both were still on track to end the week up slightly.

On Thursday, the United States reported at least 75,000 new COVID-19 cases, a new daily record. Spain and Australia reported their steepest daily jumps in more than two months, cases continued to soar in India and Brazil stepped up lockdown measures.

The two benchmark contracts fell 1% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) imposed earlier this year by some 2 million bpd from August.

But actual output additions will be closer to 1.1 million bpd, as countries like Iraq – which overproduced compared with their commitments to cut supply in May through July – agreed to bigger reductions in August and September.

Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said the market took some heart with the agreement for some to compensate for previous non-compliance with commitments at a time when there is uncertainty over demand growth.

“They’re taking those precautions. That gives the market confidence that OPEC+ is looking quite closely at those conditions to make sure they don’t push the market in the wrong direction,” he said.

Analysts expect the market to remain in the $40-45 a barrel range, with the looming return of some U.S. supply and uncertainty over fuel demand as new lockdowns may be needed to curb the resurgence of COVID-19 cases.

“The problem with the market right now is prices have got to a level where we’re concerned U.S. supply is going to come back,” Dhar said.

Oil prices drop for second straight session as coronavirus spike cools demand hopes

CNBC

Reuters
KEY POINTS
  • Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.
  • Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude was at $37.82, down 67 cents, or 1.7%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, economist at Singapore’s OCBC bank said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and natural gas rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.

Coronavirus live updates: India surpasses China as cases spike; Italy eases travel restrictions

CNBC

Weizhen Tan
KEY POINTS
  • Brazil confirmed 15,305 new cases, bringing its total to 218,223.
  • Mexico had 2,437 new cases, that brought its tally to 45,032 confirmed infections.
  • Global cases surpassed 4.5 million, with the number of cases in Latin America surging.

This is CNBC’s live blog covering all the latest news on the coronavirus outbreak. This blog will be updated throughout the day as the news breaks.

  • Global cases: More than 4.5 million
  • Global deaths: At least 307,159
  • Most cases reported: United States (More than 1.4 million), Russia (262,843), United Kingdom (238,004), Spain (230,183), Italy (223,885).

The data above was compiled by Johns Hopkins University as of 9:40 a.m. Beijing time.

All times below are in Beijing time.

5:00 pm: Russia reports 9,200 new infections

Russia reported 9,200 new confirmed cases, bringing its total to 272,043, according to Reuters.

There were 119 deaths, with the total number of fatalities now at 2,537, the report said. Russia is the second worst-hit country, after the U.S., according to data from Johns Hopkins University. — Weizhen Tan

4:40 pm: More than 500 beaches in Greece reopen

Greek residents flocked to beaches on Saturday as more than 500 of them reopened, with Greece easing restrictions earlier this month, according to Reuters.

Beach goers were required to keep to distancing rules, with no more than 40 people allowed per 1,000 square meters. — Weizhen Tan

3:30 pm: Singapore confirms 465 new cases

Singapore has reported another 465 cases of Covid-19, taking its tally to 27,356, the health ministry said.

Most of the new cases are migrant workers living in dormitories, said the ministry. Those workers, mostly men from other Asian countries, have accounted for a vast majority of cases in the Southeast Asian city-state. — Weizhen Tan

2:15 pm: Germany reports 620 new cases

Germany’s total cases jumped by 620 to 173,772, according to the latest data by Robert Koch Institute, a federal government agency responsible for disease monitoring and prevention.

The country’s death toll increased by 57 to 7,881, the data showed. — Weizhen Tan

1:15 pm: Italy eases travel restrictions

The Italian government is easing travel restrictions imposed due to the coronavirus pandemic, allowing people to move freely inside the region where they live as of Monday, and between regions starting June 3.

The government decree announced early Saturday also permits international travel to and from Italy from June 3.

Italy imposed nationwide lockdown rules in early March after it became the first country outside Asia with a major outbreak of coronavirus. But the government led by Premier Giuseppe Conte has gradually reopened the country as the rates of infections and deaths have fallen.

