Oil inches lower on expectations for US crude stock build

CNBC

  • Oil prices slipped on expectations for a build-up in U.S. crude inventories.
  • Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Oil prices slipped on Wednesday on expectations for a build-up in U.S. crude inventories, but Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.

U.S. WTI crude futures were at $63.36 a barrel at 0208 GMT, down 15 cents, or 0.24 percent, from their previous settlement.

Brent crude futures dipped to $67.94 per barrel, down 18 cents, or 0.26 percent, after it rose 0.7 percent on Tuesday.

U.S. crude inventories likely saw a build for the second straight week, while refined product stockpiles were forecast to have declined last week, an expanded Reuters poll showed on Tuesday.

“With the change in prices being only a few cents, I think the oil market is waiting for the next development and of course the U.S. inventories data due tonight (Wednesday) is very good reason for traders to be waiting,” said Michael McCarthy, Chief Market Strategist at brokerage CMC Markets.

Industry group the American Petroleum Institute, however, said on Tuesday U.S. crude stocks have unexpectedly fallen last week as refineries boosted output.

“With total combined stocks of crude oil and refined products coming in around unchanged on the week, I would call it a neutral data point,” said Dominic Chirichella, senior partner at the Energy Management Institute in New York.

Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

“The EIA data has not (always) been in sync with the API data so we could see a different set of data points Wednesday morning,” Chirichella said.

Meanwhile, Russian Energy Minister Alexander Novak said on Tuesday that a joint organisation between the Organization of the Petroleum Exporting Countries and non-OPEC countries may be set up after the current deal on production cuts expires at the end of this year.

“Russia is testing the upper production bands but provided they don’t ramp up dramatically I think this news will be viewed in a positive light for prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

Oil has risen from a multi-year low near $27 a barrel in January 2016, helped by production cuts led by OPEC and Russia, which began in 2017 in order to rein in over-supply and prop up prices.

Top producer Russia’s oil output rose in March to 10.97 million barrels per day, up from 10.95 million bpd in February, official data showed earlier this week, prompting some traders to worry the OPEC-non-OPEC alliance to help balance oil markets was under threat.

Oil prices stable after 2-day decline, but rising US output drags

CNBC

  • Oil prices stabilized early on Wednesday after posting two days of falls at the start of the week.
  • Support on Wednesday came from a report that U.S. crude inventories are not rising as much as expected during the spring season that is starting.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Oil prices stabilized early on Wednesday after posting two days of falls at the start of the week.

Support on Wednesday came from a report that U.S. crude inventories are not rising as much as expected during the spring season that is starting, implying healthy demand.

U.S. West Texas Intermediate (WTI) crude futures were at $60.86 a barrel at 0033 GMT, up 15 cents, or 0.25 percent, from their previous close.

Brent crude futures were at $64.70 per barrel, up 6 cents, or 0.1 percent.

U.S. crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday. That compared with analysts’ expectations for an increase of 2 million barrels.

Refinery crude runs rose by 85,000 barrels per day (bpd), API data showed.

Despite this, general market conditions remain weak, and crude prices have not managed to return to their early 2018 highs of over $70 per barrel for Brent and almost $67 a barrel for WTI.

“The ever-expanding U.S. supply continues to pose significant downside risk to oil prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

U.S. crude oil production has risen by almost a quarter since mid-2016 and output soared past 10 million bpd in late 2017, overtaking production by top exporter Saudi Arabia.

U.S. crude production, pushed up largely by shale oil drilling, is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA).

Official weekly U.S. crude oil production and inventory figures are due to be published by the Energy Information Administration (EIA) later on Wednesday.

Outside the United States, Libya’s Zawiya oil terminal returned to normal operations late on Tuesday after workers who were blocking ships from docking agreed to end a one-day strike, two sources said.

Zawiya exports crude from Libya’s giant El Sharara oilfield, which produces 300,000 bpd, more than a quarter of the North African country’s output.

Oil steadies after big fall, but soaring US crude output still weighs

CNBC

  • Oil prices steadied on Thursday after falling the previous day on the back of record U.S. crude production and rising inventories.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil prices steadied on Thursday after falling the previous day on the back of record U.S. crude production and rising inventories.

Brent crude futures were at $64.49 per barrel at 0100 GMT, up 15 cents, or 0.2 percent, from their previous close. That slight rise came after a more than 2 percent fall the previous day.

U.S. West Texas Intermediate (WTI) crude futures were at $61.29 a barrel, up 14 cents, or 0.2 percent. WTI also fell by more than 2 percent the previous session.

The slight recovery on Thursday came amid a U.S. crude inventory build that was not as big as expected during the current seasonal demand lull at the end of winter, when many oil refineries shut down for maintenance.

“Oil prices bounced back immediately after the release of the weekly oil inventories data from the Energy Information Administration … (where) the headline figure was better than expected,”said Fawad Razaqzada, market analyst at futures brokerage Forex.com.

The EIA reported late on Wednesday that U.S. crude inventories rose by 2.4 million barrels in the week to March 2, to 425.91 million barrels, less than the 2.7 million barrel increase analysts had forecast.

