Oil near 2019 highs after US ends all Iran sanction exemptions

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Reuters

KEY POINTS
  • Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
  • U.S. West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 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 were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.

Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.

U.S. West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.

The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.

Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries(OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.

Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets”.

The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel”.

ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya. ”

The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.

Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”

Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.

“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Meanwhile, the Atlantic Council said the U.S. move would hurt Iranian citizens.

“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the U.S. sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”

Oil edges lower as supply concerns check losses

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Reuters

KEY POINTS
  • Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.
  • Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.
RT: Oil refinery Libya 131218
Ismail Zitouny | Reuters

Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.

Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close. Brent closed up 1 percent on Friday when prices hit a high of $71.87 a barrel, the highest since Nov. 12.

U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.

The head of Libya’s National Oil Corp warned on Friday that renewed fighting could wipe out crude production in the country.

“Supply side issues remained a concern for the market. Libyan rebel leader Khalifa Haftar moved forces closer to Tripoli,” ANZ Bank said in a research note.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet in June to decide whether to continue withholding supply. OPEC, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from Jan. 1 for six months.

OPEC’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.

Russia’s Finance Minister Anton Siluanov was quoted by the TASS news agency as saying on Saturday that Russia and OPEC may decide to boost production to fight for market share with the United States but this would push oil prices as low as $40 per barrel.

Oil slips from five-month highs as economic worries counter tight market

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Reuters

KEY POINTS
  • International benchmark Brent futures touched their strongest level since last November at $71.34 per barrel on Tuesday, before losing ground to $70.96 per barrel by 0158 GMT, down 14 cents, or 0.2%, from their last close.
  • U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.36, 4 cents below their last settlement.
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An offshore oil rig off the coast of Norway.
Nerijus Adomaitis | Reuters

Oil prices eased on Tuesday, slipping away from 5-month highs reached earlier in the session as a sluggish economic outlook countered an otherwise tight market.

International benchmark Brent futures touched their strongest level since last November at $71.34 per barrel on Tuesday, before losing ground to $70.96 per barrel by 0158 GMT, down 14 cents, or 0.2%, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures also hit a November 2018 high, at $64.77 per barrel, before easing to $64.36, 4 cents below their last settlement.

Despite generally bullish oil markets, concerns that an economic slowdown this year will hit fuel consumption have been preventing crude prices from rising even higher, traders said.

And while fears of a global recession ebbed following strong U.S. jobs figures and improved Chinese manufacturing data late last week, Bank of America Merrill Lynch said there was still a “significant slowing in growth globally” in 2019.

The bank said it expects Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.

Despite the economic concerns, global oil markets are tight, and Brent and WTI crude oil futures have risen by 40% and 30% respectively since the start of the year.

“Renewed fighting in Libya … has seen Brent crude break above $70 per barrel, ” said Ole Hansen, head of commodity strategy at Saxo Bank.

Libya is a significant supplier of oil to Europe, producing around 1.1 million barrels per day (bpd) of crude in March.

A warplane attacked Tripoli’s only functioning airport on Monday as eastern forces advancing on the Libyan capital disregarded international appeals for a truce in the latest of a cycle of warfare since Muammar Gaddafi’s fall in 2011.

Hansen said the fighting in Libya added to an already tense market, which has been tightened this year by U.S. sanctions on oil exporters Iran and Venezuelaas well as supply cuts led by the producer club of the Organization of the Petroleum Exporting Countries (OPEC).

Oil prices rise on Libyan export disruption, but markets remain weak

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  • Libya’s National Oil Company on Monday declared force majeure on exports from the country’s largest oilfield after it was seized by a local militia group over the weekend.
  • Despite the development, overall sentiment on oil prices remained weak.

Oil tanker

Jean-Paul Pelissier | Reuters

Oil prices edged up on Tuesday after Libya’s National Oil Company declared force majeure on exports from the El Sharara oilfield, which was seized at the weekend by a local militia group.

Despite that, overall sentiment on oil prices remained weak amid worries over global stock markets and doubts that planned supply cuts led by producer club OPEC will be enough to rein in oversupply.

International Brent crude oil futures were at $60.19 per barrel at 0336 GMT, up 19 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $51.16 per barrel, up 16 cents, or 0.3 percent.

Libya’s National Oil Company (NOC) late on Monday declared force majeure on exports from the El Sharara oilfield, the country’s biggest, which was seized at the weekend by a militia group.

NOC said the shutdown would result in a production loss of 315,000 barrels per day (bpd), and an additional loss of 73,000 bpd at the El Feel oilfield.

The rise came after crude prices dropped by 3 percent the session before amid ongoing weakness in global stock markets and concerns that slowing oil demand-growth could erode supply cuts announced last week by the Organisation of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia.

Crude futures have lost around a third of their value since early October amid the financial market slump and an emerging oil supply overhang.

In a show of no confidence, money managers cut their bullish wagers on crude to the lowest in more than two years in the week ending Dec. 4, the U.S. Commodity Futures Trading Commission (CFTC) said on Monday.

The financial speculator group cut its combined futures and options position in New York and London by 25,619 contracts to 144,775 during the period. That is the lowest level since Sept. 20, 2016.

In physical markets, Kuwait and Iran this week both reduced their January crude oil supply prices to Asia.

“There remains a lot of uncertainty if the production cut is thick enough to make a significant dent in global supply,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

“The general risk-off tone in global markets and the stronger dollar … are contributing to the selling pressure.”

The OPEC-led group of oil producers last Friday announced a supply cut of 1.2 million barrels per day (bpd) in crude oil supply from January, measured against October 2018 output levels.

Oil climbs from 3-month low as more oil workers strike in Norway

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  • Brent crude prices rose from a three-month low on Tuesday after more oil workers went on strike in Norway.
  • The market has been dominated by oversupply issues in recent days.

Oil fracking

David McNew | Getty Images

Brent crude prices rose from a three-month low on Tuesday after more oil workers went on strike in Norway, supporting a market that has been dominated by oversupply issues in recent days.

Brent crude futures had climbed 28 cents, or 0.4 percent, to $72.12 a barrel by 0331 GMT. They fell 4.6 percent on Monday, at one point touching their lowest since mid-April.

U.S. West Texas Intermediate futures were down 1 cent at $68.05. They fell 4.2 percent on Monday.

An oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.

The strike, which began last Tuesday, has had a limited impact on Norway’s oil production so far, but some drillers warned of possible contract cancellations if the dispute goes on for a month or more.

“The threat of further supply disruptions hasn’t totally evaporated,” ANZ said in a morning note.

ANZ also said that “production from Libya remains susceptible to further declines, despite its ports reopening”.

While Libyan ports are reopening, output at the Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.

On July 11, the NOC said four export terminals were being reopened after eastern factions handed over the ports, while a lengthy shutdown at the El Feel oilfield in the southwest also ended. Two days later, output at the nearby 300,000 bpd Sharara was slashed.

U.S. oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said in a monthly report on Monday.

Production is expected to climb in all seven formations, with the largest gain of 73,000 bpd seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.