Oil gains amid Middle East tensions, US-China trade deal hopes

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Reuters

KEY POINTS
  • Brent crude futures were up 3 cents at $62.17 a barrel by 0330 GMT. They rose 2% on Tuesday.
  • U.S. West Texas Intermediate crude gained 12 cents to $54.02 a barrel. The U.S. benchmark surged 3.8% in the last session.
Reusable: Oil storage refinery Australia Caltex Oil 141014
Jason Reed | Reuters

Oil prices extended gains on Wednesday after rising in the previous session on rekindled hopes for a U.S.China trade deal and on the potential for conflict between the U.S. and Iran in the Middle East after tanker attacks there last week.

Brent crude futures were up 3 cents at $62.17 a barrel by 0330 GMT. They rose 2% on Tuesday.

U.S. West Texas Intermediate crude gained 12 cents to $54.02 a barrel. The U.S. benchmark surged 3.8% in the last session.

In a post on Twitter, U.S. President Donald Trump said preparations were starting for him to meet Chinese President Xi Jinping at the G20 summit in Osaka, Japan, next week.

That comes after talks to reach a broad deal on trade between the United States and China broke down last month after Washington accused the Chinese of backing away from previously agreed commitments.

Interaction between the two sides since then has been limited, and Trump has threatened, repeatedly, to slap more tariffs on Chinese products in an escalation that businesses in both countries want to avoid.

“Global demand for crude got a boost on expectations that trade talks are showing some positive signs following President Trump’s tweets,” said Edward Moya, senior market analyst at OANDA in New York.

Both oil benchmarks gave up earlier gains in the Asian session after data showed that Japan’s exports fell for a sixth straight month in May as China-bound shipments weakened, underlining the impact of the trade war.

Tensions in the Middle East after last week’s tanker attacks remain high, with Trump saying he was prepared to take military action to stop Iran having a nuclear bomb but leaving open whether he would sanction the use of force to protect Gulf oil supplies.

Fears of a confrontation between Iran and the United States have mounted since last Thursday’s attacks, which Washington has blamed on Tehran. Iran has denied involvement.

Iran said this week it would breach internationally agreed curbs on its stock of low-enriched uranium within 10 days, possibly paving the way for the country to develop a nuclear weapon, adding that European nations still had time to save a landmark nuclear deal.

The U.S. is deploying about 1,000 more troops to the Middle East for what Washington said were defensive purposes, citing concerns about a threat from Iran.

Market participants are also waiting for a meeting between the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, a group known as OPEC+, to decide whether to extend a supply reduction pact that ends this month.

OPEC and non-OPEC states are discussing holding meetings on July 10-12 in Vienna, a date range proposed by Iran, OPEC sources said on Tuesday. OPEC itself, however, is considering meeting on July 1-2 though it is still saying meeting will be held on June 25-26 on its website.

U.S. crude stocks also fell by 812,000 barrels last week to 482 million, industry group the American Petroleum Institute said on Tuesday.

The report from the government’s Energy Information Administration are due later on Wednesday.

Oil prices rise after tanker attacks stoke Middle East tensions

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Reuters

KEY POINTS
  • Brent futures had climbed 26 cents, or 0.4%, to $62.27 a barrel by 0314 GMT. They gained 1.1% on Friday.
  • U.S. West Texas Intermediate (WTI) crude futures were up 17 cents, or 0.3%, at $52.68 a barrel. They rose 0.4% in the previous session.
Reusable: Petrobras oil platform Rio De Janeiro 150703
A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
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Oil prices rose on Monday after U.S. Secretary of State Mike Pompeo said Washington will take all actions necessary to guarantee safe navigation in the Middle East, as tensions mounted following attacks on tankers last week.

Brent futures had climbed 26 cents, or 0.4%, to $62.27 a barrel by 0314 GMT. They gained 1.1% on Friday.

U.S. West Texas Intermediate (WTI) crude futures were up 17 cents, or 0.3%, at $52.68 a barrel. They rose 0.4% in the previous session.

Prices had jumped as much as 4.5% on Thursday after the attacks on two oil tankers near Iran and the Strait of Hormuz.

It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran.