Despite this, oil markets remain under pressure from the seasonal trend of rising inventories, which in the United States have climbed back above the 5-year average of 420 million barrels.

Also looming over oil markets is soaring U.S. production, which last week marked another record, at 10.37 million barrels per day (bpd).

“Crude is … under pressure from rising U.S. production which hit a new high last week, now firmly above Saudi Arabia’s production level,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

At just below 11 million bpd, only Russia currently produces more crude oil than the United States, although the International Energy Agency (IEA) expects even this to change as the United States is set to surge past 11 million bpd by late 2018.

With U.S. output outpacing demand growth, analysts say the Organization of the Petroleum Exporting Countries (OPEC) and Russia, who together with some other producers have been withholding production in order to prop up prices, are under pressure to keep up the supply restraint, even at the cost of market share.

“OPEC may … have to extend its production agreement with Russia and co in order to avoid triggering another 2014-style sell-off in oil prices,” said Razaqzada.

Oil steady as investors avoid risk assets on equities decline, stronger dollar weighs

CNBC

  • Oil prices were little changed on Thursday after falling in the previous two sessions.
  • U.S. crude inventories rose by 3 million barrels last week, compared with analyst expectations for a build of 2.1 million barrels, data from the EIA showed.

Oil prices were little changed on Thursday after falling in the previous two sessions as investors shied away from riskier assets amid volatile equity markets and the U.S. dollar gained, limiting overall interest in commodities.

Both global benchmark oil futures fell sharply on Wednesday after crude and gasoline inventories in the United States rose unexpectedly.

U.S. West Texas Intermediate crude for April delivery was up 8 cents at $61.72 a barrel by 0403 GMT after settling down 2.2 percent in the previous session.

Brent crude for May delivery, the new front-month contract, was down 3 cents at $64.70. The April contract expired on Wednesday down 1.3 percent.

Both benchmark contracts fell nearly 5 percent in February, the first monthly decline in six months.

“An extended large decline in equities has been prompting investors to avoid risk assets such as oil,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Some industry sources said Wednesday’s decline was also due to profit-taking by market participants at the end of the month after oil hit a three-week high earlier this week.

The U.S. dollar index, which measures the greenback against six major currencies, increased for a second day on Wednesday and was slightly higher on Thursday. A stronger U.S. dollar limits demand for dollar-denominated commodities such as oil since investors paying in other currencies must pay a higher price.

U.S. crude inventories rose by 3 million barrels last week, compared with analyst expectations for a build of 2.1 million barrels, weekly data by the Energy Information Administration (EIA) showed.

Gasoline stocks also rose by 2.5 million barrels against expectations for a 190,000-barrel drop, which pushed gasoline futures sharply lower. Distillate stockpiles, which include diesel and heating oil, fell by 1 million barrels, versus expectations for a 709,000-barrel drop.

Oil field workers on a rig in Tioga, North Dakota.

Crude oil inventories up 3 million barrels  

Soaring U.S. crude production has also kept a lid on oil prices this year, even though producers, led by the Organization of the Petroleum Exporting Countries and Russia, have reduced output.

U.S. crude oil production rose to a record 10.057 million barrels per day(bpd) in November and retreated slightly in December to 9.949 million bpd, the EIA said on Wednesday.

“Despite the expanding output curbs by OPEC and non-OPEC members such as Russia, the market has been focusing more on rising U.S. output since around late January,” Akuta added.

OPEC, meanwhile, is doing its part to keep a lid on prices. The group’s oil output fell in February to a 10-month low as the United Arab Emirates joined other Gulf members in over-delivering on the reduction pact, a Reuters survey found on Wednesday.

Oil prices may find some support as the U.S. is considering oil-related sanctions on OPEC member Venezuela to pressure its socialist President Nicolas Maduro, a U.S. official said on Wednesday.

The sanctions could target a military-run oil services company and restrict insurance coverage for Venezuelan oil shipments ahead of the country’s elections on April 22.

US oil extends gains to hold near 3-week high

CNBC

  • U.S. oil prices rose for a fourth session on Tuesday to near a three-week high hit a day earlier.
  • Prices were supported by signs of robust production curbs by OPEC and non-OPEC countries.

An oil pump jack in the oil town of Gonzales, Texas.

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

U.S. oil prices rose for a fourth session on Tuesday to near a three-week high hit a day earlier, supported by signs of robust production curbs by OPEC and non-OPEC countries and a slight fall in U.S. production.

U.S. West Texas Intermediate crude for April delivery was up 10 cents at $64.01 a barrel by 0020 GMT. The contract hit $64.24 on Monday, its highest since Feb. 6.

London Brent crude had yet to start trading after settling up 19 cents at $67.50.

Saudi Arabian oil minister Khalid al-Falih indicated on Saturday that its crude production would be well below the production cap as the Organization of the Petroleum Exporting Countries and its allies were committed to reducing output to bring balance and stability to the market.

Prices were also supported by U.S. Energy Information Administration data on Thursday that showed domestic oil production dipped to 10.27 million barrels per day from 10.271 million bpd the week before.

