Don’t count on further gains in oil prices after Trump’s Iran announcement, expert says

CNBC

  • Oil prices are unlikely to take another leg higher even if the U.S. ends up reversing itself and pulling out of the Iran deal, said Alejandro Barbajosa, vice president at Argus Media.
  • Prices have been recently buoyed by concerns of Washington reimposing sanctions on Iran.
  • A potential decrease in Iranian oil could create an “exit strategy” of sorts for the rest of OPEC.

Oil prices, which have risen on worries about Washington’s possible withdrawal from the Iran agreement, are unlikely to take a leg higher even if the U.S. ultimately pulls out of deal, according to one expert.

Markets have already factored in the possible effect of the U.S. re-sanctioning Iran, currently the third-largest oil producer in the Organization of the Petroleum Exporting Countries.

“We’ve already seen that bullishness factored in over the past few weeks … The markets have already reacted to the expectation of less supplies going forward,” Alejandro Barbajosa, vice president at Argus Media, told CNBC’s Nancy Hungerford.

As a result, it will be difficult for oil prices to advance under current circumstances, Barbajosa said.

Saudi Arabia would be ready to compensate for war-related disruption of oil, says expert

Oil prices will slide even if Trump only delays Iran decision: expert  

Oil prices declined in Asia trade on Tuesday, following a tweet from President Donald Trumpthat he will announce his decision on the Iran deal on Tuesday at 2 p.m. ET.

The 2015 accord lifted economic sanctions on Iran in exchange for the country limiting its nuclear program and allowing regular inspections of its to atomic facilities. The United States agreed to those terms, and Iran does not appear to have violated the deal, but the Trump administration has said it wants to scrap the agreement.

U.S. crude futures, which had topped the $70 per barrel mark in the last session for the first time since end-2014, had slid 1.2 percent to around $69.88. Brent crude futures were down 1.01 percent at $75.40.

An ‘exit strategy’ for OPEC

Trump has criticized the Iran deal very extensively, saying it should never have been made. Barbajosa said he expects a “significant decline” in oil prices, should the U.S. attempt to delay a decision on the deal in order to buy time.

“It’s just pushing the decision further into the future, but that just means that that buffer of supply that is coming from Iran at present would continue to be there for an extended period of time,” he said.

Analysts expect renewed sanctions to take out as many as 500,000 barrels of Iranian oil a day. That may have a limited impact on markets, but it would also hand other OPEC members a chance to increase production.

“OPEC might use this as an opportunity as an exit strategy from the current strategy of restrained supplies, because what we see is that there is little scope for them to start producing again at the levels they would like to produce without having a negative effect on prices,” Barbajosa said.

“If Iran gets out of the market, it might be a very natural way for them to say, ‘Oh, we need to increase production now, because Iran is no longer there,'” he said.

— CNBC’s Tom DiChristopher contributed to this report.

Oil prices mixed after edging up from two-week lows; set for weekly drop

CNBC

  • U.S. oil prices were mixed on Friday, after three days of declines.
  • Gains were limited as Asian share markets extended a selloff on Wall Street after news of planned U.S. tariffs on steel and aluminium.

U.S. oil prices were mixed on Friday, after three days of declines, but any gains were limited as Asian share markets extended a selloff on Wall Street after news of planned U.S. tariffs on steel and aluminium raised fears of a trade war.

President Donald Trump announced he would impose hefty tariffs on the two metals to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighboring Canada.

U.S. West Texas Intermediate (WTI) crude was down 1 cent at $60.98 by 0432 GMT after touching a two-week low of $60.18 a day earlier.

Global benchmark Brent was up 7 cents, or 0.1 percent, at $63.90 a barrel, after settled down 1.4 percent on Thursday, also a two-week low. Brent is set for a weekly fall of 5.1 percent.

U.S. crude is on track for a 4 percent drop this week, its first weekly decline in three, having given up much of the gains in recent weeks when sentiment was boosted by a fall in inventories at the Cushing delivery point for WTI.

Oil and gas sectors drop on steel and aluminum tariff news  

“The market is not showing any obvious signs of turning around the mood. We are being driven by the pick up in U.S. inventories and in general terms the market went a bit to far too soon,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

“Then we have the volatility in the U.S. dollar and the implications of the tariff news to factor in,” he said.

U.S. crude stocks rose last week even as refineries hiked output, increasing by 3 million barrels, compared with expectations for an increase of 2.1 million barrels.

