Oil prices slip amid ample US output, Brent drifts away from five-month high

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Reuters

KEY POINTS
  • Brent crude futures were at $71.42 a barrel at 0235 GMT, down 20 cents, or 0.3 percent, from their last close. Brent fell 0.1 percent on Wednesday, after earlier touching its highest since Nov. 8 at $72.27 a barrel.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.69 per barrel, down 7 cents, or 0.1 percent, from their previous settlement. WTI closed the last session down 0.5 percent.
Reusable: Oil pump jack in North Dakota 150128
An oil pumpjack operates near Williston, North Dakota.
Andrew Cullen | Reuters

Oil prices dropped on Thursday as the impact of plentiful U.S. production offset a surprise decline in U.S. inventories, leaving international benchmark Brent retreating from a five-month high touched in the previous session.

Brent crude futures were at $71.42 a barrel at 0235 GMT, down 20 cents, or 0.3 percent, from their last close. Brent fell 0.1 percent on Wednesday, after earlier touching its highest since Nov. 8 at $72.27 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $63.69 per barrel, down 7 cents, or 0.1 percent, from their previous settlement. WTI closed the last session down 0.5 percent.

U.S. crude inventories fell by 1.4 million barrels in the week to April 12, compared with analyst expectations for an increase of 1.7 million barrels, Department of Energy (DoE) showed on Wednesday.

“A persistent rise in U.S. oil output, together with lingering demand-side concerns emerging from the U.S.-China trade dispute, is limiting price gains, ” Abhishek Kumar, Head of Analytics at Interfax Energy in London.

While official data on Wednesday showed China’s economy grew by 6.4 percent in the first quarter, defying expectations for a further slowdown, talks on a U.S.-China trade deal have yet to bear fruit.

While the U.S.-China trade war has rumbled on, prices have been supported this year by an agreement reached by the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, to limit their oil output by 1.2 million barrels per day.

Global supply has also been tightened further by U.S. sanctions on OPEC members Venezuela and Iran.

Iran’s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.

Surging U.S. production has filled some of the gap in supplies, although not all of the lost production can be immediately replaced by U.S. shale oil due to refinery configurations.

“The unexpected drawdown in U.S. commercial crude oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Kumar said.

Gasoline stocks fell by 1.2 million barrels, less than analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell 362,000 barrels, also not as much as forecasts for a 846,000-barrel drawdown, the EIA data showed.

Net U.S. crude imports fell last week by 659,000 barrels per day.

Oil at five-month highs amid OPEC-led supply cuts, US sanctions

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Reuters

KEY POINTS
  • International benchmark Brent futures were at $70.72 per barrel at 0225 GMT on Monday, up 38 cents, or 0.5 percent from their last close.
  • U.S. West Texas Intermediate (WTI) crude were up 37 cents, or 0.6 percent, at $63.45 per barrel.
Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil prices rose to their highest level since Nov. 2018 on Monday, driven up by OPEC’s ongoing supply cuts, U.S. sanctions against Iran and Venezuela and strong U.S. jobs data.

International benchmark Brent futures were at $70.72 per barrel at 0225 GMT on Monday, up 38 cents, or 0.5 percent from their last close.

U.S. West Texas Intermediate (WTI) crude were up 37 cents, or 0.6 percent, at $63.45 per barrel.

Brent and WTI both hit their highest levels since November last year at $70.76 and $63.48 per barrel, respectively, early on Monday.

“Brent prices increased more than 30 percent year-to-date as OPEC+ continued to cut supply for 4 months in a row and optimism over U.S.-Chinatrade talks helped to buoy the demand outlook, ” U.S. bank J.P.Morgan said in a note released over the weekend.

The Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up prices.

Energy consultancy FGE said OPEC-led supply cuts meant “excess inventories are disappearing and the market looks healthy,” adding that “the market is poised for prices to rise to $75 per barrel or higher” for Brent.

Traders said strong U.S. jobs data from Friday also helped lift Asian markets early on Monday.