U.S. crude inventories are forecast to have risen by 2.7 million barrels last week, a preliminary Reuters poll showed on Monday.

Gasoline stocks are seen down by 600,000 barrels, while distillate inventories, which include heating oil and diesel fuel, were seen down 700,000 barrels. The American Petroleum Institute is scheduled to release its weekly data later in the day.

Oil falls as stronger dollar eclipses US inventory drop

CNBC

  • Stronger dollar makes oil costlier for some buyers
  • API report showed lower U.S. crude inventories

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices fell on Thursday, dragged lower by a firmer dollar that offset support from a surprise decline in U.S. crude inventories.

Brent crude futures were down 28 cents at $65.14 a barrel by 1007 GMT, while West Texas Intermediate (WTI) futures dropped 37 cents to $61.31 a barrel.

The dollar rose to a one-week high against a basket of major currencies on Thursday, after minutes of the Federal Reserve‘s January meeting showed policymakers were more confident of the need to keep raising interest rates.

With the strengthening dollar, the oil price has lost nearly 10 percent since hitting a multi-year high above $70 in January.

RBC:  Two offsetting stories at play in the oil market this year

RBC: Two offsetting stories at play in the oil market this year  

“Given the market’s whipsaw reaction we could add another key takeaway, that recent heightened market volatility could be here to stay,” LCG markets strategist Jasper Lawler said.

The correlation between moves in the oil price and the dollar has strengthened in the last couple of weeks, as investors increasingly sell other assets to buy the U.S. currency on expectations of a faster pace of rate rises.

“The firming dollar continues to thwart investor sentiment despite the bullish inventory data,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA.

A stronger dollar pushes up the bill for countries paying for imports in other currencies, potentially curbing demand.

The American Petroleum Institute on Wednesday reported an unexpected drop in U.S. crude oil inventories by 907,000 barrels to 420.3 million barrels for the week to Feb. 16.

Geopolitical risk has heightened as a factor in crude oil prices

Geopolitical risk has heightened as a factor in crude oil prices  

Inventories usually rise at this time of year, as many refineries cut crude intake to conduct maintenance, but a bottleneck in Canada’s pipeline system has reduced U.S. imports and pushed U.S. stocks lower.

“Improved pipeline infrastructure to the Gulf coast and the decreased supply via TransCanada’s Keystone pipeline, sent … inventories tumbling,” Innes said.

But analysts said oil markets were still generally well supported due to rising demand for crude and production restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

“OPEC production curbs have stabilized the market. Adherence to (the) agreement has been relatively good,” Daniel Hynes, senior commodity strategist at ANZ bank, said in a report on Thursday.

Oil stable on weaker dollar and healthy economic growth, but pockets of oversupply linger

CNBC

  • Oil prices were stable on Wednesday, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand.

Oil

Lucy Nicholson | Reuters

Oil prices were stable on Wednesday, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand.

Despite this, crude prices remain well below recent highs due to signs of lingering oversupply, including rising U.S. inventories and ample physical flows globally.

U.S. West Texas Intermediate (WTI) crude futures were at $59.17 a barrel at 0123 GMT, down 2 cents from their last settlement. WTI was trading above $65 in early February.

Brent crude futures were at $62.77 per barrel, up 5 cents from their last close. Brent was above $70 a barrel earlier this month.

Ongoing weakness in the U.S. dollar, which potentially stokes demand from countries using other currencies at home, as well as healthy economic growth were supporting oil markets, traders said.

“While we continue to see a firming fundamental backdrop over the course of this year … investors should not discount the caution signs that have been emerging,” investment bank RBC Capital Markets said in a note to clients.

“Pockets of oversupply have been emerging in the physical market,” the Canadian bank said, adding that “the tempering physical oil backdrop is … playing a central role in the recent price softness”.

John Kilduff of Again Capital Talks U.S. Shale Oil Growth

John Kilduff of Again Capital talks about U.S. shale oil growth  

The American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to 422.4 million.

That was largely due to soaring U.S. crude production, which has jumped by over 20 percent since mid-2016 to over 10 million barrels per day (bpd), surpassing output of top exporter Saudi Arabia and coming within reach of Russia, the world’s biggest producer.

U.S. crude is increasingly appearing on global markets.

More is set to come as the Louisiana Offshore Oil Port in the Gulf of Mexico starts testing supertankers for exports.

The surge in U.S. production and exports means oil may be in oversupply again soon, flipping a deficit from 2017 induced by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

The International Energy Agency said on Tuesday oil demand would grow by 1.4 million bpd in 2018, but added output growth could outpace demand.

The physical market is already reacting, with prices for regional crudes from the North Sea, Russia, the United States, and Middle East becoming cheaper as producers struggle to remain competitive amid ample supplies.

Despite the warning lights from within oil markets, economic fundamentals remain healthy.

High consumer spending drove Japan’s economy to eight straight quarters of growth in October-December, its longest continuous expansion since the 1980s bubble economy, Cabinet Office data showed on Wednesday.