Still, stocks fell again at Cushing in Oklahoma, with inventories down by 1.2 million barrels, the 10th consecutive week of declines, the Energy Information Administration said this week.

“Although destocking in Cushing has continued, with stocks there falling below 30 million barrels for the first time since late 2014, the overall increase in U.S. oil stocks has overshadowed the good news,” Fawad Razaqzada, market analyst at Forex.com, said in a note.

The Organization of the Petroleum Exporting Countries (OPEC) will hold a dinner on Monday in Houston with U.S. shale firms, the latest sign of the producer group widening talks about how best to tame a global oil glut.

U.S. crude output slipped in the last month of 2017, but in November hit an all-time high of 10.057 million barrels per day (bpd). Weekly data showed another record and further gains are expected.

US crude rises 34 cents, settling at $61.68, breaking two-week losing streak with 4.2% gain

CNBC

  • U.S. crude stabilized on Friday as the dollar slipped to a three-year low and equities were on pace for their biggest weekly gain in six years.
  • Supportive comments from OPEC members about the cartel’s output cuts also boosted sentiment.
  • However, surging U.S. production is offsetting those efforts. U.S. crude output hit a record 10.27 million bpd last week.

Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

Oil prices stood near a one-week high on Friday as global equities headed for their biggest weekly gain in six years as the dollar slipped to a three-year low.

U.S. West Texas Intermediate crude for March delivery ended Friday’s session up 34 cents at $61.68 a barrel. For the week, the U.S. crude contract rose 4.2 percent after losing nearly 10 percent last week.

London Brent crude rose 37 cents to $64.70 by 2:03 p.m. ET, on track for a roughly 3-percent weekly gain after falling more than 8 percent last week.

“Oil is getting support from a rebound in global stock markets and a weak dollar, but the upside is limited due to a projection for rising U.S. production,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Commodities tomorrow:

Commodities tomorrow: Crude finds $60 ‘sweet spot’  

The dollar slipped to a three-year low against a basket of currencies on Friday but later regained some ground. A weaker dollar often boosts oil and other dollar-denominated commodities.

World shares were set to post their best week of gains in six years after two consecutive weeks in the red. Activity was subdued as many Asian markets were closed for the Lunar New Year holiday.

Also supporting oil prices was a statement from the United Arab Emirates energy minister late on Thursday saying oil producers led by Saudi Arabia and Russia aimed to draft an agreement on a long-term alliance by the year end.

OPEC and some non-OPEC producers including Russia have been restraining production by 1.8 million barrels per day (bpd) to prop up prices. The arrangement expires at the end of 2018.

The move comes at a time when Asian demand is on the rise.

India imported a record 4.93 million bpd in January to feed its expanded refining capacity and meet rising demand, data showed.

Here's where oil prices are headed next: Oil analyst

Here’s where oil prices are headed next: Oil analyst  

Oil won support earlier in the week after Saudi Energy Minister Khalid al-Falih said OPEC hopes to keep limiting crude output to leave the market tight.

However, surging U.S. production is offsetting those efforts. U.S. crude output hit a record 10.27 million bpd last week, the Energy Information Administration said on Wednesday. The United States is now a bigger producer than Saudi Arabia.

U.S. drillers added 7 oil rigs in the latest national count kept by oilfield services firm Baker Hughes. The count has risen by 51 oil rigs in the last four weeks, putting the total at a nearly three-year high of 798.

“Drilling activity in the U.S. continues to pick up … Adding to this, producers appear to be more efficient than they were mid last year,” ING said in a note, adding that rising U.S. supplies and the liquidation of speculative longs were likely to keep oil prices under pressure.

— CNBC’s Tom DiChristopher contributed to this report.

Oil gains as dollar sags near 3-year low; many Asian markets shut

CNBC

  • The U.S. crude contract has risen nearly 4 percent this week after losing nearly 10 percent last week.

Oil prices edged higher on Friday as the dollar stood near a three-year low in subdued Asian trade, with many markets closed for the Lunar New Year holiday.
Oil pumpjacks in silhouette at sunset.

Oil pumpjacks in silhouette at sunset.

U.S. crude for March delivery was up 16 cents, or 0.3 percent, at $61.50 a barrel by 0200 GMT, after settling up 74 cents on Thursday. For the week, the contract has risen nearly 4 percent after losing nearly 10 percent last week.

