Oil steady as US resumes Gulf of Mexico output

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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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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.
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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
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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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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.
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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.

Oil prices ease as demand worries counter OPEC supply cut extension

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KEY POINTS
  • Brent crude futures for September delivery were trading down 15 cents, or 0.2%, at $64.91 a barrel by 0311 GMT after dipping to $64.66 earlier.
  • U.S. crude futures for August were down 25 cents, or 0.4%, at $58.84 a barrel, after touching their highest in over five weeks on Monday.
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An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
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Oil prices drifted lower on Tuesday, as weak global data raised concerns about future demand for the commodity despite a positive boost from OPEC’sdecision to extend supply cuts until next March.

Brent crude futures for September delivery were trading down 15 cents, or 0.2%, at $64.91 a barrel by 0311 GMT after dipping to $64.66 earlier.

Brent climbed more than $2 a barrel on Monday before paring gains later in the day.

U.S. crude futures for August were down 25 cents, or 0.4%, at $58.84 a barrel, after touching their highest in over five weeks on Monday.

“After 2-1/2 years of production cuts, the effects of rolling over production cuts is losing steam,” said Edward Moya, senior market analyst at OANDA in New York, adding that markets remained nervous about demand.

“The trade war is not likely to get resolved any time soon and while central banks globally are expected to deliver fresh stimulus in the coming months, economic activity is continuing to trend lower.”

While the U.S. and China agreed at a recent Group of 20 leaders summit to restart trade talks, indications that factory activity shrank across much of Europe and Asia in June while growth in manufacturing cooled in the United States weighed on oil prices.

“The weaker PMI prints killed sentiment overnight, and the market started to factor in the realm of the unknown around shale (oil), so (investors) were worried about the fear of oversupply in the face of weaker demand,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.

However, the decision to extend production curbs would continue to support oil prices, as OPEC looked to maintain market equilibrium, he said.

The Organization of the Petroleum Exporting Countries (OPEC) agreed on Monday to extend oil supply cuts until March 2020 as the group’s members overcame their differences in order to try to prop up the price of crude.

OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging U.S. output.

Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts until December 2019 or March 2020.

Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector felt the impact of a contaminated crude crisis that crippled exports.

Meanwhile, U.S. producers hit a monthly record of 12.16 million barrels per day (bpd) in April, data showed, though new U.S. shale oil production is expected to slip this year from last year, according to a survey of major forecasters.

OPEC is sounding likely to extend oil production curbs as meeting starts in Vienna

KEY POINTS
  • OPEC members are set to meet on July 1 in Vienna, followed by a meeting with non-OPEC states on July 2.
  • Russia, Saudi Arabia and the UAE all indicate that they want to continue production curbs. Meanwhile, OPEC member Iran called for unity among members of the cartel.
  • Oil prices rose sharply in the afternoon of Asian trading hours on Monday, with international benchmark Brent crude futures adding 2.58% to $66.41 per barrel. U.S. crude futures jumped 2.46% to $59.91 per barrel.
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The OPEC logo is seen at the Organization of the Petroleum Exporting Countries (OPEC) building in Vienna on June 20, 2018.
Omar Marques | SOPA Images | LightRocket via Getty Images

Ahead of a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies in Vienna, the most important oil producers there are indicating there’s likely to be an extension of a deal to curb oil production.

Speaking to reporters in the Austrian capital on Sunday, United Arab Emirates Minister of Energy and Industry Suhail al-Mazrouei said an extension of a deal originally struck in December last year — which called for an output cut of 1.2 million barrels per day — would likely be necessary.

“The current condition of the market, in my view, would require an extension,” al-Mazrouei said.

“I said that earlier when we were in … Jeddah for the” Joint Ministerial Monitoring Committee, he said, in reference to his comments from May that the job of OPEC and its allies to balance the oil markets was still incomplete. “We looked at the numbers. I don’t think they have changed much … since that time.”