Brent oil prices rise above $60, buoyed by U.S. stock drawdown

SINGAPORE (Reuters) – Brent crude oil futures rose above $60 a barrel on Wednesday after industry data showed a larger-than-expected drop in U.S. crude inventories, but ongoing worries about a possible global recession capped gains.

Brent crude LCOc1 had gained 33 cents, or 0.6%, to $60.36 a barrel by 0654 GMT, after settling 0.5% higher on Tuesday.

U.S. crude CLc1 was up 17 cents, or 0.3%, at $56.30 a barrel.

U.S. crude oil stocks fell by 3.5 million barrels in the week to Aug. 16, data from industry group the American Petroleum Institute (API) showed on Tuesday. Analysts polled by Reuters had expected a fall of 1.9 million barrels.

“Crude prices should see support from a bullish API stockpile report that could signal the largest Cushing draw since February 2018, if the EIA validates it,” said Edward Moya, senior market analyst at OANDA in New York.

Inventory numbers from the government’s Energy Information Administration (EIA) are due at 10:30 a.m. EDT (1430 GMT) on Wednesday, and will be more closely watched than usual given the nearing of the end of peak U.S. driving season, analysts said.

“With Canadian heavy crude restrictions being extended, we should see U.S. refiners … struggle to fill the void from lowered shipments from Mexico and Venezuela,” Moya said, referring to the Canadian province of Alberta extending mandatory curtailments on crude production by an extra year.

Tensions in the Middle East remained in the spotlight as U.S. Secretary of State Mike Pompeo said on Tuesday that the United States would take every action it can to prevent an Iranian tanker in the Mediterranean from delivering oil to Syria in contravention of U.S. sanctions.

Oil prices were also supported by data showing lower exports in June from Saudi Arabia, the world’s top oil exporter.

Saudi Arabia plans to keep its crude exports below 7 million barrels per day (bpd) in August and September despite strong demand from customers, to bring the market back to balance, a Saudi oil official told Reuters earlier this month.

But uncertainty over the global economic outlook amid the U.S.-China trade war capped gains in the oil markets.

“The trade-related tug of war in the oil market will probably extend until we get some semblance of clarity from the next round of U.S.-China trade discussion,” Stephen Innes, managing partner, VM Markets, said in a note.

Traders are also waiting for this week’s annual U.S. central bank seminar at Jackson Hole, where comments from Federal Reserve Chief Jerome Powell will be in focus.

“The biggest risk to crude prices is if Powell disappoints at Jackson Hole and doesn’t signal more easing will be coming,” said OANDA’s Moya.

Reporting by Jessica Jaganathan; Editing by Joseph Radford and Tom Hogue

Oil prices hold steady on hopes trade tensions could ease

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KEY POINTS
  • Brent crude edged higher by 1 cent to $59.75 a barrel by 0344 GMT, after rising 1.88% on Monday.
  • U.S. crude had slipped by 6 cents to $56.15 a barrel, after gaining 2.44% in the previous session.
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Andrew Burton | Getty Images

Crude oil prices held mostly steady on Tuesday on optimism that U.S.Chinatrade tensions would ease and on hopes that major economies would enact stimulus measures to counter a possible global economic slowdown that could affect oil demand.

Brent crude edged higher by 1 cent to $59.75 a barrel by 0344 GMT, after rising 1.88% on Monday.

U.S. crude had slipped by 6 cents to $56.15 a barrel, after gaining 2.44% in the previous session.

The United States said it would extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies, signalling a slight softening of the trade conflict between the world’s two largest economies.

The extension sets a very “comforting tone” ahead of next month’s U.S.-China trade talks, Stephen Innes, managing partner of VM Markets, said in a note.

“The U.S.-China trade spat has been at the centre of the oil market demise, which has sent the global economy to the brink of recession and negatively impacted oil demand forecasts,” he said.

A rally in equity markets around the world on growing expectations that global economies would take action to counteract slowing growth also supported oil prices.

China’s new lending reference rate was set slightly lower on Tuesday after the central bank announced interest rate reforms designed to reduce corporate borrowing costs, while Germany’s right-left coalition government said it would be prepared to ditch its balanced budget rule and take on new debt to counter a possible recession.

Meanwhile, a Reuters poll of seven analysts revealed expectations that crude oil inventories in the United States fell by 1.9 million barrels in the week to Aug. 16.

The poll was conducted ahead of reports from the American Petroleum Institute (API), an industry group, and the Energy Information Administration (EIA), an agency of the U.S. Department of Energy.

“An unexpected rise, (could) possibly (take) the wind out of oil’s sails, if only temporarily,” said Jeffrey Halley, a senior market analyst at OANDA.

The API is scheduled to release its data on Tuesday.

Still, prices were weighed down by a report from the Organization of the Petroleum Exporting Countries (OPEC) that stoked concerns about oil demand growth.

Traders were also watching for signs of tension in the Middle East after the United States called the release of an Iranian tanker at the center of a confrontation between Iran and Washington unfortunate, warning Greece and Mediterranean ports against helping the vessel.

Oil prices climb after Saudi oilfield attack, but recession worries drag

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KEY POINTS
  • Brent crude was up 64 cents, or about 1.1%, at $59.28 a barrel at 0255 GMT,
  • U.S. crude was up 55 cents, or 1%, at $55.42 a barrel.
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A pump jack and pipes at an oil field near Bakersfield, California.
Lucy Nicholson | Reuters

Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for any signs that Sino-U.S. trade tensions could ease.

