Oil prices rise amid expectations that the US Federal Reserve will cut rates

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Reuters
KEY POINTS
  • Brent crude rose 33 cents, or 0.5%, to $64.04 a barrel by 0435 GMT, after gaining 0.4% the previous session.
  • U.S. crude was up 30 cents or 0.5%, at $57.17 a barrel, having risen 1.2% on Monday.
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Dan Riedlhuber | Reuters

Oil prices rose for a fourth day on Tuesday on optimism the U.S. Federal Reserve will this week cut interest rates for the first time in more than ten years, which should support economic and fuel demand growth in the world’s biggest oil user.

Brent crude rose 33 cents, or 0.5%, to $64.04 a barrel by 0435 GMT, after gaining 0.4% the previous session.

U.S. crude was up 30 cents or 0.5%, at $57.17 a barrel, having risen 1.2% on Monday.

So-called dovish monetary policy in the United States, where the central bank reduces interest rates, would “support a continuation in global expansionary activities and fuel demand growth” for the second half of 2019, Benjamin Lu, an analyst at Phillip Futures in Singapore, said in a note.

“If the Fed is a little more dovish and prices in a 75 basis points cut … we might see oil pushing up towards $60,” Lu said by phone, referring to U.S. crude.

Still, “demand side concerns are the shadow over oil prices,” he added.

U.S. central bankers will begin their two-day meeting later on Tuesday and are expected to lower borrowing costs for the first time since the depths of the financial crisis more than a decade ago.

U.S. President Donald Trump said a small rate cut “is not enough.”

Economic growth in the United States slowed less than expected in the second quarter, strengthening the outlook for oil consumption but, elsewhere, disappointing economic data has increased concerns about slower growth.

U.S. and Chinese negotiators meet this week for their first in-person talks since agreeing to a truce to their trade dispute at the Group of 20 meeting last month, with some optimistic that the discussions will help bridge the gap between the world’s two largest economies and biggest oil consumers.

However, Trump said China might not want to sign a trade deal until after the 2020 U.S. election.

Supply risks are still a concern as tensions remained high around the Strait of Hormuz, through which about a fifth of the world’s oil passes.

Tensions spiked between Iran and the West after Iranian commandos seized a British-flagged oil tanker in the Gulf this month in apparent retaliation for the capture of an Iranian tanker by British forces near Gibraltar.

Oil prices gain, US crude little changed after inventory data

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Reuters
KEY POINTS
  • West Texas Intermediate crude futures were up 6 cents at $57.68 by 0327 GMT, having fallen 3.3% on Tuesday.
  • Brent crude futures were up 25 cents at $64.60, or 0.4%. They ended down 3.2% in the previous session.
Reusable: Idled oil drilling rigs North Dakota
Stacked rigs are seen along with other idled oil drilling equipment in Dickinson, North Dakota, June 26, 2015.
Andrew Cullen | Reuters

Oil prices rose on Wednesday after steep falls in the previous session, although U.S. crude trailed gains for international benchmark Brent after U.S. crude inventories fell less than expected.

West Texas Intermediate crude futures were up 6 cents at $57.68 by 0327 GMT, having fallen 3.3% on Tuesday.

Brent crude futures were up 25 cents at $64.60, or 0.4%. They ended down 3.2% in the previous session.

Crude inventories fell by 1.4 million barrels in the week to July 12 to 460 million, industry group the American Petroleum Institute (API) said on Tuesday. That compared with analysts’ expectations for a decrease of 2.7 million barrels.

Official data is due out later today from the U.S. government’s Energy Information Administration (EIA). If it confirms the fall it will be the fifth consecutive weekly decline, the longest stretch since the beginning of 2018.

“Market participants are looking ahead to the weekly IEA oil inventory data for the U.S., which is expected to show yet another draw down,” Abhishek Kumar, head of analytics at Interfax Energy in London.

“Nevertheless, oil production in the Gulf of Mexico returning to normal following Hurricane Barry will limit price gains, ” Kumar said.

More than half the daily crude production in the U.S. Gulf of Mexico remained offline on Tuesday in the wake of Hurricane Barry, the U.S. drilling regulator said, as most oil companies were re-staffing facilities to resume production.

The Bureau of Safety and Environmental Enforcement said 1.1 million barrels per day of oil, or 58% of the region’s total, and 1.4 billion cubic feet per day of natural gas output remained shut.

The smaller than expected decline in crude stocks suggested production shut-ins caused by Hurricane Barry late last week had little impact on inventories.

Gasoline stocks also fell, declining by 476,000 barrels, compared with analysts’ expectations in a Reuters poll for a 925,000-barrel decline.

Distillate fuels stockpiles, which include diesel and heating oil, rose by 6.2 million barrels, compared with expectations for a 613,000-barrel gain, the API data showed.

Oil prices fell on Tuesday after U.S. President Donald Trump said progress has been made with Iran, signaling tensions could ease in the Middle East.

However, Iran later denied it was willing to negotiate over its ballistic missile program, contradicting a claim by U.S. Secretary of State Mike Pompeo, and appearing to undercut Trump’s statement.

Tensions between the United States and Iran over Tehran’s nuclear program have lent support to oil futures, given the potential for a price spike should the situation deteriorate.

Oil prices edge lower as China’s GDP growth slows

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Reuters
KEY POINTS
  • Brent crude futures for September fell 21 cents to $66.51 a barrel by 0222 GMT.
  • U.S. crude for August was down 28 cents at $59.93 a barrel.
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Jerome Favre | Bloomberg | Getty Images

Oil prices slipped on Monday after China posted its slowest quarterly economic growth in at least 27 years, reinforcing concerns about demand in the world’s largest crude oil importer.

