Oil prices edge down on concerns of slowing economic growth

CNBC

  • Oil prices fell on Monday over concerns of slowing economic growth.
  • International Brent crude oil futures were at $71.59 per barrel at 0413 GMT, down 24 cents from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, at $65.67 per barrel.

Oil prices fell on Monday as concerns over slowing economic growth weighed on markets.

Brent crude futures, which act as a benchmark for international oil prices, were at $71.59 per barrel at 0413 GMT, down 24 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, or 0.4 percent, at $65.67 per barrel.

Reuters technical commodity analyst Wang Tao said Brent and WTI would likely come under pressure soon, testing support at $70.62 per barrel and $64.83 per barrel respectively.

“Disappointing industrial data out of China along with concerns over emerging market economies centered on Turkey weighed on commodities,” Edward Bell of Emirates NBD bank said in a note on Sunday.

In the United States, U.S. energy companies last week kept the oil rig count unchanged at 869, according to the Baker Hughes energy services firm.

“The recent softening in benchmark prices should temper the pace of growth in U.S. exploration and production activity, and lead to slower overall output growth,” Bell said.

Outside the United States, traders said U.S. sanctions against Iran could soon impact prices.

The U.S. government has introduced financial sanctions against Iran which, from November, will also target the country’s petroleum sector.

Iran produced around 3.65 million barrels per day of crude in July, according to a Reuters survey, making it the third biggest producer within the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia and Iraq.

Oil dips as trade tensions drag; Iran sanctions provide some support

CNBC

  • Oil prices dipped on Tuesday as rising trade tensions dented the outlook for fuel demand growth especially in Asia.
  • U.S. sanctions against Iran still pointed towards tighter supply.

An oil pump jack in Gonzales, Texas.

Getty Images
An oil pump jack in Gonzales, Texas.

Oil prices dipped on Tuesday as rising trade tensions dented the outlook for fuel demand growth especially in Asia, although U.S. sanctions against Iran still pointed towards tighter supply.

Front-month Brent crude oil futures were at $72.60 per barrel at 0338 GMT, down by 21 cents, or 0.3 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 5 cents at $67.58 per barrel.

Signs of slowing economic growth and lower fuel demand increases, especially in Asia’s large emerging markets are weighing on the oil markets.

“Demand growth from Asia in general is being called into question. This due to the negative impact of trade wars, a stronger dollar and rising funding costs,” Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said in a note late last week.

Despite the gloomy outlook for trade and the potential slowdown in economic growth, oil markets are expected to remain relatively tight, particularly as U.S. sanctions on Iran have started.

“If markets really go into a funk, I’d expect oil to be part of that. But the complicating factor right now is Iran and the sanctions,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Because of the conflicting factors in oil markets, McKenna said “I’m staying out of oil at the moment.”

The United States has started implementing new sanctions against Iran, which from November will also target the country’s petroleum sector. Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries.

“With U.S. sanctions on Iran back in place … maintaining global supply might be very challenging,” ANZ bank said on Monday, although it added that “the U.S. is doing its bit to increase production, with data showing drilling activity is continuing to rise.”

U.S. energy companies last week added the most oil rigs since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm.

That was the highest level of drilling activity since March 2015.

However, keeping with the bearish tone of the market, hedge funds and other money managers reduced their bullish positions in U.S. crude futures and options in the week ending on Aug. 7, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The speculator group cut its combined net-long position in New York and London by 9,117 contract to 397,885 during the week, the lowest since June 19, the data showed.

Oil edges up on Iran sanctions, but trade disputes dent demand outlook

CNBC

  • Oil prices edged up on on Friday on worries that renewed U.S. sanctions against Iran will tighten supplies.
  • The escalating trade dispute between Washington and Beijing restricted gains.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Oil prices edged up on on Friday on worries that renewed U.S. sanctions against Iran will tighten supplies, although the escalating trade dispute between Washington and Beijing restricted gains.

Front-month Brent crude oil futures were at $72.21 per barrel at 0444 GMT, up 14 cents, or 0.2 percent from their last close.

U.S. West Texas Intermediate (WTI) crude future were up by 6 cents at $66.87 a barrel.

Despite the possibility of a slowdown in economic growth due to escalating trade tensions, oil markets are for now relatively tight, analysts said, mostly because of sanctions on Iranian oil exports the United States plans to implement in November.

Although other powers, including the European Union, China and India oppose sanctions, many are expected to bow to American pressure.

“We do not believe that sanctions have been fully priced into Brent, leaving room for a significant run-up in prices towards the end of the year,” BMI Research said.

Goldman Sachs' chief commodities researcher on the record

Goldman Sachs’ chief commodities researcher gives bull case for oil  

Analysts expect the drop-off in Iranian crude exports to range between 500,000 barrels per day (bpd) and 1.3 million bpd, with buyers in Japan, South Korea and India already dialing back orders.

The reduction will depend on whether major buyers of Iranian oil in Asia receive sanctions waivers that would still allow some imports.

It was also not clear whether China, the biggest buyer of Iranian crude, will bow to Washington’s pressure.

