Oil extends gains after Trump hints at intervening in Saudi-Russia price war

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Reuters
KEY POINTS
  • U.S. crude futures for April rose 92 cents, or 3.7% to $26.14 a barrel. The front-month April contract, which spiked 24% on Thursday, expires later on Friday.
  • Brent crude futures climbed 57 cents, or 2%, to $29.04 per barrel. Brent rose 14.4% on Thursday in its biggest one-day gain since September.
GP: US Pumpjack at Dusk in the Permian Basin
Silhouette of Permian Basin pumpjacks taken at dusk, north of Midland, Texas, U.S. in late 2019.
Richard Eden | via Getty Images

U.S. crude oil prices rose over $1 on Friday, extending steep gains from the previous session, after U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia at an “appropriate time”.

Prices were also supported by United States’ plans to buy oil for its emergency stockpile, while regulators in the country’s largest oil-producing state Texas were reportedly considering curtailing production.

“Such actions, if implemented, would reduce global and domestic supplies and help support prices in the near-term,” Goldman Sachs said in a note on Friday.

“While this support could prove lasting in 2H20, the accompanying supply cuts would however remain much too small to offset the current 8 million barrels per day hit on demand from the coronavirus…”

The more active West Texas Intermediate (WTI) crude futures contract for May was up $1.01, or 3.9% at $26.92 a barrel by 0352 GMT.

U.S. crude futures for April rose 92 cents, or 3.7% to $26.14 a barrel. The front-month April contract, which spiked 24% on Thursday, expires later on Friday.

Brent crude futures climbed 57 cents, or 2%, to $29.04 per barrel. Brent rose 14.4% on Thursday in its biggest one-day gain since September.

U.S. crude and Brent have both collapsed about 40% in the last two weeks since talks between the Organization of the Petroleum Exporting Countries and its allies, including Russia, broke down, which led Saudi Arabia to ramp up supply.

The Trump administration is considering a diplomatic push to get Saudi Arabia to close its taps and using the threat of sanctions on Russia to force them to reduce output, the Wall Street Journal reported, quoting unidentified sources.

“A fair bit of short covering ensued after President Trump suggested he may tackle the oil crisis by brokering a deal between Moscow and Riyadh,” Stephen Innes, chief market strategist at AxiCorp, said in a note.

U.S. crude prices were also supported by the country’s plans to buy crude for stockpiling after the U.S. Department of Energy said it would buy up to 30 million barrels of crude oil for the Strategic Petroleum Reserve by the end of June.

“Buying oil for the strategic reserve is a very constructive measure to help some U.S. producers avoid collapse amid the international price war,” said Per Magnus Nysveen, head of analysis at Oslo-based energy research firm Rystad Energy.

Oil steadies on bargain-hunting; virus fears cap gains

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Reuters
KEY POINTS
  • Brent crude rose 19 cents, or 0.3%, to $56.49 a barrel by 0436 GMT, after slipping 3.8% on Monday, the largest single-day price fall since Feb. 3.
  • U.S. crude futures gained 17 cents, or 0.3%, to $51.60, recovering from a 3.7% drop in the previous session.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil steadied on Tuesday as investors sought bargains after crude benchmarks slumped almost 4% in the previous session, although concerns about the coronavirus spreading out of China denting major economies and curbing fuel demand capped gains.

Brent crude rose 19 cents, or 0.3%, to $56.49 a barrel by 0436 GMT, after slipping 3.8% on Monday, the largest single-day price fall since Feb. 3.

U.S. crude futures gained 17 cents, or 0.3%, to $51.60, recovering from a 3.7% drop in the previous session.

“Because we’ve seen a very significant fall in case of West Texas, from above $60 to touch below $50 (over the past six weeks), I think oil has largely reflected a lot of risk, unlike other markets,” Michael McCarthy, chief market strategist at CMC Markets, told Reuters over the phone.

Crude markets are also close to an important technical support level between $49.50 and $50 for WTI and between $54.50 and $55 for Brent, McCarthy said.

“For this week, key factors are coronavirus, inventory data and the technical picture,” he said.

Demand concerns savaged prices for oil and a whole swathe of commodities on Monday, while both U.S. and European equities suffered their steepest losses since mid-2016.

Asian share markets were trying to stabilize on Tuesday after a wave of early selling petered out and Wall Street futures managed a solid bounce.

In the United States, crude oil inventories were seen building for a fifth straight week, while refined products likely fell, a preliminary Reuters poll on the expectations for the week ended on Feb. 21 showed on Monday.

Countries around the world are stepping up efforts to prevent a pandemic of the flu-like SARS-CoV-2 virus originating from China late last year that has now infected more than 80,000 people, 10 times more than the SARS coronavirus of 2002/2003.

“Fears that the rapidly-spreading coronavirus outside of China could lead to a bigger-than-anticipated impact on global economy and oil demand will likely keep weighing on market sentiment,” Satoru Yoshida, a commodity analyst with Rakuten Securities said.

