Oil drops on concern over US-China trade talks progress, oversupply

CNBC

Reuters
KEY POINTS
  • Brent crude was down 55 cents, or 0.9%, at $61.96 by 0350 GMT. The contract rose 1.3% last week.
  • U.S. crude was 47 cents, or 0.8%, lower at $56.77 a barrel, having risen 1.9% last week.
GP: Azerbaijan Oil Industry 191008
Azeri oil workers operate a large field of drilling rigs on October 12, 2003 outside the capital city of Baku.
Oleg Nikishin | Getty Images

Oil prices fell on Monday amid renewed doubts over the prospects of a trade deal between the United States and China, while concerns over excess supplies also weighed on the market.

Brent crude was down 55 cents, or 0.9%, at $61.96 by 0350 GMT. The contract rose 1.3% last week.

U.S. crude was 47 cents, or 0.8%, lower at $56.77 a barrel, having risen 1.9% last week.

U.S. President Donald Trump said on Saturday that trade talks with China were moving along “very nicely,” but the United States would only make a deal with Beijing if it was the right one for America.

The 16-month trade war between the world’s two biggest economies has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

Trump also said there had been incorrect reporting about U.S. willingness to lift tariffs as part of a “phase one” agreement, news of which had boosted markets.

Underlining the impact of the trade war, data over the weekend showed that China’s producer prices fell the most in more than three years in October, as the manufacturing sector weakened, hit by the dispute and declining demand.

“Oil prices are dampened by re-escalating trade uncertainties and a strengthening U.S. dollar,” said Margaret Yang, market analyst at CMC Markets in Singapore.

“Supply is expected to remain ample in the near term as OPEC showed it is reluctant for further cuts, while production in North America remains robust,” she added.

The oil market outlook for next year may have upside potential, OPEC Secretary-General Mohammad Barkindo said last week, suggesting there is no need to cut output further.

The Organization of the Petroleum Exporting Countries and its allies led by Russia meet in December. The so-called OPEC+ alliance, seeking to boost oil prices, has since January cut output by 1.2 million barrels per day until March 2020.

Money managers boosted their net long U.S. crude futures and options positions in the week to Nov. 5 by 22,512 contracts to 138,389, the U.S. Commodity Futures Trading Commission (CFTC) said.

In the United States, energy companies last week reduced the number of oil rigs operating for a third week in a row. Drillers cut seven rigs in the week to Nov. 8, bringing the total count down to 684, the lowest since April 2017, Baker Hughes said.

Oil prices gain after bigger-than-expected fall in US stockpiles

CNBC

Reuters
KEY POINTS
  • Brent crude futures rose 51 cents, or 0.6%, to $62.89 a barrel by 0405 GMT.
  • West Texas Intermediate (WTI) futures were up 54 cents, or 0.9%, to $57.94 a barrel.
Reusable: oil derrick Apache Corp Texas worker
Getty Images

Oil prices traded higher on Wednesday after an industry report said U.S. crude stockpiles fell last week by more than twice the amount that analysts in a Reuters poll had forecast.

Brent crude futures rose 51 cents, or 0.6%, to $62.89 a barrel by 0405 GMT, while West Texas Intermediate (WTI) futures were up 54 cents, or 0.9%, to $57.94 a barrel.

Prices had ended lower on Tuesday, squeezed by speculation of sanctions-hit Iranian crude returning to the market following U.S. President Donald Trump’s move to fire national security adviser John Bolton, a noted Iran policy hawk.

But they rebounded after American Petroleum Institute (API) data late on Tuesday showed U.S. crude oil and gasoline stocks fell last week, while distillate stocks built.

“Oil should remain supported in Asian trading, mostly supported by the overnight API crude inventory data,” said Jeffrey Halley, senior market analyst at OANDA.

The API numbers had U.S. crude inventories down by 7.2 million barrels in the week ended Sept. 6 to 421.9 million, compared with analysts’ expectations in a Reuters poll of a decrease of 2.7 million barrels.

Halley said he was expecting a draw down of 4.8 million barrels when official numbers are released by the Energy Information Administration (EIA) later on Wednesday.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.4 million barrels, the API said, while refinery crude runs rose by 208,000 barrels per day.

Gasoline stocks fell by 4.5 million barrels, the industry group said, compared with analysts’ expectations of an 847,000-barrel decline in a Reuters poll.

Prices had risen sharply before Bolton’s removal, boosted after Prince Abdulaziz bin Salman, Saudi Arabia’s new energy minister, said the kingdom’s oil policy would not change and a deal with other producers to cut output by a combined 1.2 million barrels per day would be maintained.

Iran’s oil exports were slashed by more than 80% due to re-imposed sanctions by the United States after Trump last year exited the 2015 nuclear deal between Tehran and world powers.

Oil hits six-week high on hopes of extended OPEC output cuts

CNBC

Reuters
KEY POINTS
  • Brent was up 26 cents, or 0.4%, at $62.85 a barrel by 0349 GMT.
  • U.S. crude was 27 cents, or 0.5%, higher at $58.12 a barrel.
Reusable CNBC: oil drilling rig West Texas 150825-Brennan
Morgan Brennan | CNBC

Oil futures hit a six-week high on Tuesday, rising for a fifth day on optimism that OPEC and other countries may agree to extend production cuts in a bid to support prices.

Brent was up 26 cents, or 0.4%, at $62.85 a barrel by 0349 GMT, while U.S. crude was 27 cents, or 0.5%, higher at $58.12 a barrel. Brent touched its highest since Aug. 1, while U.S. crude rose to the highest since July 31.