Brent crude futures for September fell 21 cents to $66.51 a barrel by 0222 GMT while U.S. crude for August was down 28 cents at $59.93 a barrel. Both contracts last week posted their biggest weekly gains in three weeks on cuts in U.S. oil production and diplomatic tensions in the Middle East.

Refineries in the path of Tropical Storm Barry continued to operate despite flood threats while the storm has slashed U.S. Gulf of Mexico crude output by 73%, or 1.38 million barrels per day.

An unwinding of the risk premium from tropical storm Barry, lower oil demand forecasts and a lack of news from the Middle East may have led to a muted oil price reaction, Stephen Innes, managing partner at Bangkok-based Vanguard Markets, said.

China’s economic growth slowed to 6.2% in the second quarter from a year earlier, in line with analysts’ expectations, with demand at home and abroad faltering as the Sino-U.S. trade war bites.

Still, China’s industrial output and retail sales beat forecasts, “suggesting that the economy in China is healthier than we previously been pricing,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

In the Middle East, Iranian President Hassan Rouhani said in a televised speech on Sunday that Iran is ready to hold talks with the United States if Washington lifts sanctions and returns to the 2015 nuclear deal it quit last year.

Meanwhile Britain has offered to facilitate the release of the detained Iranian oil tanker Grace 1 if Tehran gave guarantees that it would not go to Syria.

Oil prices edge lower after US inventories build

Oil prices edge lower after US inventories build

Reuters

KEY POINTS
  • Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70.
  • U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November.
Reusable: Rusted oil extraction equipment
An idled pump jack, once used to extract crude oil from the ground, and a tank battery, used to temporarily store freshly-pumped crude, rust in a farmer’s field near Ridgway, Ill., Jan. 21, 2015.
Getty Images

Oil prices dipped on Thursday, with Brent edging away from the psychologically important $70 level after easing in the previous session on data showing a surprise build in U.S. inventories.

Brent futures eased 2 cents to $69.29 by 0100 GMT. On Wednesday, Brent dipped 6 cents, after touching $69.96, the highest since Nov. 12, when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude was down 14 cents, or 0.2 percent, at $62.34 a barrel. The contract fell 12 cents in the previous session after briefly hitting $62.99, also the highest since November.

Crude oil inventories in the United States rose by 7.2 million barrels last week, as net imports climbed, the Energy Information Administration said on Wednesday. Analysts had forecast a decrease of 425,000 barrels.

The increase “encouraged a wave of profit taking as traders are opting to take some chips off the table ahead of the psychologically significant $70 per barrel for prompt Brent,” Stephen Innes, head of trading and market strategy at SPI Asset Management, said in a note.

The $70 level “could prove to be the real litmus test for this current rally,” he added.

Brent, the global benchmark, is up nearly 30 percent this year, while WTI has gained nearly 40 percent, with prices underpinned by tightening global supply and signs of demand picking up.

U.S. crude production climbed 100,000 barrels per day (bpd) to a record 12.2 million bpd, after hovering around 12-12.1 million bpd since mid-February, according to the data from the Energy Information Administration.

Refined fuel inventories fell more than expected, with gasoline drawing down for a seventh straight week, as refining rates remained low, the data from the statistical arm of the Department of Energy showed.

Oil rises on OPEC-led supply cuts, report of falling US crude inventories

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Reuters

KEY POINTS
  • Both international Brent and U.S. crude futures gained.
  • U.S. crude oil inventories fell by 4.2 million barrels in the week to Feb. 22, to 444.3 million barrels, the American Petroleum Institute (API) estimated in a weekly report on Tuesday.
  • Meanwhile, OPEC has indicated it will continue to withhold supply despite pressure from U.S. President Donald Trump this week to stop artificially tightening markets.
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Jean-Paul Pelissier | Reuters

Oil prices rose on Wednesday after a report of declining crude inventories in the country and as producer club OPEC seemed to stick to its supply cuts despite pressure from U.S. President Donald Trump.

U.S. West Texas Intermediate (WTI) crude oil futures were at $56.02 per barrel at 0100 GMT, up 52 cents, or 0.9 percent, from their last settlement.

International Brent crude futures were at $65.55 per barrel, up 34 cents, or 0.5 percent from their last close.

U.S. crude oil inventories fell by 4.2 million barrels in the week to Feb. 22, to 444.3 million barrels, the American Petroleum Institute (API) estimated in a weekly report on Tuesday.

Official data will be released by the U.S. Energy Information Administration (EIA) after 1800 GMT.

Oil markets have generally received support this year from supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-affiliated producers like Russia, known as OPEC+, agreed late last year to cut output by 1.2 million barrels per day (bpd) to prop up prices.

And the group has indicated it will continue to withhold supply despite pressure from U.S. President Donald Trump this week to stop artificially tightening markets.

“Crude oil has been rising lately, not due to strong growth and rising demand but primarily due to a politically orchestrated cut in production from OPEC and friends,” said Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank.

Despite this, oil remains in ample supply as U.S. crude oil production has risen by more than 2 million bpd over the past year, to a record 12 million bpd, and because demand growth is low because of a global economic slowdown and improving energy efficiency across industries.

“The OPEC+ production cuts have … so far failed to create the tightness needed to support a continued rally,” Hansen said.