Oil prices have further been driven up by U.S. sanctions against OPEC-members Iran and Venezuela.

“Sanctions can cut 500,000 bpd of Venezuelan exports. Add that to a cut in Iran waivers and prices can rise substantially,” FGE said.

There remain, however, some factors that could bring prices down later this year.

Russia is a reluctant participant in its agreement with OPEC to withhold output, and Russian oil production may increase again if a deal with the producer club is not extended once it expires before July 1, Energy Minister Alexander Novak said on Friday.

Russian oil output reached a record high of 556 million tonnes, or 11.16 million barrels per day (bpd), last year.

In the United States, crude oil production reached a record 12.2 million bpd in late March.

U.S. crude exports have also risen, breaking through 3 million bpd for the first time earlier this year.

“With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports,” FGE said.

There also still remain concerns about the health of the global economy, especially should China and the United States fail to resolve their trade dispute soon.

“Global (trade) demand has weakened, and existing tariffs on Chinese goods shipments to the U.S. are providing an additional drag,” credit rating agency Moody’s said on Monday, although it added that Chinese monetary stimulus measures would likely support growth over 2019.

Oil rises on Iran sanctions threat, Venezuela shutdown

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Reuters

KEY POINTS
  • Brent crude rose 26 cents, or 0.4 percent, to $69.27 a barrel by 0025 GMT, having earlier touched $69.29, a new high for 2019.
  • U.S. West Texas Intermediate (WTI) futures rose 28 cents, or 0.5 percent to $61.87 a barrel, earlier reaching $61.89, also a new high for 2019. WTI closed up 2.4 percent on Monday.
Reusable: Oil pump jack leased by Devon Energy 150922
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Oil prices rose to fresh highs for the year on Tuesday, after a U.S. official said Washington is considering more sanctions on Iran and a key Venezuelanexport terminal halted operations.

Prices were also underpinned by a Reuters survey showing OPEC oil supply sank to a four-year low in March, and positive data from the world’s biggest economies, the United States and China.

Brent crude rose 26 cents, or 0.4 percent, to $69.27 a barrel by 0025 GMT, having earlier touched $69.29, a new high for 2019.

U.S. West Texas Intermediate (WTI) futures rose 28 cents, or 0.5 percent to $61.87 a barrel, earlier reaching $61.89, also a new high for 2019. WTI closed up 2.4 percent on Monday.

The U.S. government is considering additional sanctions against Iran that would target areas of its economy that have not been hit before, a senior Trump administration official told reporters on Monday.

The official also suggested that the U.S. may not extend waivers from sanctions on Iranian oil exports to a group of eight importers that expire next month.

“That, I think, is where we’re headed,” the official said.

Venezuela’s Jose crude export terminal has halted operations due to a lack of electricity supply, two sources with knowledge of the situation said, after restarting on Friday following a prolonged blackout.

Production cuts from the Organization of the Petroleum Exporting Countries (OPEC) helped push the group’s supply to a four-year low in March, a Reuters survey found.

The world’s biggest exporter, Saudi Arabia, over-delivered on the group’s supply-cutting pact while Venezuelan output fell further due to U.S. sanctions and earlier power outages.

Markets also rallied on Monday after upbeat economic numbers from the United States and China eased worries about slowing global growth.

Oil prices set for biggest first quarter gain since 2009 on US sanctions, OPEC

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Reuters

KEY POINTS
  • U.S. West Texas Intermediate (WTI) futures were at $59.56 per barrel at 0211 GMT, up 26 cents, or 0.4 percent, from their last settlement.
  • Brent crude oil futures were up 30 cents, or 0.4 percent, at $68.12 per barrel. Brent futures are set to increase by 1.7 percent for the week and are set to climb by 27 percent for the first quarter.
RT: Oil operations Permian Basin near Midland, Texas 180823
A worker walks through an oil production facility owned by Parsley Energy in the Permian Basin near Midland, Texas, August 23, 2018.
Nick Oxford | Reuters

Oil prices rose on Friday, pushed up by ongoing supply cuts led by producer club OPEC and U.S. sanctions against Iran and Venezuela, putting the crude markets on pace to post their biggest first quarter gain since 2009.

