Brent crude prices fall below $60 on weak China trade data

CNBC

  • Brent crude oil prices fell below $60 per barrel on Monday after Chinese data showed weakening imports and exports in the world’s biggest trading nation.
  • China’s December exports fell by 4.4 percent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world’s second-largest economy. Imports also contracted, falling 7.6 percent, the biggest decline since July 2016.
  • Traders said the data pulled down crude oil futures and Asian stock markets alike, which had both posted modest gains earlier on Monday.

Brent crude oil prices fell below $60 per barrel on Monday after Chinese data showed weakening imports and exports in the world’s biggest trading nation.

International Brent crude oil futures were at $59.78 per barrel at 0312 GMT, down 70 cents, or 1.2 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 63 cents, or 1.2 percent, $50.96 a barrel.

China’s December exports fell by 4.4 percent from a year earlier, the biggest monthly drop in two years, official data showed on Monday, pointing to further weakening in the world’s second-largest economy. Imports also contracted, falling 7.6 percent, the biggest decline since July 2016.

Traders said the data pulled down crude oil futures and Asian stock markets alike, which had both posted modest gains earlier on Monday.

Economic research firm TS Lombard said oil prices were capped as “the world economy is now slowing … limiting the scope for positive surprises in oil demand and hampering inventory reduction.”

Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, said “the deterioration seen recently in forward-looking economic data from the U.S. to Europe and China” meant that the upside for crude oil futures was likely limited to $64 per barrel for Brent and for $55 for WTI.

The weak Chinese data countered general support that oil markets have been receiving since the start of the year from supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia.

In the United States, drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873, energy services firm Baker Hughes said in a weekly report on Friday.

Oil drops nearly 2 percent, breaking 9-day win streak amid global growth concern

CNBC

  • Oil prices fall nearly 2 percent on Friday, but post solid weekly gains.
  • Investors remain concerned about a slew of recent economic data that has raised worries about a global economic slowdown.
  • Hopes the United States and China may soon resolve their trade dispute and tightened supply following OPEC-led crude production cuts are supporting oil prices.

Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Spencer Platt | Getty Images
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.

Oil prices fell about 2 percent on Friday amid worries about a global economic slowdown, but futures ended the week higher, keeping some gains from a week-long rally spurred by U.S.-China trade hopes.

U.S. West Texas Intermediate crude futures ended Friday’s session down $1, or 1.9 percent, at $51.59 a barrel. Brent crude futures fell $1.15, or 1.9 percent, to $60.53 a barrel, around 2:30 p.m. ET.

Friday’s pullback marked the end of a nine-day winning streak for crude futures, the best string of gains since January 2010 for WTI and April 2007 for Brent.

Still, both benchmarks posted their second week of gains, with WTI rising about 7.5 percent and Brent up 6 percent.

Markets were supported earlier this week by hopes that an all-out trade war between Washington and Beijing might be averted. Three days of talks concluded on Wednesday with no concrete announcements, but higher-level discussions may convene later this month.

Paul Sankey on oil's rebound

Paul Sankey on oil’s rebound  

“Some of the strength that we’ve gotten from that seems to be coming out of the market,” Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.

“Right now I think the market is in a holding pattern above our recent lows and it’s looking for its next driver,” McGillian said.

Investors remained concerned about a slew of recent economic data that has raised worries about a global economic slowdown.

China plans to set a lower economic growth target of 6-6.5 percent in 2019 compared with last year’s target of “around” 6.5 percent, policy sources told Reuters, as Beijing gears up to cope with higher U.S. tariffs and weakening domestic demand.

“If we experience an economic slowdown, crude will underperform due to its correlation to growth,” said Hue Frame, portfolio manager at Frame Funds in Sydney.

On the supply side, oil markets have received support from supply cuts led by the Organization of the Petroleum Exporting Countries. The deal is aimed at reining in a glut that emerged in the second half of 2018.

Lower oil exports from Iran since November, when U.S. resumed sanctions against the OPEC producer, have also supported crude.

Pick energy names you know, says Stacey Gilbert

Pick energy names you know, says Stacey Gilbert  

Iran will see its crude exports severely curtailed for a third month in January, according to tanker data and industry sources.

Playing a key part in the emerging glut was the United States, where crude oil production has soared to a record 11.7 million barrels per day.

Consultancy JBC Energy this week said it was likely that U.S. crude production was “significantly above 12 million bpd” by this month.

U.S. energy firms, however, this week cut four oil rigs, the second week of declines, General Electric Co’s Baker Hughes energy services firm said, as producers turned conservative in their 2019 drilling plans due to uncertainty over a recovery in crude prices.

— CNBC’s Tom DiChristopher contributed to this report.

Oil falls 1 percent on swelling US supply, concerns on US-China trade talks

CNBC

  • Both U.S. and Brent crude futures slipped around 1 percent.
  • Both oil benchmarks had risen around 5 percent the previous day, as financial markets around the world surged on the hopes that Washington and Beijing may soon be able to end their ongoing trade dispute.

Oil refinery and storage Australia

Jason Reed | Reuters

Oil prices fell by about 1 percent on Thursday on swelling U.S. supply and amid a cautious reaction to trade talks between the United States and China, the world’s two largest oil consumers, that finished without concrete details to ending their dispute.

U.S. West Texas Intermediate (WTI) crude oil futures were at $51.80 per barrel at 0432 GMT, down 56 cents, or 1.1 percent, from their last settlement.