Trade dispute

Beyond Iran sanctions, the escalating trade dispute between Washington and Beijing was weighing on global markets.

On a weekly basis, Brent is set for a 1.5 percent fall, while WTI is heading for a drop of around 2.5 percent.

“The market seems to be focused on fears of reduced demand from China, partially due to the effects of the trade wars between China and the United States,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities. In the latest round, China said it would impose additional tariffs of 25 percent on $16 billion worth of U.S. imports.

Although crude was dropped off the list, replaced by refined products, many analysts say Chinese imports of American crude will still drop significantly.

“Already we are hearing that Chinese refiners are holding back on U.S. crude, despite escaping tariffs,” ANZ bank said in a note on Friday.

Growing global trade tensions have also led to a slump in the currencies of major emerging economies such as India, Turkey and China.

These devaluations have made imports of oil, which is traded in U.S. dollars, more expensive, potentially denting demand.

“The major devaluation of many emerging market currencies relative to the U.S. dollar means that in local terms oil is higher than what we see on the screen,” U.S. investment bank Jefferies said on Friday.

Oil prices steady on falling US crude stocks, Iran sanctions

CNBC

  • Oil prices held steady on Wednesday.
  • Prices were supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices held steady on Wednesday, supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran.

Front-month U.S. West Texas Intermediate (WTI) crude futures were at $69.28 per barrel at 0408 GMT, up 11 cents from their last settlement.

Brent crude oil futures were at $74.61 per barrel, down 4 cents from their last close.

Both futures contracts have risen during the previous two sessions.

“Crude oil prices rose as the reality of U.S. sanctions on Iran weighed on sentiment. News from key buyers suggests the market is already adjusting to the new regime,” ANZ bank said in a note on Wednesday.

The U.S. government introduced a raft of new sanctions against Iran on Tuesday, targeting Iran’s purchases of U.S. dollars – in which oil is traded – metals trading, coal, industrial software and its auto sector.

From November, Washington will also target Iran’s petroleum sector. Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC). It shipped out almost 3 million barrels per day (bpd) of crude in September, equivalent to around 3 percent of global demand.

The price of oil is correct, says Jim Cramer

The price of oil is correct, says Jim Cramer  

Beyond the sanctions, the oil market was focusing on the U.S. market, where the American Petroleum Institute said on Tuesday that crude inventories fell by 6 million barrels in the week to Aug. 3 to 407.2 million.

Official U.S. fuel storage data is due to be released later on Wednesday by the Energy Information Administration.

In terms of production, the EIA on Tuesday slightly cut its 2018 expectation for average 2018 U.S. crude output to 10.69 million bpd, down from its previous estimate of 10.79 million bpd.

On the demand side, China’s July crude oil imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a drop-off in demand from the country’s smaller independent, or “teapot”, refineries.

Shipments into the world’s biggest importer of crude came in at 36.02 million tonnes last month, or 8.48 million bpd, up from 8.18 million bpd a year ago, and just up on June’s 8.36 million bpd, data from the General Administration of Customs showed.

However, July imports were still the third-lowest so far this year.

Oil rises as US renews sanctions against Iran

CNBC

  • Oil prices rose on Tuesday as the United States reintroduced sanctions against major crude exporter Iran, tightening global markets.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices rose on Tuesday as the United States reintroduced sanctions against major crude exporter Iran, tightening global markets.

Spot Brent crude oil futures were at $74.08 per barrel at 0624 GMT, up 33 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.3 percent, at $69.21 barrel.

U.S. sanctions against Iran, which shipped out almost 3 million barrels per day (bpd) of crude in July, officially came into effect at 12:01 a.m. U.S. Eastern time (0401 GMT) on Tuesday.

“The U.S. seems hell-bent on regime change in Iran,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Many countries, including U.S. allies in Europe as well as China and India oppose the sanctions, but the U.S. government said it wants as many countries as possible to stop buying Iranian oil.

“It is our policy to get as many countries to zero as quickly as possible. We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran,” saida senior U.S. administration official on Monday.

Iran sanctions back: Impact on oil market

Iran sanctions back: Impact on oil market  

French bank Societe Generale said there was currently a “comfortable supply” in physical crude markets, but noted “Iran sanctions will take another 1 million bpd off the markets.”

This would leave markets with little spare capacity to deal with unforseen disruptions, it said.

Heat impacts oil

The main oil market price drivers of recent months have been output levels by top producers Russia, Saudi Arabia and the United States, renewed Iran sanctions, the U.S.-China trade dispute, and unplanned supply disruptions. Some analysts warned that a global heat wave could also now affect oil demand.

Much of the northern hemisphere has been gripped by extreme heat this summer, pushing up demand for industrial and residential cooling.

This mostly impacts demand for power fuels such as thermal coal and natural gas.

But U.S. bank JPMorgan said a warmer-than-usual fourth quarter could stem from a potential El Niño weather pattern that “can cause droughts, flooding and other natural disasters across the globe, including heatwaves in the U.S. that affect commodities”.

“Past instances of El Niño have resulted in sharp drops in U.S. residential and commercial heating oil demand and prices,” it said.