Oil firm on Iran sanctions, but rising US supply and strong dollar weigh

CNBC

  • U.S. commercial crude stocks rise by 907,000 barrels — API.
  • U.S. crude production to end 2018 at 11.3 million barrels per day — Barclays.

Oil prices were firm on Wednesday on expectations of tighter markets once U.S. sanctions target Iran’s petroleum industry from next month, although a strong dollar and rising U.S. crude supply curbed gains.

Brent crude oil futures were at $84.86 per barrel at 0340 GMT, up 6 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up just 1 cent at $75.24 a barrel.

Traders said global oil markets remained tense because of the looming U.S. sanctions against Iran’s oil exports, which kick in from Nov. 4.

Brent and WTI earlier this week both reached levels last seen in November 2014, and the two contracts have risen by around 20 and 17 percent respectively since mid-August.

Despite this, traders said prices were held back by a strong dollarwhich makes oil imports more expensive for countries using other currencies domestically, as well as by climbing supply in the United States.

U.S. commercial crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, the private American Petroleum Institute (API) said on Tuesday. Refinery crude runs fell by 158,000 barrels per day (bpd), API data showed.

Official weekly government data is due from the Energy Information Administration (EIA) on Wednesday.

Traders said the rising stocks were partly due to a relentless increase in U.S. crude oil production, which has jumped by a third since mid-2016 to a record 11.1 million bpd.

“We expect U.S. crude production to exit the year at 11.3 million bpd,” Barclays bank said in a note on Tuesday.

That would mean the United States challenges Russia as the world’s biggest crude oil producer.

On the demand side, fuel consumption is strong, growing especially fast in Asia’s emerging economies.

However, high crude prices, combined with widespread emerging market currency weakness, threaten growth.

“That oil prices are rising to elevated levels at the same time as emerging market currencies hit record lows will be a flashing signal to OPEC members that demand may be at risk of a sharp correction,” said Emirates NBD bank.

Oil supported as new hedges placed, but rising global supplies weigh

CNBC

  • Oil prices were steady on Friday, supported by traders placing new hedges in the futures market in anticipation of a decline in U.S. crude inventories.
  • Prices were held back from advancing by the prospect of rising global supplies.

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Oil prices were steady on Friday, supported by traders placing new hedges in the futures market in anticipation of a decline in U.S. crude inventories, but held back from advancing by the prospect of rising global supplies.

U.S. West Texas Intermediate (WTI) crude futures were at $69.06 per barrel at 0421 GMT, up 10 cents from their last settlement.

Brent crude futures were at $73.40 per barrel, down 5 cents from their last close.

Overall U.S. crude oil inventories actually rose by 3.8 million barrels last week to 408.74 million barrels, according to data from the Energy Information Administration (EIA), however stocks at the key Cushing storage hub in Oklahoma fell by 1.3 million barrels, the EIA data showed.

“Hedges (are) thought to be a factor in oil prices being well bid,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

“There’s increasing chatter about … Cushing inventories (being) down … This primary U.S. oil hub’s inventory now sits at the lowest levels since 2014,” he said.

ANZ bank said on Friday in a note the drop in Cushing inventories were a driver for rising crude oil prices “amid signs that last week’s (overall) build in inventories won’t last very long.”

Even with last week’s rise, overall U.S. crude inventories are below the 5-year average of around 420 million barrels.

Bearish factors

There were also factors holding oil markets in check. WTI is heading for a roughly flat week after four weekly falls, while Brent is on track to post a fourth week of declines in five, set for a drop of 1.4 percent.

Analysts said the outlook beyond the short-term was turning bearish.

“Bulls are fighting a losing battle … Brent oil may fall to $67 per barrel,” said Reuters technical commodities analyst Wang Tao. Russian oil output rose by 150,000 barrels per day (bpd) in July from a month earlier, to 11.21 million bpd, energy ministry data showed on Thursday.

Output by top exporter Saudi Arabia has also risen recently, to around 11 million bpd, and U.S. production is around that level as well.

Reacting to rising supplies, Saudi Aramco cut its September price for its Arab Light grade for Asian customers by $0.70 a barrel versus August to a premium of $1.20 a barrel to the Oman/Dubai average, it said on Thursday.

Oil prices mixed as producers adding more oil while US gasoline stocks drop

CNBC

  • Oil prices were mixed on Thursday.
  • The market struggled to digest signs of strong gasoline demand in the U.S., the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

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Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 percent, to $68.82.

Both benchmarks rose by 1 percent on Wednesday after inventory data from the U.S. Energy Information Administration reported on Wednesday U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.

However, the EIA also reported U.S. oil production reached a record 11 million barrels per day (bpd). The United States has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.

Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market.

