Oil prices rise on tightening market, traders expect further increases

CNBC

  • U.S. crude inventories at lowest level since 2015.
  • Tighter U.S. market comes ahead of new Iran sanctions.
  • Merchants, banks say crude could spike above $90 soon.

Oil prices rose on Monday as U.S. markets tightened just weeks ahead of Washington’s plan to impose new sanctions against Iran, with major traders and banks expecting prices to rise over $90 per barrel in coming months.

Brent crude futures were at $79.82 per barrel at 0501 GMT, up by $1.02 cents, or 1.3 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures rose by 82 cents, or 1.2 percent, to $71.60 a barrel.

Amid a tightening market, U.S. commercial crude oil inventories are at their lowest level since early 2015. And while output remains around the record of 11 million barrels per day (bpd), recent subdued U.S. drilling activity points towards a slowdown.

Commodity merchants Trafigura and Mercuria said on Monday that Brent could rise to $90 per barrel by Christmas and even above $100 in early 2019 as markets tighten once U.S. sanctions against Iran are implemented from November.

J.P. Morgan expects the sanctions could lead to a loss of 1.5 million bpd, while Mercuria warned that as much as 2 million bpd could be knocked out of the market.

The Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) as well as top producer Russia are discussing raising output to counter falling supply from Iran, although no decision has been made public yet.

“We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop in Iranian barrels,” said Edward Bell, commodity analyst at Emirates NBD bank.

J.P. Morgan said in its latest market outlook, published on Friday, that “a spike to $90 per barrel is likely” for oil prices in the coming months due to the Iran sanctions.

The bank said it expects Brent and WTI to average $85 and $76 per barrel, respectively, over the next six months.

Struggling with high feedstock crude prices and record lows for the rupee against the dollar, Indian refiners are preparing to cut back crude imports and instead use up commercial inventories.

Oil prices climb amid fall in US stockpiles, supply worries

CNBC

  • Oil prices rose for a third day on Thursday following another drawdown in U.S. inventories and strong U.S. gasoline demand.
  • U.S. crude oil stockpiles fell for a fifth straight week to 3.5-year lows in the week to Sept. 14, while gasoline inventories also showed a larger-than-expected draw on unseasonably strong demand, the Energy Information Administration said on Wednesday.

Oil rose for a third day on Thursday amid another drawdown in U.S. inventories and strong U.S. gasoline demand, while signs OPEC may not raise output to address shrinking supplies from Iran also supported prices.

Global benchmark Brent crude was up by 26 cents, or 0.3 percent, at $79.66 by 0611 GMT, after gaining half-a-percent on Wednesday.

U.S. West Texas Intermediate crude was up 60 cents, or 0.8 percent, at $71.72 a barrel, after rising nearly 2 percent the previous session.

U.S. crude oil stockpiles fell for a fifth straight week to 3.5-year lows in the week to Sept. 14, while gasoline inventories also showed a larger-than-expected draw on unseasonably strong demand, the Energy Information Administration said on Wednesday.

Crude inventories declined by 2.1 million barrels, the EIA data showed, compared with expectations for a decrease of 2.7 million barrels.

“The bulls are back in charge, even more so after traders were conveying a high degree of resistance to the unexpected build on the API survey,” said Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore.

He was referring to the weekly survey from the oil industry group the American Petroleum Institute (API) on Tuesday that indicated U.S. stocks had risen by 1.2 million barrels last week.

U.S. sanctions affecting Iran’s oil exports come into force on Nov. 4 and many buyers have already scaled back Iranian purchases. But it is unclear how easily other producers can compensate for any lost supply.

The Organization of the Petroleum Exporting Countries and other producers including Russia meet on Sunday in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian supply.

“The current market betting line suggests price levels rather than global supply levels will be the key determinant on turning on the oil taps,” Innes said.

OPEC sources have told Reuters no immediate action was planned and producers would discuss how to share a previously agreed output increase.

Oil prices steady as U.S. crude inventories fall, but trade tensions weigh

CNBC

  • U.S. crude inventories fall to Feb-2015 low of 401.49 million barrels.
  • But diesel, gasoline stocks rise after lackluster driving season.
  • Trade tensions weigh on markets.
  • U.S. crude oil production at 11 million barrels per day.

Oil prices held steady on Friday, as the market balanced a fall in U.S. crude inventories to the lowest levels since 2015, with Sino-American trade tensions and economic weakness from emerging markets.

U.S. West Texas Intermediate (WTI) crude futures were at $67.78 per barrel at 0448 GMT, up just 1 cent from their last settlement.

International Brent crude futures dipped 8 cents to $76.42 a barrel.

“Oil inventory data released last night showed a larger-than-expected draw in crude inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

U.S. commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to Aug. 31, the lowest since February 2015, U.S. Energy Information Administration (EIA) data showed on Thursday.

Despite that, analysts said prices were curbed by a rise in refined product stocks and a relatively weak U.S. peak fuel consumption season this summer, known as the driving season.

