Oil prices seesaw after Navarro walks back U.S.-China trade deal comment

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Reuters
KEY POINTS
  • Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.
  • Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.

Jangled nerves were also soothed to some degree after U.S. President Donald Trump later tweeted that the China trade deal was fully intact, adding he hoped China would continue to live up to the terms of the agreement.

Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.

U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Trump and his administration repeatedly have accused Beijing of not being transparent about the outbreak.

Prices had slid suddenly after Navarro told Fox News in an interview that the trade deal with China was “over”, linking the breakdown in part to Beijing not sounding the alarm earlier about the outbreak of the coronavirus pandemic.

He later issued a statement saying that he had been “speaking to the lack of trust” in the Chinese administration, the comments had been “taken wildly out of context” and the trade deal remains in place.

“These comments from Navarro came out of nowhere,” said Edward Moya, senior market analyst at brokerage OANDA. “Energy traders will likely remain sceptical of the relationship between the U.S. and China if the Chinese fail to quickly make up for the shortfall with their promises of agricultural goods (purchases).”

Prices had risen earlier in the session, with the reopening of some U.S. states and countries around the world after coronavirus lockdowns sustaining a rally as demand for fuel returns. In New York, streets were clogged with traffic as the worst affected city in the United States emerged from more than 100 days of lockdown.

Tensions in the Middle East also lent some support to oil prices.

The Saudi-led coalition in Yemen said early on Tuesday it intercepted three ballistic missiles launched by Yemen’s Houthis towards the Saudi Arabian cities of Najran and Jizan, according to the Saudi state TV.

On the supply side, meanwhile, U.S. and Canadian oil and gas drillers cut the number of the rigs they are operating to a record low. That leaves them with a steep slope to scale towards recovery in output even with higher prices to spur them on.

“U.S. onshore production has now given up two full years of (volume) gains,” said Stephen Innes, chief global markets strategist, at AxiCorp. “It supports the market supposition that even with a rebound in price, the capital investment that had already been tapering off in Q1 isn’t flowing back quickly.”

U.S. oil rigs contracted for drilling dropped by 10 to 189 last week, their lowest since June 2009, according to weekly data from energy services firm Baker Hughes Co.

Gas rigs fell by three to 75, the lowest on record according to data going back to 1987.

Oil prices rise ahead of trade deal, likely stock draw

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Reuters
KEY POINTS
  • Brent crude was up 16 cents, or 0.3%, at $64.36 per barrel by 0301 GMT after falling 1% on Monday. U.S. West Texas Intermediate crude futures were up 13 cents, or 0.2%, at $58.21 a barrel.
  • However, price gains were capped by receding Middle East tensions, with both Tehran and Washington desisting from any further escalation after this month’s clashes.
  • Elsewhere, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said his country will work for oil market stability at a time of heightened U.S.-Iranian tension and wants to see sustainable prices and demand growth.
GP: Aramco oil facility Saudi Arabia 190719
Aramco oil facility near al-Khurj area, just south of the Saudi capital Riyadh on Sept. 15, 2019.
Fayez Nureldine | AFP | Getty Images

Oil prices edged higher on Tuesday as investors focused on the signing of a preliminary trade deal between the United States and China, the world’s top oil consumers, and on expectations of a drawdown in U.S. crude oil inventories.

However, price gains were capped by receding Middle East tensions, with both Tehran and Washington desisting from any further escalation after this month’s clashes.

Brent crude was up 16 cents, or 0.3%, at $64.36 per barrel by 0301 GMT after falling 1% on Monday. U.S. West Texas Intermediate crude futures were up 13 cents, or 0.2%, at $58.21 a barrel.

“Oil prices are modestly rebounding, following four days of intense selling,” said Edward Moya, analyst at brokerage OANDA, pointing to trade-deal optimism and fading concerns over the U.S.-Iran conflict.

“Oil prices are tentatively rebounding after seller exhaustion kicked in as investors await the next developments on the trade front and as earnings season begins.”

Oil prices were supported ahead of the signing at the White House on Wednesday of a Phase 1 trade deal, which marks a major step in ending a dispute that has cut global growth and dented demand for oil.

Still, with traders already pricing in the signing of the deal, there is more downside risk to prices, said Michael McCarthy, chief market strategist at CMC Markets.

“Regardless whether the deal is signed, we might have a buy the rumours, sell the fact scenario unfolding,” he added.

Separately, U.S. crude oil inventories were expected to have fallen last week, a preliminary Reuters poll showed on Monday, helping to boost prices.

The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.

China’s crude oil imports in 2019 grew by nearly 10 percent from the previous year on demand growth from new mega-refineries, customs data showed.

Elsewhere, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said his country will work for oil market stability at a time of heightened U.S.-Iranian tension and wants to see sustainable prices and demand growth.

Oil prices surged to their highest in almost four months after a U.S. drone strike killed an Iranian commander on Jan. 3 and Iran retaliated with missiles launched against U.S. bases in Iraq. But they slumped again as Washington and Tehran retreated from the brink of direct conflict last week.

Prince Abdulaziz said it was too early to talk about whether the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, would continue with production curbs set to expire in March.

