Oil prices fall as U.S. fuel demand remains weak

CNBC

Reuters
KEY POINTS
  • Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT.
  • U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices edged lower on Friday after U.S. inventory data showed lackluster fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.

Brent crude slipped 25 cents, or 0.7%, to $35.04 a barrel by 0334 GMT and U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6%. Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries.

“The rally needs a breather. It has been four weeks of gains and the market needs to buy time for downstream prices to catch up,” OCBC economist Howie Lee said.

“Beyond the short term, the bullish momentum still looks rather intact.”

Thursday’s data from the Energy Information Administration showed that U.S.crude oil and distillate inventories rose sharply last week. Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.

“Memorial Day weekend did not bring U.S. motorists out in droves like many market bulls were hoping,” RBC Capital Markets analyst Christopher Louney said in a note.

Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June.

Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.

Oil skids as U.S. inventories pile up, but demand hopes stem bigger drop

REUTERS

SINGAPORE (Reuters) – Oil prices dropped on Wednesday after U.S. industry data showed a surprise build in crude inventories, but expectations for firmer demand next year kept losses in check.

Brent crude futures LCOc1 dropped 38 cents, or 0.57%, to $65.72 a barrel by 0730 GMT on Wednesday. The international benchmark rose 1.2% to $66.10 a barrel on Tuesday.

West Texas Intermediate (WTI) crude futures CLc1 fell 46 cents, or 0.75%, to $60.48 per barrel.

Wednesday’s declines followed a gain of more than 1% in the previous session as the “phase one” U.S.-China trade deal announced last week eased pressure on the oil benchmarks.

Prior to the agreement, oil markets were hampered by worries over the economic impact of the trade dispute between the world’s two biggest oil consumers.

“The sizzling oil market rally came to a grinding halt after an unexpected climb in the weekly U.S. crude inventory report,” said Stephen Innes, market strategist at AxiTrader. However, he added that “it’s unlikely to be a game-changer.”

“Investors have transcended the trade deal-inspired relief rally euphoria, and are now banking on a fundamental demand-driven shift that could quicken the pace of the oil market rebalancing in the first quarter of 2020.”

U.S. crude inventories climbed 4.7 million barrels in the week to Dec. 13 to 452 million, compared with analysts’ expectations for a draw of 1.3 million barrels, data from industry group the American Petroleum Institute showed.

But a drop in official inventory data from the U.S. Energy Information Administration (EIA) due later on Wednesday could give oil more upward impetus, said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.

The drop in prices Wednesday morning “are minuscule, with oil’s price action continuing to be constructive,” Halley said.

Deeper production cuts coming from the Organization of the Petroleum Exporting Countries and allies such as Russia – a group known as OPEC+ – also continued to support market sentiment and prevented a further slide in prices.

OPEC+, which has cut production by 1.2 million barrels per day (bpd) since Jan. 1 this year, will make a further oil supply cut of 500,000 bpd from Jan. 1, 2020, to support the market.

Reporting by Koustav Samanta; Editing by Jacqueline Wong and Tom Hogue

Oil poised near three-month highs on US-China trade hopes, supply cuts

CNBC

Reuters
KEY POINTS
  • Brent crude oil futures had slipped by two cents to $65.32 a barrel by 0422 GMT.
  • West Texas Intermediate crude was down four cents to $60.17 a barrel.
GP: Oil field workers pump jack 191120
Oil field workers with Wisco work on a pump jack in North Dakota, the United States, on November 6, 2013.
Ken Cedeno | Corbis News | Getty Images

Oil prices trickled a fraction lower on Tuesday but remained near a three-month high as investors kept the faith with hopes that a fully fledged U.S.China trade deal is in the pipeline, set to stoke oil demand in the world’s biggest economies.

Brent crude oil futures had slipped by two cents to $65.32 a barrel by 0422 GMT, while West Texas Intermediate crude was down four cents to $60.17 a barrel.

Under a partial trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $200 billion over the next two years.

“Oil prices are struggling to extend their gains as investors await further details regarding the U.S.-China ‘Phase One’ trade deal,” said Edward Moya, senior market analyst at OANDA. “Oil should be much higher, but the U.S.-China trade war is far from over.”

The so-called ‘Phase One’ trade deal between both countries has been “absolutely completed”, Larry Kudlow, a top White House adviser said on Monday, adding that U.S. exports to China will double under the agreement.

The agreement is yet to be signed and several Chinese officials told Reuters the wording of the agreement remained a delicate issue, with care was needed to ensure expressions used in text did not re-escalate tensions and deepen differences.

JP Morgan and Goldman Sachs have revised their oil price forecasts for the next year upwards, with an OPEC-led agreement to curb output further dovetailing with the improving trade outlook between the U.S. and China.

Lower supply next year due to a planned cut by the Organization of the Petroleum Exporting Countries (OPEC) and associated producers like Russia — a grouping known as ‘OPEC+’ — and stronger economic growth expected because of the improved trade outlook between United States and China will combine to tighten the oil supply-demand balance next year, analysts from JP Morgan said.

Oil demand could see further improvements as U.S. President Donald Trump “tries to … ensure the U.S. growth remains robust before voters turn to the polls in November,” said OANDA’s Moya.

Also supporting prices, a preliminary Reuters poll ahead of reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) showed expectations that U.S. crude oil inventories likely fell last week.