Saudi Aramco expects the coronavirus impact on oil demand to be short-lived, however, and for consumption to rise in the second half of the year, Chief Executive Amin Nasser told Reuters on Monday.

Oil prices skid on demand concerns as virus spreads globally

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Reuters
KEY POINTS
  • Brent crude fell by $1.69 or 2.9% to $56.81 a barrel by 0158 GMT.
  • U.S. crude futures fell by $1.40 or 2.6% to $51.98.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices tumbled nearly 3% towards a one-week low on Monday as the rapid spread of the coronavirus in several countries outside China left investors fretting about a hit to demand.

Global shares also extended losses as concerns about the impact of the new virus grew, with the number of infections jumping in South Korea, Italy and Iran.

Brent crude fell by $1.69 or 2.9% to $56.81 a barrel by 0158 GMT. U.S. crude futures fell by $1.40 or 2.6% to $51.98.

“It’s pretty clear in the middle of last week that the consensus overall was that it would be a temporary economic impact and that would be at least offset by the actions of central banks,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“But as we’ve seen European and U.S. markets react on Friday night and then further news over the weekend about the global spread of the virus, investors now are questioning the assumption about economic growth and that of course is weighing on oil markets.”

South Korea’s government put the country on high alert after the number of infections surged to over 700 with seven deaths, while in Italy, officials said a third person infected with the flu-like virus had died, as the number of cases jumped to above 150 from just three before Friday.

Iran said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi’ite Muslim holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

“We should not underestimate the economic disruption as a super spreader could trigger a massive drop in business activity around the globe of proportions the world has never dealt with before,” said Stephen Innes, chief market strategist at AxiCorp in a note on Monday.

Oil prices received some support after local health commissions in China said on Monday that four Chinese provinces — Yunnan, Guangdong, Shanxi and Guizhou — have lowered their coronavirus emergency response measures.

Chinese President Xi Jinping said on Sunday the world’s largest energy consumer will adjust policy to help cushion the blow to the economy from the coronavirus outbreak.

In the United States, the oil rig count, an indicator of future production, rose for a third straight week. Drillers added one oil rig last week, bringing the total count to 679, the highest since the week of Dec. 20, energy services firm Baker Hughes Co said.

Oil steadies after gains driven by trade optimism

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Reuters
KEY POINTS
  • Brent crude futures were up 4 cents at $62.17 a barrel at 0330 GMT after gaining 0.7% in the previous session.
  • U.S. crude futures were down 1 cent at $56.53 a barrel. They gained 0.6% on Monday.
GP: Iran Salman Oil Field 190422
Workers cross walkways between zones aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, near Lavan island, Iran, on Jan. 5. 2017.
Ali Mohammadi | Bloomberg | Getty Images

Oil prices steadied on Tuesday as investors kept an eye on U.S. inventory data due later, following two days of gains on positive economic data and hopes for a Washington-Beijing trade deal.

Brent crude futures were up 4 cents at $62.17 a barrel at 0330 GMT after gaining 0.7% in the previous session.

U.S. crude futures were down 1 cent at $56.53 a barrel. They gained 0.6% on Monday.

“This is mostly position lightening after an impressive run higher,” said Jeffrey Halley, senior market analyst at OANDA.

“Oil is vulnerable now to any sharp change in short-term investor sentiment,” he said.

U.S. crude oil inventories were forecast to have risen last week, while refined products stocks likely declined, a preliminary Reuters poll showed on Monday.

Five analysts polled by Reuters estimated, on average, that crude inventories rose around 2.7 million barrels in the week to Nov. 1.

Oil has been supported by hopes for a trade deal that could boost demand.

Chinese President Xi Jinping and U.S. President Donald Trump have been in continuous touch through “various means,” China said on Monday, when asked when and where the two leaders might meet to sign a trade deal.

Improved U.S. jobs growth numbers in October and upward revisions of the two previous months are also helping oil prices, analysts said.

Oil investors are closely watching the initial public offering of Saudi Arabia’s state oil company, Saudi Aramco, in what is expected to be the world’s biggest listing as the kingdom seeks to cash in on peaking demand for oil.

Aramco’s chairman Yasser al-Rumayyan said on Sunday the state oil giant would continue to meet its global oil supply demand after it lists on the Riyadh bourse.

On the supply side, Russia cut its oil output to 11.23 million barrels per day (bpd) last month from 11.25 million bpd in September, but again missed its obligations under a pact to curb production.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers — a group known as OPEC+ – have since January implemented a deal to cut oil output by 1.2 million barrels per day.

OPEC output rose in October from an eight-year low as a rapid recovery in Saudi Arabian production from attacks on oil plants more than offset losses in Ecuador and voluntary curbs under a supply pact, a Reuters survey found last week.

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

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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.