Oil prices tumble by more than 2 percent after Trump announces new tariffs on Chinese goods

Reuters
  • U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.
  • Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Oil prices tumbled by more than 2 percent on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking derailing months of trade talks between the world’s two biggest economies.

U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.

Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.

Trump on Sunday said on Twitter he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures.

The Wall Street Journal reported that Beijing is considering canceling all trade talks with Washington.

“Trump has taken the proverbial sledgehammer to the walnut this morning … by threatening to slap a 25 percent tariff on a mind-boggling $525 billion of Chinese goods by this Friday,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.

Within the oil industry, there are signs of a further rise in output from the United States, where crude production has already surged by more than 2 million barrels per day (bpd) since early 2018, to a record 12.3 million bpd. That has made the United States the world’s biggest producer ahead of Russiaand Saudi Arabia.

The number of rigs drilling for gas in the United States fell by 3 to 183 in the week to May 3, while oil-directed drilling rigs rose by 2 to 807, data from oil services firm Baker Hughes showed on Friday.

Oil set for weekly decline amid surging US output, expected OPEC increase

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Reuters

KEY POINTS
  • Brent crude oil futures were at $70.38 per barrel at 0440 GMT, down 37 cents, or 0.5 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were down 20 cents, or 0.3 percent, at $61.61 per barrel.
RT: Venezuela oil pumps over water 150520
Oil pumps are seen in Lake Maracaibo, in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela.
Isaac Urrutia | Reuters

Oil prices on Friday were set to fall for the week as surging U.S. output and an expected supply increase from the Organization of the Petroleum Exporting Countries (OPEC) weighed on markets.

Brent crude oil futures were at $70.38 per barrel at 0440 GMT, down 37 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 20 cents, or 0.3 percent, at $61.61 per barrel.

Brent is set for a weekly fall of 2.5 percent, while WTI has declined 2.6 percent so far, its second straight weekly drop.

“Oil prices have fallen as the pressure of record U.S. output levels continues to weigh,” said Mihir Kapadia, chief executive officer of Sun Global Investments.

U.S. crude oil production reached a record 12.3 million barrels per day (bpd) last week, rising by around 2 million bpd over the past year. U.S. crude exports broke through 3 million bpd for the first time this year, according to data from the Energy Information Administration.

Traders said prices also fell as Russia started sending clean oil through a pipeline towards western Europe, after several countries last week halted imports because of contamination. In Poland, the government released strategic reserves to ensure supply.

“In Eastern Europe, countries have secured supplies to offset shipments halted due to contamination,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

In the United States, analysts say supply will rise further as its export infrastructure is improved.

“One of the things that we can see in the near future is the de-bottlenecking of the Permian basin in the U.S. through new pipelines and export capacity. This will connect the world’s largest shale basin to the global oil market,” said Will Hobbs, chief investment officer for Barclays Investment Solutions.

Rising U.S. oil production has helped offset some of the disruptions from U.S. sanctions against Iran and Venezuela, and from supply cuts led by the Middle East-dominated OPEC, which started in January.

Despite these disruptions and sharp oil price rises in the first months of this year, some analysts say the long-term price risk to crude oil is skewed to the downside.

Erik Norland, senior economist at commodity derivative exchange CME Group, said “the 130 percent rise in U.S. production due to the shale oil revolution” during the past decade had created a strong and constant downside risk to oil prices, which was visible in exchange trading positions.

“Observers of the oil markets might be surprised to discover that during the past decade, out-of-the-money (OTM) put options were more expensive than OTM calls 92.5 percent of the time for crude oil,” he said.

“In other words, oil traders have spent much more time during the past decade worried about downside risks than prices heading higher,” Norland added.

Oil slips to $71, hit by talk of higher OPEC+ production

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KEY POINTS
  • Analysts expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase.
  • Oil fell Monday after comments from Russia raised concern the OPEC-led supply-cutting pact may not be renewed.
  • OPEC and its allies are due to meet in June to decide whether to continue the arrangement.
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Andrew Burton | Getty Images

Brent oil slipped to around $71 a barrel on Tuesday, pressured by expectations of higher U.S. inventories and concern about Russia’s willingness to stick with OPEC-led supply cuts.

Analysts on average expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase. The first of this week’s stockpile reports is due at 2030 GMT from the American Petroleum Institute.

“We have already seen these inventories going higher in the last week’s print,” said Naeem Aslam, chief market analyst at TF Global Markets in London.

“The rising inventory data has raised many questions for investors – no one wants to see the oil glut again.”

Brent crude, the global benchmark, was down 12 cents at $71.06 a barrel at 0801 GMT. U.S. West Texas Intermediate (WTI) crude gained 6 cents to $63.46.

While OPEC-led supply cuts have boosted Brent by more than 30 percent this year, gains have been limited by worries that slowing economic growth could weaken demand for fuel.

Oil also fell on Monday after comments from Russia raised concern the OPEC-led supply-cutting pact may not be renewed. Russia and the producer group may decide to boost output to fight for market share with the United States, TASS news agency ited Finance Minister Anton Siluanov as saying.

The Organization of the Petroleum Exporting Countries and other producers including Russia, an alliance known as OPEC+, have been cutting output since Jan. 1. They decide in June whether to continue the arrangement.

