Oil prices recover after output from US, Russia, OPEC drop

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Reuters
KEY POINTS
  • December Brent crude futures rose 51 cents, or 0.86% to $59.76 a barrel by 0426 GMT.
  • U.S. West Texas Intermediate crude for November was up 52 cents, or 0.96%, at $54.59 a barrel.
GP: Oil worker pipes Schlumberger 191001
A oil rigger at the Schlumberger field prepares pipes in Midland, Texas on December 16, 2008.
Kirk McKoy | Los Angeles Times | Getty Images

Oil prices rebounded on Tuesday on reports that production at the world’s largest oil producers fell during the third quarter, although a resumption in Saudi supply and demand concerns continued to keep a lid on prices.

December Brent crude futures rose 51 cents, or 0.86% to $59.76 a barrel by 0426 GMT, while U.S. West Texas Intermediate crude for November was up 52 cents, or 0.96%, at $54.59 a barrel.

Front-month prices for both contracts posted their largest quarterly falls this year on Monday, hurt by a slowdown in global economic growth amid the U.S.-China trade war.

“Asia has seen some profit-taking from short-term money and other bargain hunters,” Jeffrey Halley, a senior market analyst for Asia Pacific at OANDA in Singapore, said.

“Any rallies though are likely to be met with plenty of sellers as a slowing global economy and the recovery of Saudi production outweigh any Middle East risk factors for now.”

Oil prices are likely to remain steady, with Brent averaging $65.19 a barrel and WTI $57.96 in 2019, as flagging demand outweighs supply shocks, a Reuters survey showed.

Brent has averaged $64.72 a barrel so far this year, while WTI has averaged $58.13.

Saudi Aramco has restored full oil production and capacity to the levels they were at before attacks on its facilities on Sept. 14, the head of its trading arm said on Monday. Saudi Arabia pumped about 9.78 million barrels per day (bpd) in August.

Still, OPEC’s output fell to the lowest in eight years in September at 28.9 million bpd, down 750,000 bpd from August’s revised figure and the lowest monthly total since 2011, a separate Reuters survey found.

Output at the world’s two largest producers, the United States and Russia, also fell in July and September, respectively.

Russia’s output declined to 11.24 million bpd in Sept. 1-29, down from 11.29 million bpd in the previous month, sources said, although it is still above the quotas set in an output deal between Russia and OPEC.

U.S. crude oil output fell 276,000 bpd in July to 11.81 million bpd as federal offshore Gulf of Mexico production slid, according to a U.S. Energy Information Administration monthly report released on Monday.

U.S. production peaked at 12.12 million bpd in April.

Meanwhile, U.S. crude oil stockpiles likely rose 1.1 million barrels last week, while distillate stocks probably slipped, a preliminary Reuters poll showed on Monday.

Oil falls but remains set for weekly gain on US-China diplomacy

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Reusable: Idled oil drilling rigs North Dakota
Stacked rigs are seen along with other idled oil drilling equipment in Dickinson, North Dakota, June 26, 2015.
Andrew Cullen | Reuters

Oil prices fell on Friday as U.S.-China trade tensions continued to weigh on sentiment despite recent diplomatic progress.

Brent crude was down 94 cents, or 1.6%, at $60.01 a barrel. U.S. West Texas Intermediate (WTI) crude was down $1.08, or 1.9%, at $55.22.

Brent is still set to register its fourth consecutive weekly gain while U.S. crude is on track for a second weekly rise.

Beijing and Washington on Thursday agreed to hold high-level talks in early October. The news cheered investors hoping for an end to a trade war that has brought tit-for-tat tariffs between the world’s two biggest economies, chipping away at economic growth.

The prolonged dispute has had a dampening effect on oil prices, though they have risen over the year thanks partly to production cuts led by the Organization of the Petroleum Exporting Countries and Russia to drain inventories.

However, analysts warn that market fundamentals remain bearish and depend heavily on a resolution to the U.S.-China trade saga.

“If trade tensions escalate further, oil demand growth may soften even more, requiring much lower prices,” UBS oil analyst Giovanni Staunovo said in a note analysing oil market trends for 2020.

“On the other hand, unexpected supply disruptions in the Middle East or a surprise production cut by OPEC and its allies may push oil prices higher.”

