U.S. oil prices rise as Gulf platforms shut ahead of hurricane

CNBC

  • Storm Gordon to make U.S. landfall as hurricane.
  • Brent dips as India takes steps to continue Iran imports.
  • Global oil markets have tightened since 2017 — Barclays.

U.S. oil prices rose on Tuesday, breaking past $70 per barrel, after two Gulf of Mexico oil platforms were evacuated in preparation for a hurricane.

U.S. West Texas Intermediate (WTI) crude futures were at $70.05 per barrel at 0353 GMT, up 25 cents, or 0.4 percent from their last settlement.

Anadarko Petroleum Corp said on Monday it had evacuated and shut production at two oil platforms in the northern Gulf of Mexico ahead of the approach of Gordon, which is expected to come ashore as a hurricane.

International Brent crude futures, by contrast, lost ground, trading at $78.07 per barrel, down 8 cents from their last close.

This came as India allowed state refiners to import Iranian oil if Tehran arranges and insures tankers.

Many international shippers have stopped loading Iranian oil as U.S. financial sanctions against Tehran prevents them from insuring its cargoes.

Mirroring a step by China, where buyers are shifting nearly all their Iranian oil imports to vessels owned by National Iranian Tanker Co (NITC), this means that Asia’s two biggest oil importers are making plans to continue Iran purchases despite pressure by Washington to cut orders.

Traders said Brent was also pressured by emerging market turmoil and the strong dollar, which makes crude imports for countries using other currencies more expensive.

Changing market

Britain’s Barclays bank said on Tuesday that oil markets had changed since 2017 when worries about rising supply were more evident.

“U.S. producers are resisting temptation and exercising capital discipline, OPEC and Russia have convinced market participants they are managing the supply of over half of global production, the U.S. is using sanctions more actively, and several key OPEC producers are at risk of being failed states,” Barclays said.

Crude oil “prices could reach $80 and higher in the short term”, the bank said, although it added that despite these developments global supply may exceed demand next year.

For 2020, Barclays said it expects Brent to average $75 per barrel, up from its previous forecast of just $55 a barrel.

French bank BNP Paribas struck a similar tone, warning of “supply issues” for the rest of the year and into 2019.

“Crude oil export losses from Iran due to U.S. sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production due to market share sensitivities,” the bank said.

BNP Paribas expects Brent to average $79 per barrel in 2019.

US oil dips from 3-1/2 yr high, but markets remain tight

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  • U.S. oil prices on Friday held around three-and-a-half year highs touched the previous day.
  • A Canadian production outage disrupted the North American market.

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 on Friday held around three-and-a-half year highs touched the previous day as a Canadian production outage disrupted the North American market.

International oil markets also remained firm as looming sanctions by Washington against Iran are expected to lead to a sharp drop in supplies from the OPEC-member.

U.S. West Texas Intermediate (WTI) crude futures were at $73.17 a barrel at 0049 GMT, down 28 cents, or 0.4 percent from their last settlement.WTI on Thursday hit its highest since November 2014 at $74.03 per barrel.

Brent crude futures were at $77.79 per barrel, down 6 cents.

Traders and analysts said Friday’s dip was more a result of profit-taking than any market fundamentals, with WTI still up by more than 18 percent from June lows.

Greg McKenna, chief market strategist at futures brokerage AxiTrader said this week’s crude price rises had “exhausted the bulls.”

Crude oil prices hit 3.5-year high

Crude oil prices hit 3.5-year high  

North America’s oil markets have tightened significantly as an outage of Canada’s Syncrude has locked in over 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncot.

Outside North America, oil prices have been rallying for most of 2018 due to record demand and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Oil demand has been chasing records for most of the year, and OPEC has said it will raise output in order to meet demand and replace crude from unplanned disruptions.

Looming U.S. sanctions against OPEC-exporter Iran are also fueling Brent prices.

Unplanned supply disruptions from Libya to Venezuela have helped to further tighten the market.

US oil dips as markets well supplied despite strong demand, outages

CNBC

  • U.S. oil prices dipped from three-and-a-half year highs on Thursday.
  • Physical markets remained well supplied despite record demand and ongoing disruptions.

Pumpjacks operating near Ruehlermoor, Germany.

Getty Images
Pumpjacks operating near Ruehlermoor, Germany.

U.S. oil prices dipped from three-and-a-half year highs on Thursday as physical markets remained well supplied despite record demand and ongoing disruptions.

U.S. West Texas Intermediate (WTI) crude futures were at $72.55 a barrel at 0114 GMT, down 21 cents, or 0.3 percent from their last settlement.

WTI hit its highest since November 2014 at $73.06 per barrel in the previous session.

Brent crude futures were at $77.63 per barrel, virtually unchanged from their last close and still below recent May highs.

Oil prices have been rallying for much of 2018 on tightening market conditions due to record demand and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Unplanned supply disruptions from Canada to Libya and Venezuela have added to those cuts.

Yet not all indicators point towards an ever-tightening market.

Although output growth is slowing, U.S. crude production is approaching 11 million barrels per day (bpd).

With Russia and Saudi Arabia at similar levels, and output expected to rise as OPEC and Russia ease their supply restrictions, there will soon be three countries pumping out 11 million barrels of crude each and every day.

Oil prices hit 3.5-year high

Oil prices hit 3.5-year high  

This unprecedented output means just three countries are meeting a third of world consumption.

“The physical oil market is well supplied,” said Konstantinos Venetis, senior economist at research firm TS Lombard, although he warned OPEC and Russia were producing at near maximum output “leaving a thinner margin of safety for the future.”

US inventories fall

Despite rising U.S. output, U.S. commercial crude oil inventories dropped by almost 10 million barrels in the week to June 22, to 416.64 million barrels, according to the Energy Information Administration on Wednesday.

That’s below the 5-year average level of around 425 million barrels.

Traders expect inventories to draw further in coming weeks as an outage of Canada’s Syncrude locks in over 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncot.

The draw in U.S. inventories was also due to high exports of almost 3 million bpd, coupled with domestic refinery activity hitting a utilization rate of 97.5 percent, the highest in more than a decade.

Oil demand has been chasing records for most of 2018, but the outlook is dimming amid escalating trade disputes between the United States and other major economies including China and the European Union.

“Our macroeconomic view remains overwhelmingly bearish,” commodity brokerage Marex Spectron said.

“Credit conditions have worsened again, which is likely to have an outright negative impact on the demand for crude oil in the next 4-6 weeks,” it said.

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

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  • 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.

83093782SO011_Farmland_Tapp

Getty Images

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.