International Brent crude futures were down 0.9 percent, or 57 cents, at $60.87 per barrel.

Both oil benchmarks rose by around 5 percent the previous day as financial markets around the world surged on the hopes that Washington and Beijing may soon be able to end their trade dispute, soothing fears of an all-out trade war between the two biggest economies and its possible impact on global growth.

By Thursday, however, the positive feelings ebbed because of a lack of a details on the talks despite a warm statement form China on the outcome, and financial markets took a breather from the rally.

Vandana Hari of consultancy Vanda Insights in Singapore said in a note that oil prices dropped “as optimism fuelled by the U.S.-China trade talks earlier in the week appeared to have run its course and official statements after the conclusion of three days of negotiations, while indicating modest progress, lacked details.”

Meanwhile, U.S. bank Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent on Wednesday, pointing to “weakening economic growth expectations” and rising oil supply from especially from the United States as reasons for their lower price forecast.

Morgan Stanley now expects Brent to average $61 a barrel this year, down from a previous estimate of $69 a barrel, and U.S. crude to average $54 per barrel, against a prior forecast of $60.

The main source of new supply is the United States, where crude oil production remained at a record 11.7 million barrels per day (bpd) in the week ending Jan. 4, the Energy Information Administration (EIA) said on Wednesday.

That has resulted in swelling fuel inventories.

Gasoline stocks rose 8.1 million barrels, to 248.1 million barrels, marking the largest weekly rise since December 2016, the EIA said. Distillate stocks swelled by 10.6 million barrels, to 140.04 million barrels.

Although crude stocks dipped by 1.7 million barrels, to 439.74 million barrels, they remained above their five-year seasonal average of 435 million barrels.

The surge in U.S. crude production runs counter to efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut supply aimed at reining an emerging glut.

“Balancing the market would require OPEC discipline to continue well into 2020,” Morgan Stanley said.

Oil prices surge on hopes of successful US-China trade talks

CNBC

  • Both Brent and U.S. crude futures saw gains.
  • Both crude price benchmarks had already gained more than 2 percent in the previous session.

Oil tanker

Jean-Paul Pelissier | Reuters

Oil prices rose on Wednesday, extending gains from the previous session on hopes that Washington and Beijing can resolve a trade dispute that has triggered a global economic slowdown.

U.S. West Texas Intermediate (WTI) crude oil futures were at $50.29 per barrel as at 0131, up 51 cents, or 1 percent from their last settlement. It was the first time this year that WTI has topped $50 a barrel.

International Brent crude futures were up 42 cents, or 0.7 percent, at $59.14 per barrel.

Both crude price benchmarks had already gained more than 2 percent in the previous session.

“Crude continues to extend gains as early reports from Beijing regarding trade negotiations are fueling optimism around successful trade talks between the U.S. and China,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.

“After a dreadful December for risk markets, Crude oil continues to catch a positive vibe,” he added.

The world’s two biggest economies will continue trade talks in Beijing for an unscheduled third day on Wednesday, U.S. officials said, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China’s markets.

State newspaper China Daily said on Wednesday that Beijing is keen to put an end to its trade dispute with the United States, but that it will not make any “unreasonable concessions” and that any agreement must involve compromise on both sides.

If no deal is reached by March 2, Trump has said he will proceed with raising tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports at a time when China’s economy is slowing significantly.

Oil prices have also been receiving support from supply cuts started at the end of 2018 by a group of producers around the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

“Crude oil prices continued to march higher, with investors becoming increasingly confident that the OPEC cuts would tighten the market,” ANZ bank said.

Oil prices rise on trade talk optimism, OPEC cuts

CNBC

  • Both Brent and U.S. crude futures saw gains of at least 0.7 percent.
  • Asian stock markets rose as investors hope Washington and Beijing will reach some sort of agreement.

Oil prices rose on Tuesday on hopes that U.S.-Chinese talks in Beijing would bring a halt to trade disputes between the world’s biggest economies, while OPEC-led supply cuts tightened markets.

International Brent crude futures were at $57.77 per barrel at 0113 GMT, up 44 cents, or 0.8 percent from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $48.85 per barrel, up 33 cents, or 0.7 percent.

U.S. Commerce Secretary Wilbur Ross said late on Monday that Beijing and Washington could reach a trade deal that “we can live with” as dozens of officials from the world’s two largest economies held talks in a bid to end their trade dispute that has roiled global markets since last year.

Asian stock markets rose as investors hope Washington and Beijing will reach some sort of agreement.

Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on shaky grounds, and that tensions could flare up again soon.

“We remain concerned about the world’s most important bilateral relationship,” political risk consultancy Eurasia Group said in its 2019 outlook.

“The U.S. political establishment believes engagement with Beijing is no longer working, and it’s embracing an openly confrontational approach … (and) rising nationalist sentiment makes it unlikely that Beijing will ignore U.S. provocations,” Eurasia Group said.

Beyond politics, oil markets are being supported by supply cuts started late last year by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

“Crude oil prices have benefited from OPEC production cuts and steadying equities markets,” said Mithun Fernando, investment analyst at Australia’s Rivkin Securities.

Looming over the OPEC-led cuts, however, is a surge in U.S. oil supply, driven by a steep rise in onshore shale oil drilling and production.

As a result, U.S. crude oil production rose by a whopping 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

With drilling activity still high, most analysts expect U.S. oil production to rise further this year.

Consultancy JBC Energy said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by early January.