U.S. crude and product inventories fell last week, with crude drawing down for a third consecutive week despite a jump in imports, the Energy Information Administration (EIA) said.

Crude stocks dropped 4.8 million barrels, nearly double analyst expectations, to 423 million barrels, their lowest level since October last year.

Oil prices on Thursday soared more than 2% after the EIA report, though they gradually trimmed gains on investor doubts over the chances that the trade talks will yield results.

“There is still no getting away from lingering demand-side concerns,” said Stephen Brennock, of oil broker PVM.

“Consequently, any looming upside potential will be built on wobbly foundations so long as the U.S. and China continue to do battle on the trade front.”

In another sign of a possible global economic slowdown, data released on Friday showed German industrial output fell unexpectedly in July, putting Europe’s biggest economy at risk of falling into recession in the third quarter.

European markets slipped from one-month highs and the upbeat mood brought on by potential U.S.-China trade talks seemed to fade as markets awaited U.S. jobs data later on Friday.

Oil steady as US resumes Gulf of Mexico output

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Reuters
KEY POINTS
  • Brent crude futures were up 7 cents, or 0.1%, at $66.55 a barrel by 0426 GMT.
  • U.S. West Texas Intermediate crude futures rose by 1 cent to $59.59 a barrel after falling earlier in the session.
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A worker grabs a nozzle at a PTT gas station in Bangkok, Thailand, January 5, 2016.
Athit Perawongmetha | Reuters

Oil prices were steady on Tuesday after falling in the previous session as output in the U.S. Gulf of Mexico resumed after Hurricane Barry swept through over the weekend and as U.S. shale production is expected to rise to a record.

Brent crude futures were up 7 cents, or 0.1%, at $66.55 a barrel by 0426 GMT after dropping earlier in the session. They fell 0.4% overnight.

U.S. West Texas Intermediate crude futures rose by 1 cent to $59.59 a barrel after falling earlier in the session. The U.S. benchmark fell about 1% in the previous session.

Producers on Monday began restoring some of the roughly three-quarters of output that was shut at U.S. Gulf of Mexico platforms ahead of Hurricane Barry.

“The previous storm expectations didn’t pan out, which is good, but you have still got platforms with about 69 percent of output off,” said Phin Ziebell, senior economist at National Australia Bank.

“It was a bit of a shock to supply but a short term one. The market has returned to a bit of normality,” he said.

There was 1.3 million barrels per day (bpd) of oil production offline in the U.S. waters of the Gulf of Mexico on Monday, about 80,000 barrels fewer than on Sunday.

Workers also were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to be resumed after a storm leaves the Gulf of Mexico.

The market was also weighed down by signs of further increases in output from the United States, which has ridden a wave of shale oil production to rise to become the world’s biggest crude oil producer, ahead of traditional top producers Russia and Saudi Arabia.

U.S. oil output from seven major shale formations is expected to rise by about 49,000 bpd in August, to a record 8.55 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report.

Overall U.S. crude production is now more than 12 million bpd.

The rising U.S. output will further undermine the efforts by Russia and Saudi Arabia to reduce global oil inventories by convincing suppliers both in the Organization of the Petroleum Exporting Countries and outside of OPEC to cut production.

The global supplier group, known as OPEC+, agreed earlier this month to extend their production cuts for another nine months.

“On the one hand you have the OPEC output cuts and there’s some geopolitical issues around Iran. But the demand outlook is muted and U.S. supply is perennially good from shale oil, which seems to have structurally changed the nature of the oil market,” said Ziebell.

Oil prices rise amid bigger-than-expected fall in US stockpiles

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Reuters

KEY POINTS
  • West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT.
  • Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95.
Reusable: Oil rig Rio de Janeiro Petrobras 150703
A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
Getty Images

Oil prices rose on Wednesday, led by U.S. crude after an industry group reported that U.S. stockpiles fell for a fourth week in a row, alleviating concerns about oversupply amid global trade tensions.

West Texas Intermediate (WTI) crude had climbed 81 cents, or 1.4%, to $58.64 by 0151 GMT. Brent was up 61 cents, or 1%, at $64.77, having earlier hit $64.95.

