Oil rebounds from 18-year lows after US, Russia agree to talks

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Reuters
KEY POINTS
  • Brent crude was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.
  • U.S. crude was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002.
GP: Oil Pumping Jacks
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil recovered ground on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilize energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Brent crude was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.

U.S. crude was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002.

Oil markets have faced a double whammy from the coronavirus outbreak and a price war between Saudi Arabia and Russia after OPEC and other producers failed to agree on deeper cuts to support oil prices in early March.

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday.

“Oil prices are clawing back from a near 18-year low on hopes that oversupply concerns may finally see some relief,” said Edward Moya, senior market analyst at broker OANDA.

“Much of the focus has fallen on a key call between the Presidents of the United States and Russia.”

With a plunge in prices that has knocked around 60% off oil this year, a commissioner with the Texas state energy regulator renewed his call for restrictions on crude production because of the national supply glut.

In a sign of how well the market is supplied, the front-month Brent futures contract for May, is currently at a discount of $13.95 per barrel to the November contract, the widest contango spread ever seen.

A contango market implies traders expect oil to be higher in the future, prompting them to store oil for later sales.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), plans to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption, a Saudi energy ministry official said.

Global oil refiners, meanwhile, have cut their throughput because of the slump in demand for transportation fuel, with European refineries slashing output by at least 1.3 million bpd, sources told Reuters.

UBS estimated global oil demand to fall by 1.2 million bpd, or 1.2%, over the whole of 2020, weighed down by the coronavirus pandemic, the Swiss bank said in a note.

Others, including the chief economist for global commodities trader Trafigura, have said that oil demand could fall as much as 30% from the end of last year over coming weeks.

Oil gains as governments pledge support amid coronavirus chaos

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Reuters
KEY POINTS
  • Brent crude was up 22 cents, or 0.8%, at $26.56 a barrel by 0415 GMT.
  • U.S. crude was up 42 cents, or 1.9%, at $23.02.
GP: Oil production as sun sets
Oil production in Azerbaijan
Vostok

Oil prices rose on Friday as governments around the world pledged a huge injection of funds and other measures to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil.

Brent crude was up 22 cents, or 0.8%, at $26.56 a barrel by 0415 GMT. U.S. crude was up 42 cents, or 1.9%, at $23.02.

Both of the benchmarks are down nearly two-thirds this year and the slump in economic activity and fuel demand has forced massive retrenchment in investment by oil and other energy companies.

Oil requirements around the world may drop by 20% as 3 billion people are in lockdown, the head of the International Energy Agency said as he called on major producers like Saudi Arabia to help stabilize oil markets. [nL8N2BJ8BB]

“It’s going to be a very uncertain year for us from a price point of view,” Peter Coleman, the head of Australian oil and gas developer Woodside Petroleum told investors on a conference call on Friday.

Leaders of the Group of 20 major economies pledged on Thursday to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic.”

The United States has now passed China and Italy as the country with the most coronavirus cases, according to a Reuters tally, as the country faced a surge in hospitalizations and looming shortages in supplies, staff and sick beds.

“The U.S. is the most consequential oil demand region in the world and real-time GPS data suggests an 82% drop in congestion in major U.S. cities”, Capital Economics said in a note.

“Ultimately, U.S. consumption has to lead the way for meaningful global oil demand recovery,” it said.

Still, the availability of funds helped oil prices gain as other markets rose while more governments roll out additional stimulus measures to combat the pandemic.

Oil extends gains as optimism over US stimulus lifts global markets

CNBC

Reuters
KEY POINTS
  • U.S. crude touched a high of $25.24 a barrel early in the session and was at $24.82 a barrel, up 81 cents, or 3.4%, by 0412 GMT.
  • Brent crude was trading up 75 cents, or 2.8%, at $27.90 a barrel after rising to a high of $28.29.
GP: Oil Pumping Jacks
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil prices extended gains for a third session on Wednesday, rising alongside broader financial markets on hopes Washington will soon approve a massive aid package to stem the economic impact of the coronavirus pandemic.

U.S. crude touched a high of $25.24 a barrel early in the session and was at $24.82 a barrel, up 81 cents, or 3.4%, by 0412 GMT.

Brent crude was trading up 75 cents, or 2.8%, at $27.90 a barrel after rising to a high of $28.29.

The U.S. Congress may vote on Wednesday on the $2 trillion stimulus after Republicans and Democrats said they were close to a deal, with optimism over the package fueling a surge in stock markets.

Still, demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns to curb the spread of the coronavirus, putting a lid on oil price gains.

“It will be difficult to lift demand if lockdowns are announced in many countries and airline services remain suspended,” ANZ analysts said in a note.

