Brent oil prices rise above $60, buoyed by U.S. stock drawdown

SINGAPORE (Reuters) – Brent crude oil futures rose above $60 a barrel on Wednesday after industry data showed a larger-than-expected drop in U.S. crude inventories, but ongoing worries about a possible global recession capped gains.

Brent crude LCOc1 had gained 33 cents, or 0.6%, to $60.36 a barrel by 0654 GMT, after settling 0.5% higher on Tuesday.

U.S. crude CLc1 was up 17 cents, or 0.3%, at $56.30 a barrel.

U.S. crude oil stocks fell by 3.5 million barrels in the week to Aug. 16, data from industry group the American Petroleum Institute (API) showed on Tuesday. Analysts polled by Reuters had expected a fall of 1.9 million barrels.

“Crude prices should see support from a bullish API stockpile report that could signal the largest Cushing draw since February 2018, if the EIA validates it,” said Edward Moya, senior market analyst at OANDA in New York.

Inventory numbers from the government’s Energy Information Administration (EIA) are due at 10:30 a.m. EDT (1430 GMT) on Wednesday, and will be more closely watched than usual given the nearing of the end of peak U.S. driving season, analysts said.

“With Canadian heavy crude restrictions being extended, we should see U.S. refiners … struggle to fill the void from lowered shipments from Mexico and Venezuela,” Moya said, referring to the Canadian province of Alberta extending mandatory curtailments on crude production by an extra year.

Tensions in the Middle East remained in the spotlight as U.S. Secretary of State Mike Pompeo said on Tuesday that the United States would take every action it can to prevent an Iranian tanker in the Mediterranean from delivering oil to Syria in contravention of U.S. sanctions.

Oil prices were also supported by data showing lower exports in June from Saudi Arabia, the world’s top oil exporter.

Saudi Arabia plans to keep its crude exports below 7 million barrels per day (bpd) in August and September despite strong demand from customers, to bring the market back to balance, a Saudi oil official told Reuters earlier this month.

But uncertainty over the global economic outlook amid the U.S.-China trade war capped gains in the oil markets.

“The trade-related tug of war in the oil market will probably extend until we get some semblance of clarity from the next round of U.S.-China trade discussion,” Stephen Innes, managing partner, VM Markets, said in a note.

Traders are also waiting for this week’s annual U.S. central bank seminar at Jackson Hole, where comments from Federal Reserve Chief Jerome Powell will be in focus.

“The biggest risk to crude prices is if Powell disappoints at Jackson Hole and doesn’t signal more easing will be coming,” said OANDA’s Moya.

Reporting by Jessica Jaganathan; Editing by Joseph Radford and Tom Hogue

Oil prices fall on concerns over recession, inventories

CNBC

Reuters
KEY POINTS
  • Brent crude was down 37 cents, or 0.6%, at $59.11 a barrel by 0300 GMT, after falling 3% in the last session.
  • U.S. crude was down 25 cents, or 0.5%, at $54.98 a barrel, having dropped 3.3% in the previous session.
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Andrew Burton | Getty Images

Oil prices fell on Thursday, adding to sharp overnight losses as U.S. crude inventories unexpectedly rose, fears of recession mounted and economic data out of China and Europe disappointed.

Brent crude was down 37 cents, or 0.6%, at $59.11 a barrel by 0300 GMT, after falling 3% in the last session.

U.S. crude was down 25 cents, or 0.5%, at $54.98 a barrel, having dropped 3.3% in the previous session.

The combination of a slew of data suggesting a slowdown in global growth amid the U.S.-China trade war and persistently high levels of oil in U.S. storage has punctured recent optimism in crude markets, but stoked expectations that leading producers may take further steps to support prices.

“Oil prices, though supported by OPEC-led production curbs, … face severe headwinds as traders swing between demand-side worries and supply curtailment policies,” said Benjamin Lu, analyst at Phillip Futures in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) has been mostly trimming production since the start of 2017 and traders say they expect Saudi Arabia to reduce output further amid slowing global oil demand.

The U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007, a sign of investor concern that the world’s biggest economy may fall into recession.

China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the U.S. intensifies.

Global economic worries, amplified by tariff conflicts and uncertainty over Brexit, are also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, while the euro zone’s GDP barely grew in the second quarter of 2019.

A second week of unexpected builds in U.S. crude inventories is adding to the pressure on oil prices.

U.S. crude stocks grew by 1.6 million barrels last week, compared with analyst expectations for a decrease of 2.8 million barrels, as refineries cut output, the Energy Information Administration (EIA) said in a report.

At 440.5 million barrels, inventories were about 3% above the five-year average for this time of year, the EIA said.

Oil prices slip as demand concerns outweigh efforts to curb supply

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Reuters
KEY POINTS
  • Brent crude futures were down 18 cents or 0.3%, from the previous settlement, to $58.39 a barrel by 0310 GMT.
  • U.S. West Texas Intermediate (WTI) futures were at $54.81 per barrel, down by 12 cents, or 0.2%, from the last close.
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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 slipped on Tuesday, offsetting narrow gains in the previous session, as sluggish demand forecasts countered expectations that major producers would prop up oil prices by limiting crude oil output.

International benchmark Brent crude futures were down 18 cents or 0.3%, from the previous settlement, to $58.39 a barrel by 0310 GMT.

U.S. West Texas Intermediate (WTI) futures were at $54.81 per barrel, down by 12 cents, or 0.2%, from the last close.

“Although the outlook remains bleak, oil prices have remained anchored this week after a rapid response from Saudi Arabia, who is serious about stepping in to defend the oil price,” Stephen Innes, managing partner at VM Markets said in a note.

Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said late last week it plans to keep its crude oil exports below 7 million barrels per day in August and September to help drain global oil inventories.

Analysts expect the country to support prices ahead of its plans to float Saudi Aramco, in what could be the world’s largest initial public offering (IPO).

Saudi Aramco was ready for its IPO, but the timing for the deal will be decided by its sole shareholder, the Saudi government, a senior executive said on Monday.

Kuwait on Monday also reiterated its commitment to OPEC+ supply curbs after Oil Minister Khaled al-Fadhel said Kuwait had cut its own output by more than required by the accord.

OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) since Jan. 1.

But booming U.S. shale oil production continues to chip away at efforts to limit the global supply overhang, weighing on prices.

U.S. oil output from seven major shale formations is expected to rise by 85,000 bpd in September, to a record 8.77 million bpd, the U.S. Energy Information Administration forecast in a report.

Gloomy forecasts for the global economy and oil demand growth have also dragged on oil prices as the trade dispute between the United States and China escalates.

“The swift reaction from Saudi Arabia will likely stabilize oil prices, but the oil price probably won’t move much above $60 per barrel until there is evidence of progress in U.S.-China trade negotiations,” said Innes.

China’s central bank lowered its official yuan midpoint for the ninth straight day to a fresh 11-year low on Tuesday to reflect broad weakness in the local unit.

A lower yuan raises the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer.

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.

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.”