“We don’t want war. We’ve done what we can to deter this,” Pompeo said in an interview with Fox News Sunday, adding: “The Iranians should understand very clearly that we will continue to take actions that deter Iran from engaging in this kind of behaviour”.

Tensions between Iran and the United States have risen since U.S. President Donald Trump pulled out of a deal last year between Iran and global powers that aimed to curb Tehran’s nuclear ambitions in exchange for sanctions relief.

Iran has repeatedly warned it would block the Strait of Hormuz if it cannot sell its oil because of U.S. sanctions.

“Growing tensions in the Middle East remain a cause for concern as traders fear supply disruptions over an escalation towards militaristic conflicts,” said Benjamin Lu, an analyst at Phillip Futures in Singapore.

Also supporting prices were comments over the weekend by the Saudi energy minister, Khalid al-Falih, that OPEC would probably meet in the first week of July and he hoped it would reach an agreement on extending oil output curbs.

“We are hoping that we will reach consensus to extend our agreement when we meet in two weeks time in Vienna,” Falih told reporters while attending a G20 energy and environment ministerial meeting in Karuizawa, northwest of Tokyo.

The Organization of the Petroleum Exporting Countries plus Russia and other producers, an alliance known as OPEC+, have a deal to cut output by 1.2 million barrels per day (bpd) from Jan. 1. The pact ends this month and the group meets in coming weeks to decide the next move.

U.S. energy companies also cut the number of oil rigs operating for a second week in a row, with production growth expected to slow as crude prices fell to near their lowest levels of the year.

Brent oil rises for second day after Middle East tanker attacks

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Reuters

KEY POINTS
  • Tanker attacks raise threat to supplies from Middle East
  • Brent, WTI still heading for weekly declines
  • OPEC cuts forecast for growth in global oil demand

Brent crude on Friday extended sharp gains from the previous day following attacks on two oil tankers in the Gulf of Oman that stoked concerns of reduced crude flows of the commodity through one of the world’s key shipping routes.

The attacks near Iran and the Strait of Hormuz pushed oil prices up as much as 4.5% on Thursday, putting the brakes on a slide in prices in recent weeks over concerns about global demand.

RT: An oil tanker is seen after it was attacked at the Gulf of Oman, June 13, 2019.
An oil tanker is seen after it was attacked at the Gulf of Oman, June 13, 2019.
ISNA | Reuters

It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies, amid rising tensions between the United States and Iran. Washington quickly blamed Iran for Thursday’s attacks, but Tehran denied the allegation.

Brent crude futures were up 23 cents, or 0.4%, at $61.54 a barrel by 0638 GMT, having settled up 2.2% on Thursday. Still, the contract is heading for a weekly fall of nearly 3%, a fourth week of decline.

U.S. West Texas Intermediate crude futures were down 1 cent at $52.27 a barrel, after earlier rising. WTI also closed up 2.2% in the previous session, but is on course for a weekly decline of 3.2%.

“The events in the Gulf would now appear to have taken on an overt military dimension and we are waiting to see what action the U.S. Fifth Fleet and other military resources in the region may take,” said Tom O’Sullivan, founder of energy and security consultancy Mathyos Advisory.

Tensions in the Middle East have escalated since U.S. President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, especially targeting Tehran’s oil exports.

Iran, which has distanced itself from the previous attacks, has said it would not be cowed by what it called psychological warfare.

U.S. Secretary of State Mike Pompeo said the United States has assessed Iran was behind the attacks on Thursday.

The U.S. military later released a video that it said showed Iran’s Revolutionary Guard removing an unexploded mine from the side of a Japanese-owned oil tanker.

In a statement on Thursday evening, the Iranian mission to the United Nations said Tehran “categorically rejects the U.S. unfounded claim with regard to 13 June oil tanker incidents and condemns it in the strongest possible terms”.

Qatar called for an international investigation into the attacks and a de-escalation of tensions in the region.

On the demand side, OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction, building a case for prolonged supply restraint in the rest of 2019.

The producer group and its allies are due to meet in the coming weeks to decide whether to maintain supply curbs. Some members are worried about a steep slide in prices, despite demands from U.S. President Donald Trump for action to lower the cost of oil.

