Oil market edgy on US crude build, trade deal angst

CNBC

Reuters
KEY POINTS
  • Brent crude futures were down 3 cents, at $61.71 a barrel by 0348 GMT after settling down $1.22 per barrel, or almost 2% on Wednesday.
  • West Texas Intermediate crude futures were at $56.29 a barrel, down 2 cents, from their last close. They settled 88 cents lower, or 1.54%, in the previous session.
GP: Tullow Oil 190812 EU
The Tullow Oil Plc Prof. John Evans Atta Mills Floating Production Storage and Offloading vessel sits docked in Singapore on Jan. 21, 2016.
Nicky Loh | Bloomberg | Getty Images

Oil prices trod water on Thursday after losses in the previous session, as traders were cautious amid concerns over a potential delay in sealing a long-awaited interim U.S.China trade deal and a huge increase of U.S. crude stockpiles.

Brent crude futures were down 3 cents, at $61.71 a barrel by 0348 GMT after settling down $1.22 per barrel, or almost 2% on Wednesday.

West Texas Intermediate crude futures were at $56.29 a barrel, down 2 cents, from their last close. They settled 88 cents lower, or 1.54%, in the previous session.

U.S. crude oil stockpiles rose 7.9 million barrels last week as refiners cut output and exports fell, beating analysts’ expectations for an increase of 1.5 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Gasoline and distillate inventories dropped 2.8 million barrels and by 622,000 barrels respectively.

“The inventory builds and drops in exports is likely related to the COSCO sanctions,” said Stephen Innes, market strategist at AxiTraders, referring to the Chinese tanker firm the United States sanctioned, among others, in late September for alleged involvement in moving crude oil from Iran.

U.S. crude exports fell nearly 1 million barrels last week to 2.4 million barrels per day.

“The sanctions are coming back to haunt oil bulls as a trifecta of negativity if you include the probable delay in signing the Phase one trade deal” between the world’s top two economies and biggest oil consumers, Innes said.

A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim deal could be delayed until December as talks continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.

It was still possible the “phase one” agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not, the official said on condition of anonymity.

Expectations for a thaw in trade tensions have supported oil prices over the past several sessions

Jeffrey Halley, senior market analyst at OANDA, said the discouraging trade deal news and a massive rise in U.S. crude inventories pulled down both Brent and WTI overnight.

“Both contracts are unchanged in early trading. We expect this status quo to continue throughout the session,” Halley added.

Oil slips as focus shifts from Saudi supply to global demand concerns

CNBC

Reuters
KEY POINTS
  • Brent crude futures fell 35 cents to $64.42 a barrel by 0408 GMT.
  • U.S. West Texas Intermediate (WTI) futures  were at $58.36, down 28 cents.
GP: Rosneft oil refinery Russia 190125
A general view of the Novokuibyshev Refinery owned by Rosneft oil company on March 15, 2012 in Novokuibyshevsk, Samara region, Russia.
Sasha Mordovets | Getty Images

Oil prices eased on Tuesday as weak manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand and away from uncertainty around supply disruptions in Saudi Arabia.

Brent crude futures fell 35 cents to $64.42 a barrel by 0408 GMT, while U.S. West Texas Intermediate (WTI) futures were at $58.36, down 28 cents.

“The demand side of the equation is back in focus,” said Michael McCarthy, senior market analyst at CMC Markets in Sydney, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.

“That’s why we’re seeing a little bit more (downward) pressure on Brent than West Texas at the moment.”

Still, oil prices remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia’s largest oil processing facility that halved output in the world’s top oil exporter.

Reuters reported that Saudi Arabia has restored more than 75% of crude output lost after the attacks on its facilities and will return to full volumes by early next week. But the Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.

“Nine days after the oil facility attack in Saudi Arabia (SA), we still see divergent market views on when the damaged supplies will be restored,” analysts at Nomura said in a note.

“While the damaged plants may be repaired in the next couple of weeks, increasing actual oil supplies may require monitoring.”

European powers — Britain, Germany and France — backed the United States in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.

Meanwhile a preliminary Reuters poll found on Monday that U.S. crude oil and distillate stockpiles were expected to have dropped last week.

Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to Sept. 20.

The poll was conducted ahead of key reports from the American Petroleum Institute, an industry group, to be released on Tuesday and from the Energy Information Administration on Wednesday.

Middle East tensions lift oil prices more than 1%

CNBC

Reuters
KEY POINTS
  • Brent crude futures touched an intra-day high of $65.50 a barrel, but eased to $64.97, up 69 cents by 2323 GMT.
  • U.S. West Texas Intermediate crude futures were at $58.78 a barrel, up 69 cents, after earlier hitting a high of $59.39.
GP: Oil refinery at Corio silhouetted at sunset 190923
Richard I’Anson | Lonely Planet Images | Getty Images

Oil prices gained more than 1% to hit their highest levels in two sessions at the start of Monday’s trade as Middle East tensions remained elevated, supporting prices.

The Pentagon has ordered additional troops to be deployed in the Gulf region to strengthen Saudi Arabia’s air and missile defenses following an attack on Saudi oil facilities.

U.S. Secretary of State Mike Pompeo said on Sunday that the troops are for “deterrence and defence” and Washington aimed to avoid war with Iran.

