US oil slumps as China threatens duty on U.S. crude imports

CNBC

  • U.S. oil prices slumped after China threatened duties on American crude imports in a trade dispute with Washington.
  • U.S. President Donald Trump last week pushed ahead with tariffs on $50 billion of Chinese imports, starting on July 6.
  • Oil producers will meet in Vienna on June 22 to decide forward production policy.

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U.S. oil prices slumped on Monday after China threatened duties on American crude imports in an escalating trade dispute with Washington.

U.S. West Texas Intermediate (WTI) crude futures touched their lowest level since April, falling to $63.59 per barrel before edging back to $63.83 a barrel by 0426 GMT.

That was still down $1.23, or 1.9 percent, from their last settlement.

“Crude oil prices crashed as U.S.-China trade tensions escalated last Friday,” wrote Benjamin Lu of Singapore-based futures brokerage Phillip Futures.

In an escalating spat over the American trade deficit with most of its major trading partners, including China, U.S. President Donald Trump last week pushed ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.

China on Friday said it would retaliate by slapping duties on American export products, including crude oil.

“Beijing has retaliated … with its position as a top importer from the U.S.,” Lu said.

“These punitive measures on bilateral trade have unnerved investors as it hurts global economic growth.”

RBC: You could say Russia is now leading OPEC

RBC: You could say Russia is now leading OPEC  

International oil prices also fell, with Brent crude futures down 76 cents, or 1.1 percent, at $72.67 per barrel.

This was in response to reports that top suppliers Saudi Arabia and Russia would likely increase production.

The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), which is de-facto led by Saudi Arabia, and some allies including Russia have been withholding output since the start of 2017.

They will meet in Vienna on June 22 to decide forward production policy.

“Most industry observers are expecting a production rise,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, although he added that “the magnitude and timing of the boost remain uncertain”.

Oil prices reach highest since November 2014 on Venezuela, Iran worries

CNBC

  • U.S. oil prices rose above $70 a barrel for the first time since November 2014.
  • Brent crude prices climbed to fresh highs.
  • Investors were worried over a looming decision on whether the U.S. will walk away from a deal with Iran.
  • Analysts warned that the economic crisis in Venezuela threatened to further crimp its exports.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

U.S. oil prices rose above $70 a barrel on Monday for the first time since November 2014 while Brent crude prices climbed to fresh highs, as a deepening economic crisis in Venezuela threatened the country’s already tumbling oil supplies.

The concerns added to worries over a looming decision on whether the United States will walk away from a deal with Iran and instead re-imposes sanctions on Tehran, keeping international oil markets on edge.

Brent crude oil futures were at $75.71 per barrel, up 84 cents, or 1.12 percent from their last close at 0416 GMT after climbing to $75.89 a barrel earlier in the session, its highest since November 2014.

U.S. West Texas Intermediate (WTI) crude futures rose 0.95 percent to trade at $70.39 per barrel, up 66 cents from their last settlement.

Analysts warned that the deepening economic crisis in major oil exporter Venezuela threatened to further crimp its production and exports.

Shannon Rivkin, investment director of Australia’s Rivkin Securities, said that oil prices had been driven up due to “growing concerns over the economic collapse of Venezuela and its oil industry, plus possible new sanctions against Iran from the Trump administration.”

U.S. oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela’s state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA’s declining oil production and exports.

Venezuela’s oil output has halved since the early 2000s to just 1.5 million barrels per day (bpd), as the South American country has failed to invest enough to maintain its petroleum industry.

Beyond Venezuela’s woes Greg McKenna, chief market strategist at futures brokerage AxiTrader, said “the big story this week is going to be about oil and the Iran Nuclear deal.” Most market participants expect Trump to withdraw from the pact, he said.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran’s nuclear program.

Expressing doubts over Iran’s sincerity, Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12, which would likely result in a reduction of Iran’s oil exports.

Some traders, however, are becoming cautious about ever higher oil prices.

Hedge funds cut their net long U.S. crude futures and options positions in the week to May 1 by 11,825 contracts to 444,060, according to the U.S. Commodity Futures Trading Commission.

Looming over markets is surging U.S. output, which has soared by more than a quarter in the last two years, to 10.62 million bpd.

U.S. output will likely rise further this year, towards or past Russia’s 11 million bpd, as its energy firms keep drilling for more.

U.S. energy companies added nine oil rigs looking for new production in the week to May 4, bringing the total count to 834, the highest level since March 2015, energy services firm Baker Hughes said last Friday.

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 oil extends gains to hold near 3-week high

CNBC

  • U.S. oil prices rose for a fourth session on Tuesday to near a three-week high hit a day earlier.
  • Prices were supported by signs of robust production curbs by OPEC and non-OPEC countries.

An oil pump jack in the oil town of Gonzales, Texas.

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An oil pump jack in the oil town of Gonzales, Texas.

U.S. oil prices rose for a fourth session on Tuesday to near a three-week high hit a day earlier, supported by signs of robust production curbs by OPEC and non-OPEC countries and a slight fall in U.S. production.

U.S. West Texas Intermediate crude for April delivery was up 10 cents at $64.01 a barrel by 0020 GMT. The contract hit $64.24 on Monday, its highest since Feb. 6.

London Brent crude had yet to start trading after settling up 19 cents at $67.50.

Saudi Arabian oil minister Khalid al-Falih indicated on Saturday that its crude production would be well below the production cap as the Organization of the Petroleum Exporting Countries and its allies were committed to reducing output to bring balance and stability to the market.

Prices were also supported by U.S. Energy Information Administration data on Thursday that showed domestic oil production dipped to 10.27 million barrels per day from 10.271 million bpd the week before.

U.S. crude inventories are forecast to have risen by 2.7 million barrels last week, a preliminary Reuters poll showed on Monday.

Gasoline stocks are seen down by 600,000 barrels, while distillate inventories, which include heating oil and diesel fuel, were seen down 700,000 barrels. The American Petroleum Institute is scheduled to release its weekly data later in the day.

US oil falls for sixth day as supply fears mount

CNBC

  • U.S. oil prices fell for a sixth day on Friday after Iran announced plans to boost production and U.S. crude output hit record highs.

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U.S. oil prices fell for a sixth day on Friday after Iran announced plans to boost production and U.S. crude output hit record highs, adding to concerns about a sharp rise in global supplies.

The falls come amid a rout in global share markets as inflation fears grip investors.

U.S. West Texas Intermediate (WTI) crude was down 63 cents, or 1 percent, at $60.52 by 0015 GMT. On Thursday, it closed down 64 cents, or 1 percent, to settle at $61.15, its lowest close since Jan. 2.

Brent futures were yet to trade. On Thursday, Brent fell 70 cents, or 1.1 percent, to settle at $64.81 a barrel, their lowest close since Dec. 20.

OPEC member Iran on Thursday announced plans to increase production within the next four years by at least 700,000 barrels a day.

The U.S. Energy Information Administration (EIA) this week said crude production last week rose to a record high of 10.25 million barrels per day (bpd).

At that level, U.S. production would overtake current output in Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries.

OPEC and other producers, including Russia, have cut production since January 2017 to force down global inventories, but these cuts have been offset by rising U.S. oil production.