U.S. oil gained more than 2% on Monday, while Brent finished the day 1.7% higher as the market reacted to the appointment by Saudi Arabia’s king of his son, Prince Abdulaziz bin Salman, as energy minister on Sunday.

Prince Abdulaziz, a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), said the pillars of Saudi Arabia’s policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained.

He added that the so-called OPEC+ alliance, made up of OPEC and non-OPEC countries including Russia, would be in place for the long term.

A meeting of OPEC and OPEC+ countries in Abu Dhabi this week “is stirring up hopes for additional supply cuts,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Still, Russia’s oil output in August exceeded its quota under the OPEC+ agreements.

“Markets will need to see concrete progress on the production front, even as the world’s economy slows, to sustain gains,” said Jeffrey Halley, senior market analyst at OANDA.

Should oil end Tuesday higher it will be the longest run of gains since late July but headwinds remain as the U.S.-China trade war rumbles on.

Executives at the annual Asia Pacific Petroleum Conference said on Monday they expect oil prices this year to be pressured by uncertainties surrounding the global economy, the U.S.-China trade war and increasing U.S. supplies.

In the United States, crude stockpiles are likely to have fallen for a fourth consecutive week last week, a preliminary Reuters poll showed on Monday.

Five analysts polled by Reuters estimated, on average, that crude inventories fell 2.6 million barrels in the week to Sept 6.

Oil prices recover some ground, but economic concerns weigh

CNBC

Reuters
KEY POINTS
  • Brent crude was up 12 cents, or 0.21%, at $58.38 a barrel by 0425 GMT.
  • U.S. West Texas Intermediate gained 20 cents, or 0.37%, at $54.14 at barrel.
Reusable: Oil rig Rio de Janeiro Petrobras 150703
A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
Getty Images

Oil prices recovered some ground on Wednesday after touching their lowest in close to a month during the previous session on concerns that a weakening global economy could depress demand.

Brent crude was up 12 cents, or 0.21%, at $58.38 a barrel by 0425 GMT, while U.S. West Texas Intermediate gained 20 cents, or 0.37%, at $54.14 at barrel.

Oil prices sunk to a nearly one-month low on Tuesday following data that showed U.S. manufacturing activity in August contracted for the first time in three years and euro zone manufacturing activity contracted for a seventh month in August.

But global markets bounced on Wednesday after a private survey showed that activity in China’s services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year.

China is the world’s second-largest oil consumer and largest importer.

“Given the tumble that we saw overnight it’s probably people locking in gains on shorts or perhaps establishing new longs in anticipation we might get an announcement from Beijing (on setting a date for trade talks with the United States),” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

A short position is when an investor sells futures in expectations of falling prices while a long position is when one buys futures to profit from rising prices.

U.S. President Donald Trump on Tuesday warned he would be “tougher” on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing trade disputes between the United States and China could trigger a U.S. recession.

“Market participants are becoming increasingly worried about recession risk,” said Stephen Innes, a market strategist at AxiTrader.

“Moreover, given that tariffs present a significant threat to U.S. growth and in turn, the health of the global economy, oil prices will remain under pressure especially if trade and tariff war shows no sign of abating.”

Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.

U.S. crude oil stockpiles likely declined for a third straight week, a preliminary Reuters poll showed on Tuesday.

On the supply side, Venezuela’s oil exports fell in August to their lowest level in 2019, internal reports and Refinitiv Eikon data showed, following tougher U.S. sanctions.

Oil prices pegged back by mounting concern over US economy

CNBC

Reuters
KEY POINTS
  • Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT.
  • U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel.
RT: india oil tankers man crossing rail cars Kolkata
A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata.
Rupak De Chowdhuri | Reuters

Oil prices fell on Thursday for the first time in three days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of U.S. economy.

Brent crude was down 30 cents, or 0.5%, at $60.19 a barrel by 0202 GMT while U.S. crude was down 15 cents, or 0.3%, at $55.63 a barrel. Oil prices rose around 1.5 percent in the previous session.

Concerns about a slowdown in economic growth due to the trade war raging between the United States and China, along with the potential hit to oil demand, are keeping prices in check.

Daly said on Thursday she believes the U.S. economy has “strong” momentum, but uncertainty and a global growth slowdown are having an impact.

Daly was speaking to reporters after a speech in Wellington, New Zealand and said she was in “watch and see” mode in assessing the need for another U.S. interest-rate cut.

U.S. President Donald Trump said on Monday he believed China was sincere about wanting to reach a trade deal, but concerns arose on Tuesday after China’s foreign ministry declined to confirm a telephone call between the two countries on trade.

“Trade tensions (are) hanging like a dark cloud threatening to rain over oil prices,” said Jeffrey Halley, senior market analyst at OANDA.

The market shrugged of a big drop in U.S. inventories, which fell last week by 10 million barrels, compared with analysts’ expectations for a decrease of 2.1 million barrels, the Energy Information Administration said.

U.S. gasoline stocks fell by 2.1 million barrels, compared with analysts’ expectations in a Reuters poll for a 388,000-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell by 2.1 million barrels, versus expectations for a 918,000-barrel increase, the EIA data showed.

The crude draw down confirms “that OPEC supply cuts are effectively working by depleting U.S. reserves,” said Stephen Innes, managing partner at Valour Markets.

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been restraining supply for most of the period since Jan. 1, 2017. The alliance, known as “OPEC+”, in July renewed the pact until March 2020.

U.S. weekly crude production also rose 200,000 barrels per day to a new record at 12.5 million bpd in the week to Aug. 23.