Social distancing rules are being implemented in the sectors of the economy that have reopened, including factories and some businesses. Schools remain closed and crowds are not permitted, though people will be allowed to attend Mass in churches with some restrictions starting next week. — Associated Press

12:45 pm: India surpasses China as cases surge

Migrant labourers stand in a queue for medical checkup after reaching quarantine center at their hometown Allahabad during Government imposed nationwide lockdown as a preventive measure against the COVID-19 corona virus in Allahabad, India on April 27, 2020.
Migrant labourers stand in a queue for medical checkup after reaching quarantine center at their hometown Allahabad during Government imposed nationwide lockdown as a preventive measure against the COVID-19 corona virus in Allahabad, India on April 27, 2020.
Ritesh Shukla | NurPhoto via Getty Images

The number of cases in India surged to surpass that of China, climbing to a total of 85,940 infections, according to its health ministry. In the last 24 hours, India confirmed 3,970 new cases and 103 fatalities, according to AP.

India is now the 11th worst-hit country globally, with China falling back to be the 13th most affected (see 10:30 a.m. update), according to data from Johns Hopkins University.

India’s Prime Minister Narendra Modi said Monday that the country would look to ease a nearly seven-week lockdown despite reporting its largest single-day jump in cases this week, according to Reuters. Its lockdown had repeatedly been extended, with the latest until May 17. — Weizhen Tan

11:20 am: South Korea reports 19 new cases

South Korea reported 19 new cases, as infections continued to climb following a growing outbreak linked to a number of night clubs. That came after weeks of single-digit or zero infections.

That brought its tally to 11,037 cases, according to the Korea Centers for Disease Control and Prevention. It had two new deaths.

Despite the new night club cluster in its capital city of Seoul, South Korea said this week that it had no plans to restore social distancing rules, which it eased last week, according to Reuters. — Weizhen Tan

10:30 am: China reports 8 new cases

China’s National Health Commission reported eight new cases, six of which were imported infections, or attributed to travelers from overseas. That brings its total to 82,941 confirmed cases.

There were no new deaths, with fatalities staying at 4,633, according to the NHC. There were 13 new asymptomatic cases, where patients do not display symptoms of the disease. In all, 561 asymptomatic cases were under medical observation. — Weizhen Tan

10:05 am: House Democrats pass $3 trillion coronavirus relief package

House Democrats on Friday passed a $3 trillion coronavirus relief package, which Senate Republicans pledged to block.

The House passed the rescue legislation in a close 208-199 vote, with 14 Democrats voting against the bill and one Republican supporting it.

Here’s what the bill includes. — Jacob Pramuk

9:40 am: Brazil, Mexico report record daily highs

Passengers wearing protective masks at Estacao da Luz, central region of the city of Sao Paulo, Brazil, on May 11, 2020.
Passengers wearing protective masks at Estacao da Luz, central region of the city of Sao Paulo, Brazil, on May 11, 2020.
NurPhoto

For a second day running this week, both Brazil and Mexico reported record daily highs.

Brazil confirmed 15,305 new cases, bringing its total to 218,223, according to Reuters citing its health ministry. It had 824 deaths, to reach 14,817 fatalities in total.

Turmoil in the Latin American country climbed further as it lost its second health minister in a month as the crisis worsened, according to Reuters.

Mexico had 2,437 new cases, according to a Reuters report. That brought its tally to 45,032 confirmed infections.

The country reported 290 more deaths to a total of 4,767 fatalities, the report said. — Weizhen Tan

9:20 am: U.S. retail sales report signals more rapid restructuring of retail business

The 16.4% plunge in April retail sales signals the retail industry will face a  more rapid restructuring with more failures and store closings. Online shopping was the only segment of the retail sector that showed improvement during the month, when most states were shut down.

Economists said department stores were the biggest losers but big box stores, like Costco and Walmart, were not down nearly as much and held their own. Online sales rose 8%. — Patti Domm

9:05 am: Global cases cross 4.5 million

Global cases surpassed 4.5 million, with the number of cases in Latin America surging.

Brazil and Mexico both reported record increases in their number of new cases this week, as the infections in other parts of the world such as Europe is slowing.

Confirmed cases in Brazil surpassed that of Germany and France this week. The South American country now has the sixth highest number of infections, with 218,223 cases reported, according to the latest data from Johns Hopkins University. — Weizhen Tan

Oil prices steady as U.S. crude inventories fall, but trade tensions weigh

CNBC

  • U.S. crude inventories fall to Feb-2015 low of 401.49 million barrels.
  • But diesel, gasoline stocks rise after lackluster driving season.
  • Trade tensions weigh on markets.
  • U.S. crude oil production at 11 million barrels per day.