Still, U.S. oil output from seven major shale formations is expected to rise about 29,000 barrels per day (bpd) in January to a record 9.14 million bpd, the EIA said in a monthly forecast on Monday.

Oil slips on uncertainty over US-China trade deal, surging inventories

CNBC

Reuters
KEY POINTS
  • Brent crude, the global benchmark, was down 16 cents, or 0.3%, at $62.13 a barrel by 0259 GMT, after gaining 0.9% in the previous session.
  • U.S. West Texas Intermediate (WTI) crude was down 23 cents, or 0.4%, at $56.92 a barrel. The contract rose 1.4% on Thursday.
GP: Oil tank North Dakota 190926
A photo taken August 19, 2013 shows a worker checking oil tanks at an oil well near Tioga, North Dakota.
Karen Bleier | AFP | Getty Images

Crude oil futures fell on Friday amid lingering uncertainty on whether, and when, the United States and China will agree a long-awaited deal to end their bitter trade dispute, the gloom compounded by rising crude inventories in the United States.

Brent crude, the global benchmark, was down 16 cents, or 0.3%, at $62.13 a barrel by 0259 GMT, after gaining 0.9% in the previous session.

U.S. West Texas Intermediate (WTI) crude was down 23 cents, or 0.4%, at $56.92 a barrel. The contract rose 1.4% on Thursday.

The trade war between the world’s two biggest economies has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

On Thursday, the Chinese commerce ministry said the two countries have agreed in the past two weeks to cancel trade tariffs in different phases, without giving a timeline.

But that comment was shrouded in doubt soon after when Reuters reported that the plan faces stiff internal opposition in the U.S. administration.

“Oil is in pause mode as traders await more details on the trade talks,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Also concentrating minds among sector watchers were remarks by OPEC Secretary-General Mohammad Barkindo this week that he was more optimistic about the outlook for 2020 because of potentially positive developments on trade disputes, appearing to downplay any need to cut output more deeply.

A deal between the Organization of the Petroleum Exporting Countries (OPEC) and allies, such as Russia, is limiting supplies until March next year. The producers meet on Dec. 5-6 in Vienna to review that policy.

Barkindo’s comments are “spooking the market, especially in the face of the seemingly never-ending run of U.S. inventory builds,” said AxiTrader’s Innes.

U.S. crude oil stockpiles rose sharply last week as refineries cut output and exports dropped, while refined products extended a multi-week drawdown, the Energy Information Administration said on Wednesday.

Stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.7 million barrels, the EIA said.

Oil falls ahead of European and US economic data, offsets trade deal optimism

CNBC

Reuters
KEY POINTS
  • Brent crude futures for January fell 31 cents to $61.38 a barrel by 0406 GMT.
  • December U.S. crude futures was at $55.91 a barrel, down 29 cents.
GP: Oil Boom in Texas's Permian Basin 180505
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 5, 2018.
Benjamin Lowy | Getty Images News | Getty Images

Oil prices eased on Monday as traders took profit ahead of fresh European and U.S. economic data, despite hopes for some resolution to the U.S.China trade row that has hurt global economic growth and crimped energy demand.

Prices jumped about $2 a barrel on Friday after the world’s top two economies said they had made progress on trade talks while U.S. officials said the deal could be signed this month.

Brent crude futures for January fell 31 cents to $61.38 a barrel by 0406 GMT, while December U.S. crude futures was at $55.91 a barrel, down 29 cents.

“Friday’s mega-rally was built on a combination of not-as-bad-as-feared data and optimism on a trade deal that really, only keeps the lights on. It does not increase the brightness of the world economy,” Jeffrey Halley, a Singapore-based senior market analyst for Asia Pacific at OANDA, wrote in a note.

“With plenty of oil going around for everyone from everywhere, oil, in particular, will be more susceptible to headline bombs this week.”

The European Union and the United States are set to announce manufacturing data on Monday with more U.S. and Chinese data to come later in the week.

“I think the trade talk continues to improve sentiment but … Asian oil traders want more convincing data from the macros side” before supporting oil, Stephen Innes, Asia Pacific market strategist at AxiTrader, said.

Still, a fall in the U.S. rig count for a second week in a row and an upbeat U.S. jobs report supported oil prices last week. Independent producers cut spending after record production weighed on the outlook for energy prices.

Also underpinning U.S. crude prices was a shutdown of the Keystone pipeline that sends Canadian heavy crude to the United States. Owner TC Energy said on Friday work was underway to plug the pipeline in North Dakota.

Production cuts by the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers — a group known as OPEC+ — since January to reduce oil output by 1.2 million barrels per day are also propping up prices.

Still, Russia again missed its output cut target in October, energy ministry data showed on Saturday.

OPEC’s output recovered in October from an eight-year low after a rapid rebound in Saudi Arabia’s production from attacks on its oil infrastructure in September offset losses in Ecuador and voluntary cuts under the pact.

Protests at Iraq’s main Gulf port Umm Qasr on Saturday blocked the country’s food imports but did not affect the second-largest OPEC producer’s oil exports, which take place mostly from nearby offshore platforms.

Saudi Aramco finally kick-started its initial public offering (IPO) on Sunday, but offered scant details on the number of shares to be sold, pricing or the date for a launch.