The market is also facing the threat of increased supplies after the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, a grouping known as OPEC+, failed to extend an agreement to cut production and support prices beyond end-March.

Oil prices have fallen about 45% so far this month.

“A pare back in production from the OPEC+ and a stabilisation in the coronavirus episode are both needed to lift oil prices back to its pre-collapse prices,” analysts at OCBC Bank said in a note.

In the United States, crude inventories fell by 1.2 million barrels in the week to March 20 to 451.4 million barrels, compared with analysts’ expectations for a build of 2.8 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.

Gasoline and distillate stocks also fell last week, API said.

Analysts said in a Reuters poll on Tuesday that U.S. crude oil stockpiles likely built for a ninth successive week, while inventories of refined products were expected to have dropped, with gasoline set to decline for the eighth straight week.

The weekly report from the Energy Information Administration (EIA) is due at 10:30 a.m. on Wednesday.

Oil falls for third day as coronavirus travel bans escalate

REUTERS

TOKYO (Reuters) – Oil prices fell for a third session on Wednesday to be down about 17% so far this week as the outlook for fuel demand darkened amid travel and social lockdowns triggered by the coronavirus epidemic.

Brent crude LCOc1 was trading down 43 cents, or 1.5%, at $28.30 a barrel by 0650 GMT, after dropping to $28.26 the lowest since early 2016. The international benchmark fell 4.3% on Tuesday.

U.S. crude Clc1 was down 47 cents, or 1.7%, at $26.48 a barrel, after falling as low as $26.20, also the lowest in more than four years. West Texas Intermediate fell 6% on Tuesday.

A drop in U.S. inventories of crude, gasoline and distillates, as reported by an industry group, provided some support to prices, but the demand outlook remains grim amid a price war among major producers.

Oil slides again, squeezed between coronavirus demand hit and price war bite

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Reuters
KEY POINTS
  • Brent crude fell $1.13 to $32.72 a barrel by 0230 GMT, tumbling after last week’s plunge of 25%, the largest weekly fall since 2008. The front-month price opened at a high of $35.84 but slipped to a low of $31.63.
  • U.S. crude was at $31.01, down 72 cents after slipping below $30 earlier in the session, despite U.S. President Donald Trump’s pledge to fill strategic oil reserves in the world’s largest oil consumer “to the top”.
GP: Oil field 200310 Asia
A pumpjack near the Yamashinskoye rural settlement in the Almetyevsk District.
Yegor Aleyev | TASS | Getty Images

Oil extended losses on Monday as an emergency rate cut by the U.S. Federal Reserve failed to soothe global financial markets panicked by the rapid spread of the coronavirus while a price war rages on between top producers.

Brent crude fell $1.13 to $32.72 a barrel by 0230 GMT, tumbling after last week’s plunge of 25%, the largest weekly fall since 2008. The front-month price opened at a high of $35.84 but slipped to a low of $31.63.

U.S. crude was at $31.01, down 72 cents after slipping below $30 earlier in the session, despite U.S. President Donald Trump’s pledge to fill strategic oil reserves in the world’s largest oil consumer “to the top”.

The U.S. Fed slashed interest rates on Sunday in its second emergency cut this month, and said it would expand its balance sheet by at least $700 billion in coming weeks in a bid to ease tension in financial markets.

Oil prices have come under intense pressure on both demand and supply sides: Worries about the pandemic slashing oil buying persist, while oversupply fears have grown after top exporter Saudi Arabia ramped up output and slashed prices to increase sales to consumers in Asia and Europe.

Earlier this month, the Organization of the Petroleum Countries and Russia failed to extend a production cut agreement which has been supporting prices since 2016.

“Fear remains the crux of the problem here as market players remain unconvinced that monetary policy easing and liquidity injections will solve an essentially healthcare crisis,” OCBC Bank’s economist Selena Ling said.

“The end-game to me remains not about more policy bazookas, but a peak in global COVID-19 infections and fatalities, and, or a COVID-19 vaccine cure in the horizon.”

Despite the massive drop in both oil and natural gas prices last week, the U.S. oil drilling rig count rose for a second week in a row to its highest since December, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Still, the number of rigs is expected to fall as producers deepen spending cuts on new drilling.

More pain will be felt by U.S. producers as Brent’s premium to WTI is close to its narrowest since 2016, making U.S. crude oil uncompetitive in international markets. Exports are set to fall by 1 million barrels per day each in April and May, sources have said.

“The big loser will be U.S. shale, where the Republican government will possibly face a bailout decision on a heavily indebted industry sooner rather than later,” said Jeffrey Halley, a senior market analyst at OANDA in Singapore.