Oil prices held steady on Friday, as the market balanced a fall in U.S. crude inventories to the lowest levels since 2015, with Sino-American trade tensions and economic weakness from emerging markets.

U.S. West Texas Intermediate (WTI) crude futures were at $67.78 per barrel at 0448 GMT, up just 1 cent from their last settlement.

International Brent crude futures dipped 8 cents to $76.42 a barrel.

“Oil inventory data released last night showed a larger-than-expected draw in crude inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to Aug. 31, the lowest since February 2015, U.S. Energy Information Administration (EIA) data showed on Thursday.

Despite that, analysts said prices were curbed by a rise in refined product stocks and a relatively weak U.S. peak fuel consumption season this summer, known as the driving season.

Gasoline stocks rose by 1.8 million barrels, while distillate stockpiles, which include diesel and heating oil, climbed by 3.1 million barrels, the EIA data showed.

“U.S. gasoline inventories are now above the top of the 5-year range,” said U.S. investment bank Jefferies in a note on Friday.

“The U.S. summer driving season has proven to be a lacklustre one in terms of gasoline demand,” said O’Loughlin of Rivkin Securities.

Ongoing emerging market weakness as well as potential new U.S. import tariffs on Chinese goods were also weighing on oil market sentiment.

“Emerging markets, which tend to have a higher energy intensity of GDP, are an obvious concern,” said Jefferies.

Asian shares slipped to a 14-month trough on Friday as investors feared a new round of Sino-U.S. tariffs, while currencies from Indonesia to India also remained under pressure.

On the supply side, U.S. crude oil production last week remained at a record 11 million barrels per day (bpd), a level it has largely been at since July.

After rising by almost a third in the last two years, Jefferies said: “U.S. production growth will now significantly decelerate until 4Q19.”

Outside the United States, U.S. sanctions against major oil producer Iran, which from November will target oil exports, are fueling expectations of a tighter market towards the end of the year.

“The main driver of oil prices, in our view, remains the re-imposition of U.S. … sanctions against consumers of Iranian oil,” said Standard Chartered this week.

“There is still considerable uncertainty over the strategies of China and India, Iran’s main customers.”

Washington has indicated it may offer temporary sanctions waivers to allied countries that are unable to immediately cease imports from Iran.

U.S. oil prices rise as Gulf platforms shut ahead of hurricane

CNBC

  • Storm Gordon to make U.S. landfall as hurricane.
  • Brent dips as India takes steps to continue Iran imports.
  • Global oil markets have tightened since 2017 — Barclays.

U.S. oil prices rose on Tuesday, breaking past $70 per barrel, after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane.

U.S. West Texas Intermediate (WTI) crude futures were at $70.05 per barrel at 0353 GMT, up 25 cents, or 0.4 percent from their last settlement.

Anadarko Petroleum Corp said on Monday it had evacuated and shut production at two oil platforms in the northern Gulf of Mexico ahead of the approach of Gordon, which is expected to come ashore as a hurricane.

International Brent crude futures, by contrast, lost ground, trading at $78.07 per barrel, down 8 cents from their last close.

This came as India allowed state refiners to import Iranian oil if Tehran arranges and insures tankers.

Many international shippers have stopped loading Iranian oil as U.S. financial sanctions against Tehran prevents them from insuring its cargoes.

Mirroring a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC), this means that Asia’s two biggest oil importers are making plans to continue Iran purchases despite pressure by Washington to cut orders.

Traders said Brent was also pressured by emerging market turmoil and the strong dollar, which makes crude imports for countries using other currencies more expensive.

Changing market

Britain’s Barclays bank said on Tuesday that oil markets had changed since 2017 when worries about rising supply were more evident.

“U.S. producers are resisting temptation and exercising capital discipline, OPEC and Russia have convinced market participants they are managing the supply of over half of global production, the U.S. is using sanctions more actively, and several key OPEC producers are at risk of being failed states,” Barclays said.

Crude oil “prices could reach $80 and higher in the short term”, the bank said, although it added that despite these developments global supply may exceed demand next year.

For 2020, Barclays said it expects Brent to average $75 per barrel, up from its previous forecast of just $55 a barrel.

French bank BNP Paribas struck a similar tone, warning of “supply issues” for the rest of the year and into 2019.

“Crude oil export losses from Iran due to U.S. sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production due to market share sensitivities,” the bank said.

BNP Paribas expects Brent to average $79 per barrel in 2019.