“There is a growing concern that Russia will not agree on extending production cuts and we could see them officially abandon it in the coming months,” said Edward Moya, senior market analyst at OANDA.

Oil prices inch down as U.S. crude stocks climb

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Reuters

KEY POINTS
  • International Brent crude oil futures were at $67.55 a barrel at 0929 GMT, down 28 cents from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $59.21 per barrel, down 20 cents from their last settlement.
  • Demand concerns on the back of economic jitters linked to the U.S.-Chinese trade war have capped prices.
RT: Venezuela oil pumps over water 150520
Oil pumps are seen in Lake Maracaibo, in Lagunillas, Ciudad Ojeda, in the state of Zulia, Venezuela.
Isaac Urrutia | Reuters

Oil prices were down on Thursday, extending losses into a second consecutive session following a surprise rise in U.S. crude inventories.

International Brent crude oil futures were at $67.55 a barrel at 0929 GMT, down 28 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $59.21 per barrel, down 20 cents from their last settlement.

U.S. crude inventories rose last week by 2.8 million barrels, compared with analysts’ expectations for a decrease of 1.2 million barrels, the U.S. Energy Information Administration said.

Demand concerns on the back of economic jitters linked to the U.S.-Chinese trade war have also capped prices.

In a fresh development, China has made unprecedented proposals on a range of issues, including forced technology transfer, as the two sides work to end their protracted dispute.

Overall, bullish sentiment underpins the market, which has seen Brent rise almost 30 percent this year.

“Today’s fall does not derail the short-term bullish argument that both the OPEC+ production cuts and supply outages will outweigh the global growth concerns and rising U.S. production,” said Edward Moya, senior market analyst, OANDA.

Oil prices have found support from efforts by the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated allies like Russia, known as OPEC+, to trim output as well as plummeting Venezuelan output.

On top of U.S. sanctions, power cuts have crippled Venezuela’s oil industry.

The country’s main oil export port of Jose and four crude upgraders, needed to convert Venezuela’s heavy oil into exportable grades, have been halted since Monday, industry sources said.

U.S. sanctions have also hit Iranian crude exports.

In early May, analysts expect the United States will extend some sanction waivers on Iranian oil but might reduce the number of countries receiving them.

The 180-day exemptions were granted in November to eight countries – China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea.

Washington seeks to bring Iranian oil exports to zero.

“Enjoy it whilst it lasts. The upcoming six months will bring relatively healthy demand for OPEC oil,” PVM’s Tamas Varga said in a note.

“If the unplanned supply cuts remain in place… oil prices should edge towards $75/bbl basis Brent in coming months as global inventories will draw.”

Oil prices hit 2019 highs amid OPEC-led supply cuts and US sanctions

CNBC

  • International benchmark Brent crude futures touched 2019 highs.
  • The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated suppliers including Russia are withholding supply in order to tighten the market and prop up prices.

Oil refinery and storage Australia

Jason Reed | Reuters

Brent crude oil prices hit 2019 highs above $65 per barrel on Friday, spurred by U.S. sanctions against Venezuela and Iran as well as OPEC-led supply cuts.

Brent rose as high as $65.10, pushing past the $65 mark for the first time this year, before edging back to $64.97 a barrel by 0450 GMT. That was still 0.6 percent above the last close.

The international benchmark for oil prices is at a near 3-month high and set for a 4.6 percent gain for the week.

U.S. West Texas Intermediate (WTI) crude futures were at $54.70 per barrel, up 29 cents, or 0.6 percent, from their last settlement.

The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated suppliers including Russia are withholding supply in order to tighten the market and prop up prices.

The producer group known as OPEC+ has agreed to cut crude output by a joint 1.2 million barrels per day (bpd). Top exporter Saudi Arabia said it would cut even more in March than the deal called for.

Russia has cut its oil production by 80,000-90,000 barrels per day from its level in October, Moscow’s reference level for its cuts, the country’s energy minister said.

“Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply,” Bank of America Merrill Lynch said in a note.

It also expects “a 2.5 million barrels per day drop in OPEC supply from 4Q18 into 4Q19.”

Commodity investment firm Goehring & Rozencwajg (G&R) said that oil production from non-OPEC producers like Brazil, Mexico or the North Sea was also struggling, further tightening the market.

“The North Sea, Mexico and Brazil all disappointed and we expect this to continue going forward,” G&R said in a note published on Thursday.

Trade data in Refinitiv showed that combined crude oil shipments out of the North Sea, Mexico and Brazil were at 4.2 million bpd in January, down from 4.4 million bpd in December.

Standing against these declines is soaring U.S. crude production, which rose by more than 2 million bpd last year, to 11.9 million bpd, making America the world’s biggest oil producer.

Most analysts expect U.S. output to rise past 12 million bpd soon, and perhaps even hit 13 million bpd by the end of the year.

Rising U.S. shale oil supply, increasing spare capacity within OPEC and stagnating fuel consumption meant the medium-term oil price outlook was lower, BoAML said.

“We see growing downside risks to medium-term oil prices on rising U.S. supply and slower consumption,” the U.S. bank said. It expected Brent to range between $50 and $70 per barrel in the coming five years.