Brent crude futures touched an intra-day high of $65.50 a barrel, but eased to $64.97, up 69 cents by 2323 GMT.

U.S. West Texas Intermediate crude futures were at $58.78 a barrel, up 69 cents, after earlier hitting a high of $59.39.

In the United States, the impact of Tropical Storm Imelda on refineries in Texas has eased as Exxon Mobil and Valero restarted their crude processing units over the weekend.

Oil prices march to biggest weekly gain in months amid Middle East tensions

CNBC

Reuters
KEY POINTS
  • Brent crude is on track to rise about 7.7% this week. The front-month November contract was at $64.96 a barrel, up 56 cents, by 0212 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures were up 66 cents to $58.79 a barrel.
GP: Oil field 171003
Pumpjacks in an oil field.
Paul Giamou | Aurora | Getty Images

Oil prices were on track for a more-than-7% jump this week, their biggest in months, as early trading on Friday saw gains extended on fresh tensions in the Middle East after a key Saudi Arabian supply hub was knocked out in an attack last weekend.

Friday’s rises came after a Saudi-led coalition launched a military operation north of Yemen’s port city of Hodeidah, as the United States worked with Middle East and European nations to build a coalition to deter Iranian threats after the Saudi attack.

Brent crude is on track to rise about 7.7% this week, the biggest weekly gain since January. The front-month November contract was at $64.96 a barrel, up 56 cents, by 0212 GMT.

U.S. West Texas Intermediate (WTI) crude futures were up 66 cents to $58.79 a barrel, set to post a 7.1% gain for the week, the largest weekly rise since June.

“The forward curve remains ‘bid’ as traders are hedging that the initial estimates for the duration of repairs (at damaged Saudi facilities), given the complex nature, could well underestimate the time required,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Saudi Arabia’s production dropped by almost half after an attack on Saturday crippled a major oil processing facility. Its oil minister has pledged to restore lost production by the end of this month, and bring capacity back to 12 million barrels per day by the end of November.

The United States and Saudi Arabia blames Iran for the assault on Saudi oil facilities. Tehran denies any involvement.

In the United States, meanwhile, torrential rain from Tropical Storm Imelda has forced a major refinery to cut production and shut a key oil pipeline, terminals and a ship channel in Texas.

Global markets are also keeping an eye on U.S.-China trade negotiations in Washington, as officials from both sides resumed face-to-face talks for the first time in nearly two months on Thursday.

Oil slips after Saudi Arabia says to restore output but risks remain

CNBC

Reuters
KEY POINTS
  • Brent crude oil futures fell 15 cents, or 0.2%, to $64.40 a barrel by 0253 GMT, after tumbling 6.5% the previous session.
  • U.S. West Texas Intermediate (WTI) crude futures declined 35 cents, or 0.6%, to $58.99 a barrel, after sinking by 5.7% on Tuesday.
GP: Saudi Arabia oil production Saudi Aramco oil field 190918
Foreign “guest workers” drill at the Saudi Aramco oil field complex facilities on March 2003 in Shaybah, Saudi Arabia.
Reza | Getty Images

Oil prices slipped on Wednesday, extending losses from the previous session after Saudi Arabia’s energy minister said the kingdom will restore lost oil production by the end of the month.

But investors remained cautious about Middle East tension after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes.

Brent crude oil futures fell 15 cents, or 0.2%, to $64.40 a barrel by 0253 GMT, after tumbling 6.5% the previous session.

U.S. West Texas Intermediate (WTI) crude futures declined 35 cents, or 0.6%, to $58.99 a barrel, after sinking by 5.7% on Tuesday.

“The risk of further escalation of conflict in the Middle East remains over the energy market and wild swings will likely resume when we see tit-for-tat responses from a Saudi-U.S. led coordinated effort,” said Edward Moya, senior market analyst at OANDA in New York.

“The situation with the oil market will remain tense, but the initial fears of a sustained disruption with world oil supplies have been alleviated in the very short-term.”

Saudi Arabia sought to reassure markets after the attack on Saturday halved its oil output, saying on Tuesday that full production would be restored by month’s end.

Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world’s top oil exporter would ensure full oil supply commitments to its customers this month.

Saudi Aramco has informed some Asian refiners that it will supply full allocated volumes of crude oil in October, albeit with some changes.

Relations between the United States and Iran have deteriorated since U.S. President Donald Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports.

Tehran rejects the charges it was behind the strikes and on Tuesday ruled out talks with Trump.

Shell Petroleum Development Company of Nigeria declared force majeure on exports of Bonny Light crude oil, which put a floor on price losses on Wednesday.

In a note late on Tuesday, BNP Paribas’ Harry Tchilinguirian said “In view of the vulnerability of Saudi’s supply chain and the likelihood that such attacks could be repeated in the future, we expect the market to reprice the geopolitical risk premium in oil.”

But Moya said oil prices “will continue to struggle to maintain any sustained rally as global growth weakness continue to drive demand concerns”.

U.S. crude inventories rose by 592,000 barrels in the week ended Sept. 13 to 422.5 million, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a decrease of 2.5 million barrels.

Official U.S. government data will be released on Wednesday.