Gasoline stocks rose by 1.8 million barrels, while distillate stockpiles, which include diesel and heating oil, climbed by 3.1 million barrels, the EIA data showed.

“U.S. gasoline inventories are now above the top of the 5-year range,” said U.S. investment bank Jefferies in a note on Friday.

“The U.S. summer driving season has proven to be a lacklustre one in terms of gasoline demand,” said O’Loughlin of Rivkin Securities.

Ongoing emerging market weakness as well as potential new U.S. import tariffs on Chinese goods were also weighing on oil market sentiment.

“Emerging markets, which tend to have a higher energy intensity of GDP, are an obvious concern,” said Jefferies.

Asian shares slipped to a 14-month trough on Friday as investors feared a new round of Sino-U.S. tariffs, while currencies from Indonesia to India also remained under pressure.

On the supply side, U.S. crude oil production last week remained at a record 11 million barrels per day (bpd), a level it has largely been at since July.

After rising by almost a third in the last two years, Jefferies said: “U.S. production growth will now significantly decelerate until 4Q19.”

Outside the United States, U.S. sanctions against major oil producer Iran, which from November will target oil exports, are fueling expectations of a tighter market towards the end of the year.

“The main driver of oil prices, in our view, remains the re-imposition of U.S. … sanctions against consumers of Iranian oil,” said Standard Chartered this week.

“There is still considerable uncertainty over the strategies of China and India, Iran’s main customers.”

Washington has indicated it may offer temporary sanctions waivers to allied countries that are unable to immediately cease imports from Iran.

Oil dips on rising US crude inventories, darkening economic outlook

CNBC

  • Oil prices fell on Wednesday, pulled down by a report of increased U.S. crude inventories.
  • A darkening economic outlook stoked expectations of lower fuel demand.

Oil pumps wells Monterey Shale fracking

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Oil prices fell on Wednesday, pulled down by a report of increased U.S. crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.

Front-month Brent crude oil futures were at $72.33 per barrel at 0408 GMT, down by 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 25 cents, or 0.4 percent, at $66.79 per barrel.

U.S. crude stocks rose by 3.7 million barrels in the week to Aug. 10, to 410.8 million barrels, private industry group the American Petroleum Institute (API) said on Tuesday. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.6 million barrels, the API said.

“Oil prices … fell after the API inventory data showed an unexpected crude build last week,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Oil prices down on demand fears amid Turkey crisis

Oil prices down on demand fears amid Turkey crisis  

Official U.S. fuel inventory data is due to be published later on Wednesday by the Energy Information Administration.

Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, traders said.

The OECD’s composite leading indicator, which covers the western advanced economies plus China, India, Russia, Brazil, Indonesia and South Africa, peaked in January but has since fallen and slipped below trend in May and June.

World trade volume growth also peaked in January at almost 5.7 percent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis.

BMI Research said oil markets would “struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the U.S. and China persists.”

Oil prices steady on falling US crude stocks, Iran sanctions

CNBC

  • Oil prices held steady on Wednesday.
  • Prices were supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices held steady on Wednesday, supported by a report of rising U.S. crude inventories as well as the introduction of sanctions against Iran.

Front-month U.S. West Texas Intermediate (WTI) crude futures were at $69.28 per barrel at 0408 GMT, up 11 cents from their last settlement.

Brent crude oil futures were at $74.61 per barrel, down 4 cents from their last close.

Both futures contracts have risen during the previous two sessions.

“Crude oil prices rose as the reality of U.S. sanctions on Iran weighed on sentiment. News from key buyers suggests the market is already adjusting to the new regime,” ANZ bank said in a note on Wednesday.

The U.S. government introduced a raft of new sanctions against Iran on Tuesday, targeting Iran’s purchases of U.S. dollars – in which oil is traded – metals trading, coal, industrial software and its auto sector.

From November, Washington will also target Iran’s petroleum sector. Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC). It shipped out almost 3 million barrels per day (bpd) of crude in September, equivalent to around 3 percent of global demand.

The price of oil is correct, says Jim Cramer

The price of oil is correct, says Jim Cramer  

Beyond the sanctions, the oil market was focusing on the U.S. market, where the American Petroleum Institute said on Tuesday that crude inventories fell by 6 million barrels in the week to Aug. 3 to 407.2 million.

Official U.S. fuel storage data is due to be released later on Wednesday by the Energy Information Administration.

In terms of production, the EIA on Tuesday slightly cut its 2018 expectation for average 2018 U.S. crude output to 10.69 million bpd, down from its previous estimate of 10.79 million bpd.

On the demand side, China’s July crude oil imports recovered slightly in July after falling for the previous two months, but were still among the lowest this year due to a drop-off in demand from the country’s smaller independent, or “teapot”, refineries.

Shipments into the world’s biggest importer of crude came in at 36.02 million tonnes last month, or 8.48 million bpd, up from 8.18 million bpd a year ago, and just up on June’s 8.36 million bpd, data from the General Administration of Customs showed.

However, July imports were still the third-lowest so far this year.