Crude oil prices under pressure as supplies increase

Crude oil prices under pressure as supplies increase  

The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.

“President Trump is doing everything in his power to lower gasoline prices,” he said.

“With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market’s tide,” he said.

Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday.

A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.

A sharp jump in crude oil inventories in the United States also added to the bearish tone in the market.

U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.

Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased.

OPEC and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday.

Oil prices seesaw as US trade dispute with China rattles market

CNBC

  • Oil prices dipped on Tuesday, easing after strong gains in the previous session.
  • Despite a softening of trade concerns, oil markets still face an abundance of supplies.
  • The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

An oil pump jack in Gonzales, Texas.

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An oil pump jack in Gonzales, Texas.

Oil prices dipped on Tuesday, easing after strong gains in the previous session when hopes that trade disputes between the United States and China could be resolved buoyed global markets.

Despite a softening of trade concerns, oil markets still face an abundance of supplies that puts pressure on producers to keep their prices competitive in order not to lose market share.

U.S. WTI crude futures were at $63.26 a barrel at 0031 GMT, down 16 cents, or 0.3 percent, from their previous settlement.

Brent crude futures were at $68.52 per barrel, down 13 cents, or 0.2 percent.

The dips came after a more than 2 percent rally on Monday during European and American trade hours.

“Oil prices rose sharply (on Monday) as a weaker U.S.-dollar and easingconcerns about the trade war saw investor appetite return,” ANZ bank said.

“Reports that back-channel talks over the trade dispute between the U.S. and China are ongoing helped soothe investor angst,” it added.

Concerns of a prolonged trade dispute between the world’s two biggest economies and uncertainty over the supply and demand balance of global oil markets have resulted in volatile yet range-bound recent trading.

“Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“U.S. oil inventories had been rising for the past couple of months but the data released last week showed an unexpected draw. This week’s data may be crucial for determining the direction of WTI,” he added.

The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

Oil markets have generally been supported by healthy demand as well as supply restraint led by the Organization of the Petroleum Exporting Countries.

However, soaring U.S. crude production, which has jumped by a quarter since mid-2016 to 10.46 million barrels per day (bpd), is threatening to undermine OPEC’s efforts to tighten the market and prop up prices.

The United States late last year overtook top exporter Saudi Arabia as the world’s second biggest crude producer. Only Russia pumps more crude out of the ground, at almost 11 million bpd.

In a sign that oil supplies remain ample, China’s Sinopec, Asia’s largest refiner, plans to cut Saudi crude imports in May by 40 percent, instead buying from alternative sources, after Saudi Aramco set higher-than-expected prices, a company official said on Monday.

Oil inches lower on expectations for US crude stock build

CNBC

  • Oil prices slipped on expectations for a build-up in U.S. crude inventories.
  • Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Oil prices slipped on Wednesday on expectations for a build-up in U.S. crude inventories, but Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.

U.S. WTI crude futures were at $63.36 a barrel at 0208 GMT, down 15 cents, or 0.24 percent, from their previous settlement.

Brent crude futures dipped to $67.94 per barrel, down 18 cents, or 0.26 percent, after it rose 0.7 percent on Tuesday.

U.S. crude inventories likely saw a build for the second straight week, while refined product stockpiles were forecast to have declined last week, an expanded Reuters poll showed on Tuesday.

“With the change in prices being only a few cents, I think the oil market is waiting for the next development and of course the U.S. inventories data due tonight (Wednesday) is very good reason for traders to be waiting,” said Michael McCarthy, Chief Market Strategist at brokerage CMC Markets.

Industry group the American Petroleum Institute, however, said on Tuesday U.S. crude stocks have unexpectedly fallen last week as refineries boosted output.

“With total combined stocks of crude oil and refined products coming in around unchanged on the week, I would call it a neutral data point,” said Dominic Chirichella, senior partner at the Energy Management Institute in New York.

Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

“The EIA data has not (always) been in sync with the API data so we could see a different set of data points Wednesday morning,” Chirichella said.

Meanwhile, Russian Energy Minister Alexander Novak said on Tuesday that a joint organisation between the Organization of the Petroleum Exporting Countries and non-OPEC countries may be set up after the current deal on production cuts expires at the end of this year.

“Russia is testing the upper production bands but provided they don’t ramp up dramatically I think this news will be viewed in a positive light for prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

Oil has risen from a multi-year low near $27 a barrel in January 2016, helped by production cuts led by OPEC and Russia, which began in 2017 in order to rein in over-supply and prop up prices.

Top producer Russia’s oil output rose in March to 10.97 million barrels per day, up from 10.95 million bpd in February, official data showed earlier this week, prompting some traders to worry the OPEC-non-OPEC alliance to help balance oil markets was under threat.