The U.S. and global benchmarks have gained this year as the Organization of the Petroleum Exporting Countries (OPEC) and big producers such as Russiahave honored commitments to cut output.

Investors have also been on the lookout for any signs that unrelenting production from the United States is being consumed.

U.S. crude stockpiles fell more than forecast last week, while gasoline inventories decreased and distillate stocks built, data from industry group the American Petroleum Institute (API) showed on Tuesday.

Crude inventories fell by 8.1 million barrels in the week to July 5 to 461.4 million, compared with analyst expectations for a decrease of 3.1 million barrels, according to the data.

Official figures from the government’s Energy Information Administration (EIA) are due later on Wednesday.

“Prices are finely balanced right now as investors await fresh stimulus,” said Fawad Razaqzada, technical analyst at FOREX.com. “The stimulus could come in the form of a sharp change in U.S. crude oil inventories.”

Oil prices have been under pressure from concerns about global economic growth amid growing signs of harm from the U.S.-China trade war that has rumbled on over the last year. Lower economic growth typically means reduced demand for commodities such as oil.

“Global economic growth remains under pressure, with the latest manufacturing surveys weakening,” NAB said in a note.

“This is likely to impact demand for commodities, although stimulus measures may in some cases support commodity demand,” NAB said, citing China as an example.

Still, U.S. crude oil production is forecast to rise to a record of 12.36 million barrels per day (bpd) in 2019 from the high of 10.96 million bpd last year, the EIA’s Short Term Energy Outlook said on Tuesday.

OPEC and allied producers led by Russia agreed last week to extend their supply-cutting deal until March 2020. Brent has risen nearly 20% in 2019, supported by the pact and tensions in the Middle East, especially the row over Iran’s nuclear program.

Oil prices steady on extended supply cuts, US stocks draw

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Reuters

KEY POINTS
  • Brent crude futures for September delivery were trading up 36 cents, or 0.6%, at $62.76 a barrel by 0244 GMT.
  • U.S. crude futures for August were up 29 cents, or 0.5%, at $56.54 a barrel.
  • Both benchmarks fell more than 4% on Tuesday as worries about a slowing global economy overshadowed OPEC supply cuts.
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 edged higher on Wednesday after a steep fall in the previous session, supported by extended output cuts by OPEC and its allies despite concerns that a slowing global economy could crimp demand.

An expected large draw in U.S. crude oil inventories also underpinned sentiment after a bigger-than-expected stocks fall in a private survey.

Brent crude futures for September delivery were trading up 36 cents, or 0.6%, at $62.76 a barrel by 0244 GMT.

U.S. crude futures for August were up 29 cents, or 0.5%, at $56.54 a barrel. Both benchmarks fell more than 4% on Tuesday as worries about a slowing global economy overshadowed OPEC supply cuts.

The Organization of the Petroleum Exporting Countries and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.

“The OPEC+ meeting showed the members sticking together in tough times, characterized by weakening global demand outlook, aiming for a more balanced oil market, despite clear market share implications,” said Amarpreet Singh, analyst at Barclays Commodities Research in a note.

“This is supportive of oil prices, in our view, even as the market remains squarely focused on weak macro signals.”

Ahead of government data due later on Wednesday, industry group the American Petroleum Institute (API) said that U.S. crude inventories fell by 5 million barrels last week, more than the expected decrease of 3 million barrels.

The OPEC+ agreement to extend oil output cuts for nine months should draw down oil inventories in the second half of this year, boosting oil prices, said analysts from Citi Research in a note.

“Keeping cuts through the end of 1Q aims to avoid putting oil into the market during a seasonal low for demand and refinery runs, as well as providing time to assess the impacts of IMO 2020,” they said.

Still, signs of a global economic slowdown hitting oil demand growth worried investors after global manufacturing indicators disappointed and the U.S. opened another trade front after threatening the EU with more tariffs to offset government aid to the aviation industry.

Barclays expects demand to grow at its slowest pace since 2011, gaining less than 1 million barrels per day year-on-year this year.

Morgan Stanley, meanwhile, lowered its long-term Brent price forecast on Tuesday to $60 per barrel from $65 per barrel, and said the oil market is broadly balanced in 2019.

Crude prices were also capped by signs of a recovery in oil exports from Venezuela in June and growth in oil production in Argentina in May.