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.
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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.
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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%.
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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.

Oil prices nudge up as geopolitical tensions counter sluggish demand

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Reuters
KEY POINTS
  • Brent crude futures were up 7 cents, or 0.1%, at $63.46 a barrel by 0457 GMT. They rose 0.3% in the previous session.
  • U.S. West Texas Intermediate crude was 18 cents higher, or 0.3%, at $56.20 a barrel, after gaining 0.25% overnight.
Reusable: Oil storage refinery Australia Caltex Oil 141014
Jason Reed | Reuters

Oil prices edged higher on Friday on worries about Middle East tensions, offset by a flagging global economic growth outlook amid the U.S.China trade war.

Brent crude futures were up 7 cents, or 0.1%, at $63.46 a barrel by 0457 GMT. They rose 0.3% in the previous session.

U.S. West Texas Intermediate crude was 18 cents higher, or 0.3%, at $56.20 a barrel, after gaining 0.25% overnight.

“Growing challenges in the macroeconomic environment have kept bullish bets in check as risk appetites remain soft over potential weakness in global fuel demand,” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.

A global economic growth rut risks deepening, despite expectations that major central banks will cut rates or ease policy further, according to Reuters polls of over 500 economists who remain worried about the U.S.-China trade war.

Increasing pessimism is clear from the latest polls taken July 1-24, which show the growth outlook for nearly 90% of over 45 economies polled was either downgraded or left unchanged. That applied not just to this year but also 2020.

While concerns over Middle East supply disruptions have led to recent price spikes, oil has generally been under pressure from worries about global economic growth amid growing signs of harm from the rumbling Sino-U.S. trade war over the past year.

“Bullish wagers will be held hostage to the soggy global growth outlook,” Stephen Innes, managing partner at Vanguard Markets, said in a note.

A week after Iran seized a British-flagged tanker in the Gulf, Britain has sent a warship to accompany all British-flagged vessels through the Strait of Hormuz, a change in policy announced on Thursday after the government previously said it did not have resources to do so.

U.S. Secretary of State Mike Pompeo said in a television interview on Thursday that he would go to Iran for talks if it was necessary, amid the tensions between Tehran and Washington.