But price gains were capped by an unusually downbeat OPEC report that stoked concerns about growth in oil demand.

Brent crude was up 64 cents, or about 1.1%, at $59.28 a barrel at 0255 GMT,

U.S. crude was up 55 cents, or 1%, at $55.42 a barrel.

“Oil is benefiting from an overall optimism that we won’t see the doomsday trade war scenario and after a drone attack on oil and gas facilities in Saudi Arabia reminded markets geopolitical tensions in the Middle East are going nowhere anytime soon, ” said Edward Moya, senior market analyst at OANDA in New York.

A drone attack by Yemen’s Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.

Meanwhile, White House economic adviser Larry Kudlow said trade deputies from the United States and China would speak within 10 days and could advance negotiations over ending a trade battle between the two countries if those talks pan out.

But U.S. President Donald Trump appeared less optimistic than his aides on striking a trade deal with China, saying that while he believed Beijing was ready to come to an agreement, “I’m not ready to make a deal yet.”

Concerns about an economic recession continued to weigh on crude prices even as Trump and top White House officials dismissed concerns that U.S. economic growth may be faltering.

Elsewhere, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020.

It is rare for OPEC to give a bearish forward view on the market.

Also weighing on prices, U.S. energy firms this week increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year.

Traders will also be looking out for key manufacturing data due later this week from Europe and the United States, said Michael McCarthy, chief market strategist, CMC Markets.

Oil rises as US retail sales ease recession fears

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KEY POINTS
  • Brent crude was up 52 cents, or 0.9%, at $58.75 a barrel at 0352 GMT, after falling 2.1% on Thursday and 3% the previous day.
  • U.S. crude was up 65 cents, or 1.2%, at $55.12 a barrel, having dropped 1.4% the previous session and 3.3% on Wednesday.
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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
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Crude oil prices rose on Friday following two days of declines, buoyed after data showing an increase in retail sales in the U.S. helped dampen concerns about a recession in the world’s biggest economy.

Brent crude was up 52 cents, or 0.9%, at $58.75 a barrel at 0352 GMT, after falling 2.1% on Thursday and 3% the previous day.

U.S. crude was up 65 cents, or 1.2%, at $55.12 a barrel, having dropped 1.4% the previous session and 3.3% on Wednesday.

U.S. retail sales rose 0.7% in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, according to data that came a day after a key part of the U.S. Treasury yield curve inverted for the first time since June 2007 prompting a sell-off in stocks and crude oil.

An inverted Treasury yield curve is historically a reliable predictor of looming recessions.

“The rebound has a corrective look about it on thin volumes, rather than a beachhead for an impending rebound,” said Jeffrey Halley, senior market analyst at OANDA. “Overall, U.S. data continues to be a bright spot in a dark economic universe.”

Gains are likely to be capped after a week of data releases including a surprise drop in industrial output growth in China to a more than 17-year low, along with a fall in exports that sent Germany’s economy into reverse in the second quarter.

“The broader story around global economic growth has been a weak one, or a weakening one and expectations (are for) further weakening,” Phin Ziebell, senior economist at National Australia Bank, said by phone.

The price of Brent is still up nearly 10% this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices.

“At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?” Zeibell said, given the broader economic outlook.

A Saudi official on Aug. 8 indicated more steps may be coming, saying “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year.”

But the efforts of OPEC+ have been outweighed by worries about the global economy amid the U.S.-China trade dispute and uncertainty over Brexit, as well as rising U.S. stockpiles of crude and higher output of U.S. shale oil.

Oil prices fall on concerns over recession, inventories

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KEY POINTS
  • Brent crude was down 37 cents, or 0.6%, at $59.11 a barrel by 0300 GMT, after falling 3% in the last session.
  • U.S. crude was down 25 cents, or 0.5%, at $54.98 a barrel, having dropped 3.3% in the previous session.
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Andrew Burton | Getty Images

Oil prices fell on Thursday, adding to sharp overnight losses as U.S. crude inventories unexpectedly rose, fears of recession mounted and economic data out of China and Europe disappointed.

Brent crude was down 37 cents, or 0.6%, at $59.11 a barrel by 0300 GMT, after falling 3% in the last session.

U.S. crude was down 25 cents, or 0.5%, at $54.98 a barrel, having dropped 3.3% in the previous session.

The combination of a slew of data suggesting a slowdown in global growth amid the U.S.-China trade war and persistently high levels of oil in U.S. storage has punctured recent optimism in crude markets, but stoked expectations that leading producers may take further steps to support prices.

“Oil prices, though supported by OPEC-led production curbs, … face severe headwinds as traders swing between demand-side worries and supply curtailment policies,” said Benjamin Lu, analyst at Phillip Futures in Singapore.

The Organization of the Petroleum Exporting Countries (OPEC) has been mostly trimming production since the start of 2017 and traders say they expect Saudi Arabia to reduce output further amid slowing global oil demand.

The U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007, a sign of investor concern that the world’s biggest economy may fall into recession.

China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the U.S. intensifies.

Global economic worries, amplified by tariff conflicts and uncertainty over Brexit, are also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, while the euro zone’s GDP barely grew in the second quarter of 2019.

A second week of unexpected builds in U.S. crude inventories is adding to the pressure on oil prices.

U.S. crude stocks grew by 1.6 million barrels last week, compared with analyst expectations for a decrease of 2.8 million barrels, as refineries cut output, the Energy Information Administration (EIA) said in a report.

At 440.5 million barrels, inventories were about 3% above the five-year average for this time of year, the EIA said.