Oil rises supported by US-China trade optimism, Middle East tensions

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Reuters
KEY POINTS
  • Global benchmark Brent crude futures, were up 22 cents, or 0.3%, to 66.22 a barrel by 0430 GMT.
  • U.S. West Texas Intermediate (WTI) crude was up 18 cents, or 0.3%, at $61.24 per barrel.
  • Oil markets were closed on Wednesday for New Year’s Day.
Reusable: Iraq Oil Daura oil refinery Bagdad 091105
An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
Getty Images

Oil prices kicked off the new year higher on Thursday as warming trade relations between the United States and China eased demand concerns, while rising tensions in the Middle East fuelled worries about supply.

Global benchmark Brent crude futures, were up 22 cents, or 0.3%, to 66.22 a barrel by 0430 GMT. U.S. West Texas Intermediate (WTI) crude was up 18 cents, or 0.3%, at $61.24 per barrel.

Oil markets were closed on Wednesday for New Year’s Day.

Both benchmarks ended higher in 2019, posting their biggest annual gains since 2016, buoyed at the end of the year by a thaw in the prolonged trade dispute between the United States and China – the world’s two largest economies – and a deeper output cut pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies.

“Oil remains supported by the back-burner trade truce and the uptick in political unrest in Iraq,” said Stephen Innes, chief Asia market strategist at AxiTrader.

The U.S. military carried out air strikes against Iran-backed Katib Hezbollah militia group over the weekend. Angry at the air strikes, protesters stormed the U.S. Embassy in Baghdad on Wednesday, although they withdrew after the United States deployed extra troops.

In 2020, Brent is forecast to average $63.07 a barrel, up from December’s estimate of $62.50, while WTI is forecast to average $57.70 a barrel, up from December’s estimate of $57.30, as the OPEC-led supply cuts and the expectations of a U.S.-China trade deal boosted analysts’ views on the prospects for the year, a Reuters poll showed.

U.S. President Donald Trump said on Tuesday the U.S.-China Phase 1 trade deal would be signed on Jan. 15 at the White House.

January also marks the start of the deeper output cuts by OPEC and its partners, including Russia. OPEC and its allies have agreed to cut a further of 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd that started on Jan. 1 a year ago.

A fall in U.S. crude inventories last week also supported prices. U.S. crude stocks fell 7.8 million barrels in the week ended Dec. 27, compared with analysts’ expectations for a decrease of 3.2 million barrels, according to data from the American Petroleum Institute (API) released on Tuesday.

Official data from the Energy Information Administration (EIA) is due on Friday as the release has been delayed by two days by the New Year’s holiday.

“Traders will look towards Friday’s EIA report for forward guidance on oil prices,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.

Oil edges up on trade optimism, eyes on Middle East tensions

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Reuters
KEY POINTS
  • West Texas Intermediate (WTI) crude futures edged up 5 cents to $61.77 a barrel by 0529 GMT. The U.S. benchmark is up about 36% so far this year.
  • Brent crude futures were at $68.36 a barrel, up 20 cents, or 0.3%.
GP: Iran Salman Oil Field 190422
Workers cross walkways between zones aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, near Lavan island, Iran, on Jan. 5. 2017.
Ali Mohammadi | Bloomberg | Getty Images

Oil prices traded at three-month highs on Monday, underpinned by optimism over an expected U.S.China trade deal, while traders kept a close eye on the Middle East following a U.S. air strike.

Markets showed little initial reaction to news of the U.S. strikes in Iraq and Syria against an Iran-backed militia group, even as U.S. officials warned “additional actions” may be taken.

West Texas Intermediate (WTI) crude futures edged up 5 cents to $61.77 a barrel by 0529 GMT. The U.S. benchmark is up about 36% so far this year.

Brent crude futures were at $68.36 a barrel, up 20 cents, or 0.3%. The international benchmark has risen around 27% in 2019.

″(Trading) has been relatively flat due to lack of market participants in the holiday season,” said market analyst Margaret Yang of CMC Markets.

“Oil prices have reached their highest level since the Saudi oil field attack in Mid Sep, and thus traders are also cautious about profit-taking possibilities,” she added.

On Sunday, China’s Commerce Ministry said it is in close touch with the United States on the signing of a long-awaited trade deal.

The two countries on Dec. 13 announced a “Phase one” agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.

Oil prices were also supported by declining U.S. crude stocks which fell by 5.5 million barrels in the week to Dec. 20, far exceeding a 1.7-million-barrel drop forecast in a Reuters poll.

In the Middle East, the United States carried out air strikes on Sunday in Iraq and Syria against the Kataib Hezbollah militia group, while protesters in Iraq on Saturday forced the closure of its southern Nassiriya oilfield.

U.S. officials said the air strikes in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base were successful, but warned that “additional actions” may still be taken.

Iraq’s oil ministry said the production halt at the Nassiriya oilfield will not affect the country’s exports as it will use additional output from southern oilfields in Basra.

Elsewhere, Libyan state oil firm NOC said it is considering the closure of its western Zawiya port and evacuating staff from the refinery located there due to clashes nearby.

However, the holiday season meant “oil will continue to struggle for meaningful moves,” said Edward Moya, analyst at brokerage OANDA.

Middle East tensions lift oil prices more than 1%

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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.