U.S. West Texas Intermediate (WTI) futures were at $59.56 per barrel at 0211 GMT, up 26 cents, or 0.4 percent, from their last settlement.

WTI futures are set to rise for a fourth straight week and are set for a first quarter gain of 31 percent.

Brent crude oil futures were up 30 cents, or 0.4 percent, at $68.12 per barrel. Brent futures are set to increase by 1.7 percent for the week and are set to climb by 27 percent for the first quarter.

For both futures contracts, the first quarter 2019 is the best performing quarter since the second quarter of 2009 when both gained about 40 percent.

Oil prices have been supported for much of 2019 by the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, together known as OPEC+, who have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up markets.

“Production cuts from the OPEC+ group of producers have been the main reason for the dramatic recovery since the 38 percent price slump seen during the final quarter of last year,” said Ole Hansen, head of commodity strategy at Saxo Bank.

The price surge triggered a call by U.S. President Donald Trump on Thursday for OPEC to boost production to lower prices.

“Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!” Trump wrote in a post on Twitter.

OPEC+ are meeting in June to discuss whether to continue withholding supply or not.

OPEC’s de-facto leader Saudi Arabia favors cuts for the full year while Russia, which only reluctantly joined the agreement, is seen to be less keen to keep holding back beyond September.

However, the OPEC+ cuts are not the only reason for rising oil prices this year, with analysts also pointing to U.S. sanctions on oil exporters and OPEC members Iran and Venezuela as reasons for the surge.

Despite the surging prices, analysts are expressing concerns about future oil demand amid worrying signs the global economy may move into a recession.

Saxo Bank’s Hansen said “the biggest short-term risk to the oil market is likely to be driven by renewed stock market weakness.”

Stock markets have been volatile this year amid signs of a sharp global economic slowdown.

“Business confidence has weakened in recent months … (and) global manufacturing PMIs are about to move into contraction,” Bank of America Merrill Lynch said in a note, although it added that “the services sector … continues to expand unabated.”

Given the OPEC+ cuts, however, Bank of America said it expected oil prices to rise in the short-term, with Brent prices forecast to average $74 per barrel in the second quarter.

Heading towards 2020, however, the bank warned of a recession.

Oil edges up on supply cuts, but recession fears cap market

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Reuters

KEY POINTS
  • Brent crude oil futures were at $67.46 per barrel at 0110 GMT, up 25 cents, or 0.4 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) futures were at $59.31 per barrel, up 49 cents, or 0.8 percent, from their last settlement.
RT: Oil Iraq OPEC flames 161014
Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016.
Essam Al-Sudani | Reuters

Oil prices edged up on Tuesday, lifted by supply cuts led by producer club OPEC and U.S. sanctions against Iran and Venezuela, but signs of a sharp economic slowdown and potentially even a recession kept markets from rising further.

Brent crude oil futures were at $67.33 per barrel at 0416 GMT, up 12 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) futures were at $59.26 per barrel, up 44 cents, or 0.8 percent, from their last settlement.

Oil prices have been supported for much of 2019 by efforts by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, who have pledged to withhold around 1.2 million barrels per day (bpd) of supply this year to prop up markets.

Prices have also been driven up by U.S. sanctions on oil exporters and OPEC-members Iran and Venezuela.

Yet analysts said oil prices would likely be higher by now if it wasn’t for a spreading economic slowdown that some say could turn into a recession soon and dent fuel consumption.

“Recession risks have risen to the highest since 2008,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Manufacturing data from Asia, Europe and North America is pointing to a sharp economic slowdown.

“Global factory output growth slowed to a 1 percent rate last quarter, and indicators point to a near stall this quarter,” said JPMorgan Chase Bank.

“Outside China, Asian industry was already contracting as we turned into the New Year, ” the U.S. bank added.