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

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.
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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.

Oil prices eke out small gains ahead of Fed Chair speech

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Reuters
KEY POINTS
  • Brent crude rose 10 cents to $60.02 a barrel by 0118 GMT.
  • U.S. crude futures were at $55.38 a barrel, up 3 cents. Both contracts were on track for a second weekly gain.
RT: Oil operations Permian Basin near Midland, Texas 180823
Oil operations in the Permian Basin near Midland, Texas
Nick Oxford | Reuters

Oil prices clawed back the previous day’s losses on Friday, with Brent nudging above $60 a barrel, as tighter supplies from key producers offset slowing demand growth while investors await clues from the Federal Reserve on U.S. monetary policy.

Brent crude rose 10 cents to $60.02 a barrel by 0118 GMT, while U.S. crude futures were at $55.38 a barrel, up 3 cents. Both contracts were on track for a second weekly gain.

“Oil is set to trade quietly today as it’s all about the Jackson Hole (meeting) tonight,” Jeffrey Halley, a Singapore-based senior market analyst at brokerage Oanda.

“What we’re seeing is some profit-taking in Asia in very light volumes.”

A speech by Federal Reserve Chair Jerome Powell later on Friday at a meeting of central bankers in Jackson Hole is expected to provide some clues on whether the Fed will cut interest rates for a second time this year to boost the U.S. economy.

Traders’ expectations of further U.S. monetary easing were clouded by comments from two Fed officials who said on Wednesday that they do not see a case for a rate cut now.

A reduction in interest rates could strengthen the U.S. dollar against other currencies and make dollar-denominated oil more costly for investors.

Oil prices are down for nearly two straight months after the International Energy Agency and the Organization of Petroleum Exporting Countries cut demand growth forecasts as a simmering U.S.-China trade war hit global economic growth.

However, oil prices remained supported by production cuts from OPEC members and Russia while U.S. sanctions have sharply reduced exports from Iran and Venezuela.

Oil prices steady on extended supply cuts, US stocks draw

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Reuters

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

CNBC

Reuters

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.
Reusable: Iraq Oil Daura oil refinery Bagdad 091105
An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
Getty Images

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.