World oil demand will rise by 1.14 million barrels per day (bpd) this year, 70,000 bpd less than previously expected, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report published on Thursday.

“Throughout the first half of this year, ongoing global trade tensions have escalated,” OPEC said in the report. “Significant downside risks from escalating trade disputes spilling over to global demand growth remain.”

Oil mixed as OPEC cuts, U.S. sanctions prop up prices while trade war weighs

SINGAPORE (Reuters) – Oil prices were mixed on Tuesday as supply cuts, led by producer club OPEC, and U.S. sanctions on fuel exports from Iran and Venezuela supported crude, while concerns about an economic slowdown weighed on the market.

Front-month Brent crude futures, the international benchmark for oil prices, were at $69.99 at 0637 GMT, down 12 cents, or 0.2%, from the last session’s close, when they rose 2.1%.

U.S. West Texas Intermediate (WTI) crude futures were at $59.03 per barrel, up 40 cents, or 0.7%, from their last close on Friday. WTI did not trade on Monday due to a U.S. public holiday.

Prices have been supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) since the start of the year, and by political tensions in the Middle East.

OPEC and some allies including Russia are due to meet on June 25 and 26 to discuss output policy.

Beyond the output cuts, U.S. bank, Citi said, “Geopolitical turmoil across the Middle East … are likely to encourage financial investors to realign with their bullish physical counterparties.”

In physical oil markets, Middle East crude premiums hit their highest levels in years earlier this month amid falling supply.

Beyond the OPEC cuts, U.S. sanctions on petroleum exports from Iran and Venezuela have tightened markets.

“Iran exports remain under pressure as U.S. sanctions bite. This comes as OPEC appears to be heading towards extending the current production cut agreement,” Citi added.

Trump last year withdrew the United States from a 2015 international nuclear deal with Iran, and Washington is ratcheting up sanctions seeking to end Tehran’s international sales of crude oil and strangle its economy.

Washington has also imposed sanctions on Venezuela’s oil exports, in a bid to topple the government under President Nicolas Maduro there.

Despite this, markets remain cautious amid an economic slowdown as a result of the ongoing trade war between the United States and China, which is also expected to dent fuel consumption.

“We really need to see some strong demand figures, which so far this year has not happened, before we can really start listening to the bulls,” said Matt Stanley, a broker at Starfuels in Dubai.

Reporting by Henning Gloystein; Editing by Richard Pullin and Joseph Radford

Oil rises on escalating US-Iran tensions; trade war concerns weigh

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Reuters

KEY POINTS
  • Brent crude futures, the international benchmark for oil prices, were at $72.03 per barrel at 0118 GMT, up 6 cents, or 0.1 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were up by 12 cents, or 0.2 percent, at $63.22 per barrel.
Reusable: Texas oil production fracking worker cleans off truck 150204
A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
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Oil prices edged up on Tuesday on escalating tensions between the United States and Iran and on signs that producer club OPEC will continue withholding supply this year.

However, gains were checked by concerns that a prolonged Sino-U.S. trade war could lead to a global economic slowdown.

Brent crude futures, the international benchmark for oil prices, were at $72.03 per barrel at 0118 GMT, up 6 cents, or 0.1 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up by 12 cents, or 0.2 percent, at $63.22 per barrel.

Prices were driven up by rising tensions between the United States and Iran.

U.S. President Donald Trump on Monday threatened Iran with “great force” if it attacked U.S. interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.

Iran said on Tuesday that it would resist U.S. pressure, declining further talks under current circumstances.

ANZ bank said the rising tension in the Middle East meant a “risk premium is reflected in the price” of crude oil.

The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers have been withholding supply since the start of the year to prop up prices.

A meeting has been scheduled for June 25-26 to discuss the policy, but the cartel is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signaling a willingness to continue withholding output.

Price gains were constrained by pressure on financial markets, which have been dragged down this week by worries that the United States and China are digging in for a long, costly trade war, which could result in a broad global slowdown.

Singapore, seen as a bellwether for the health of the global economy, on Tuesday posted its lowest quarterly growth in nearly a decade of 1.2 percent year-on-year.