Brent crude was up 26 cents, or 0.4 percent, at $64.59 after settling down 3 cents. Brent is up nearly 3 percent for the week after falling more than 8 percent last week.

“Oil is getting support from a rebound in global stock markets and a weak dollar, but the upside is limited due to a projection for rising U.S. production,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo. “The market is quiet due to a slew of holidays in Asia.”

The dollar languished near a three-year low against a basket of currencies on Friday, headed for its biggest weekly loss in two years. A weaker dollar often boosts prices for oil and other dollar-denominated commodities.

Asian shares extended their recovery from two-month lows into a fifth day on Friday as Wall Street’s market volatility gauge fell, although Chinese and most Southeast Asian financial markets were closed for the Lunar New Year holiday.

Here's where oil prices are headed next: Oil analyst

Here’s where oil prices are headed next: Oil analyst  

Oil producers led by Saudi Arabia and Russia aim to draft an agreement on a long-term alliance by the end of this year, United Arab Emiratesenergy minister Suhail al-Mazroui said on Thursday. OPEC and non-OPEC producers including Russia have been restraining production by a total 1.8 million barrels per day in a bid to prop up prices under a deal that is to expire at the end of 2018.

The move comes at a time when Asian demand is on the rise. Indiaimported a record 4.93 million bpd in January to feed its expanded refining capacity and meet rising demand, data showed.

Oil won support earlier in the week after Saudi Energy Minister Khalid al-Falih said OPEC hopes to keep limiting crude output to leave the market tight.

However, surging U.S. production is offsetting OPEC’s efforts to curb supplies. U.S. crude output hit a record 10.27 million barrels per day last week, the Energy Information Administration (EIA) said on Wednesday, making it a bigger producer than Saudi Arabia.

Oil prices steady as high US output offsets report of lower crude stockpiles

CNBC

  • Industry group the American Petroleum Institute says U.S. crude inventories fell by 1.1 million barrels, ahead of official government figures.
  • Oil prices are on pace for a second weekly decline following a two-day equity sell-off and as volatility returns to financial markets.
  • Climbing U.S. production looms over the market as the U.S. Energy Information Administration forecasts American output to average 10.6 million barrels a day this year.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices were broadly steady on Wednesday, as the boost from a report showing a drop in U.S. crude inventories last week was offset by evidence of soaring U.S. output.

Brent crude futures edged up 11 cents to $66.97 a barrel by 9:13 a.m. ET (1413 GMT). The contract is 2.7 percent for the week.

U.S. West Texas Intermediate (WTI) crude futures eased 13 cents to $63.26 a barrel, down 3.6 percent so far this week.

Global equities recovered modestly after their largest one-day fall in nearly two years on Monday, when volatility surged and investors ditched stocks and bonds.

Some oil majors starting to increase spending, analyst says  

“The risk-off move impacted oil, but that impact has been limited because commodities are consumption or real assets, as opposed to equities or bonds, which are investment assets,” BNP Paribas head of commodity strategy Harry Tchilinguirian said.

“The curve pays you for being long oil,” he said, adding the main issue affecting oil prices was “the efforts of supply restraint by producers that in the second half of 2017 started to bear fruit.”

The Organization of the Petroleum Exporting Countries and other producers, including Russia, have cut production since last January to force down global inventories.

Crude inventories in the United States have fallen by 20 percent since hitting record highs in April 2017.

The futures curve shows prompt prices for oil are above those for future delivery, suggesting investors are counting on demand outpacing supply.

Data on Tuesday showed U.S. crude inventories fell by 1.1 million barrels in the week to Feb. 2 to 418.4 million barrels, helping support the oil price.

Commodities tomorrow:

Commodities tomorrow: Crude holds tight range on the day  

“Evidence points to a global inventory market that has arguably already balanced – with days of forward cover in the low single digits or possibly even lower – which should support the spot price going forward,” said Richard Robinson, manager of the Ashburton Global Energy fund.

But rising U.S. oil production has been looming over the market. Output has risen by 1 million barrels per day in the last year to about 10 million bpd.

The U.S. Energy Information Administration (EIA) expects U.S. output to reach an average of 10.59 million bpd in 2018 and 11.18 million bpd by 2019, potentially overtaking Russia as the world’s largest producer.

“The strong growth that is expected in U.S. production supports our more bearish outlook for the oil market,” Hamza Khan, head of ING commodities strategy, said in a note.