Oil falls on rising output from OPEC and United States

CNBC

  • OPEC output hit 2018 high in August – survey
  • But U.S. sanctions to target Iran’s oil exports from November.
  • U.S. rig count climbs, pointing to more production.

Oil prices fell on Monday amid rising supply from OPEC and the United States, outweighing concerns that falling Iranian output will tighten markets once U.S. sanctions bite from November.

International Brent crude oil futures were at $77.43 per barrel at 0222 GMT, down 21 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $69.62 per barrel, down 18 cents, or 0.3 percent, from their last settlement.

Output from the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) rose by 220,000 barrels per day (bpd) between July and August, to a 2018-high of 32.79 million bpd, a Reuters survey found.

Output was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record.

Meanwhile, U.S. drillers added oil rigs for the first time in three weeks, energy services firm Baker Hughes reported on Friday, increasing the rig count by 2 units to 862.

The high rig count has helped lift U.S. crude oil production by more than 30 percent since mid-2016, to 11 million bpd.

Despite the price dip, Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA said Brent was “supported by the notion that U.S. sanctions on Iranian crude oil exports will eventually lead to constricted markets”, which he said would likely push up prices.

“Iranian production is already showing signs of decline, falling by 150,000 barrels per day (bpd) last month … (as) importers of Iranian barrels will already be moving away from taking shipments,” said Edward Bell, commodity analyst at Emirates NBD bank in Dubai.

Many analysts have warned that an economic slowdown because of trade disputes between the United States and other major economies including China and the European Union would drag on oil demand.

Amid rising trade tariffs raised by Washington and Beijing, China’s manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, a private survey showed on Monday.

Despite this, OANDA’s Innes said it was too early to say whether an economic slowdown would put a serious dent on oil prices.

“While the analysts continue fretting that $200 billion in tariffs could drag down oil demand, it isn’t at all clear that such type of economic headwinds will topple oil prices given … the constant barrage of supply outages,” he said.

Oil steady as US drilling tempers bullish sentiment

CNBC

  • Oil prices were steady on Monday.
  • A rising U.S. rig count pointed to further increases in the country’s output.
  • Prices are also being supported by the supply cuts led by OPEC that were introduced in 2017.

Getty Images

Oil prices were steady on Monday as a rising U.S. rig count pointed to further increases in American output, marking one of the few factors tamping back crude in an otherwise bullish environment.

Brent crude oil futures were at $74.07 per barrel at 0354 GMT, virtually unchanged from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 3 cents at $68.37 a barrel.

U.S. drillers added five oil rigs drilling for new production in the weekended April 20, bringing the total count to 820, highest since March 2015, according to General Electric’s Baker Hughes energy services firm.

The rising rig numbers point to further increases in U.S. crude production, which is already up a quarter since mid-2016 to a record 10.54 million barrels per day (bpd).

Only Russia produces more at almost 11 million bpd.

Despite the dips in crude oil on Monday, the overall market remains well supported, especially by strong demand in Asia, and Brent prices are up by 20 percent from their 2018 lows in February.

Prices are also being supported by the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that were introduced in 2017 to prop up the market.

“Added price pressure comes from U.S. sanctions against the key oil exporting nations of Venezuela, Russia and Iran,” said J.P. Morgan Asset Management Global Market Strategist Kerry Craig. He was referring to action the U.S. government has taken on Russian companies and individuals, as well as on potential new measures against struggling Venezuela and especially OPEC-member Iran.

“Stay long oil,” U.S. bank J.P. Morgan said in a separate note to clients. The United States has until May 12 to decide whether it will leave the Iran nuclear deal and instead impose new sanctions against Tehran, including potentially on its oil exports, which would further tighten global supplies.

Trump shouldn't call on OPEC for lower oil

Trump shouldn’t call on OPEC for lower oil  

The U.S. trade action against Russia and, potentially, against Iran has resulted in a slump in Russia’s ruble and Iran’s rial.

This means costs for any imported goods become more expensive for its citizens or companies, but it has also pushed up the value of Russia’s and Iran’s oil sales as all of their production costs are in the local currencies, while foreign sales are virtually all made in the U.S. dollar.

The generally elevated oil prices have also sparked a spat between U.S. President Donald Trump and producer cartel OPEC.

Trump on Friday accused OPEC of “artificially” boosting oil prices, threatening on Twitter that this “will not be accepted”, drawing rebukes from several of the world’s top oil exporters within OPEC.

Oil Prices Bristle As U.S. Rig Count Climbs

 Oilprice.com

Oil Prices Bristle As U.S. Rig Count Climbs

Baker Hughes reported a 10-rig increase to the number of oil and gas rigs this week. The total number of oil and gas rigs now stands at 1003, which is an addition of 164 rigs year over year.

The number of oil rigs in the United States increased by 11 this week, for a total of 808 active oil wells in the US—a figure that is 136 more rigs than this time last year. The number of gas rigs held steady this week, still at 194; 29 rigs above this week last year.

The oil and gas rig count in the United States has increased by 80 in 2018.

While US drillers seem determined to add rigs, Canada continued its brutal losing streak, with a decrease of 23 oil and gas rigs, after losing 168 rigs last week in the four weeks prior. At just 111 total rigs, Canada now has 21 fewer rigs than it did a year ago.

Oil prices were trading down on Friday, with West Texas Intermediate trading down $0.27 (-0.42%) at $63.27 at 9:17am EST. The Brent benchmark was trading down $.011 (-0.16%) at $68.22. Price pressures persisted on Friday as the China and US trade tiff heated up, with President Trump announcing billions in additional tariffs in a tit-for-tat measure after China’s latest round of tariffs. Also weighing on prices this week is the ever-present threat of climbing US crude oil production, which rose again in the week ending March 30, reaching 10.460 million bpd—the sixth build in as many weeks—well on its way to the 11 million bpd mark that analysts see coming in 2018.

At 8 minutes after the hour, WTI was trading at $62.41 (-1.78%) and Brent was trading at $67.43 (-1.32%).

By Julianne Geiger for Oilprice.com

Oil hits highest level in nearly two weeks on Asian equity recovery

CNBC

  • Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed by a recovery in Asian shares and by worries over tensions in the Middle East.
  • The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit.
  • Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.

Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed as Asian shares joined a global recovery in equity markets and by worries over tensions in the Middle East.

Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation.

U.S. West Texas Intermediate crude for March delivery was up 74 cents, or 1.2 percent, at $62.42 a barrel by 0217 GMT, after earlier touching its highest since Feb. 7.

London Brent crude was up 46 cents, or 0.7 percent, at $65.30, after rising more than 3 percent last week.

“The upside momentum since WTI hit last week’s low of $58 has been continuing,” said Tetsu Emori, CEO of Emori Capital Management in Tokyo.

“Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in U.S. rig count and a slight recovery in the dollar.”

Trading is expected to be slower than usual due market holidays in the United States as well as Greater China and India.

The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit.

That marked the first time since June that drillers added rigs for four consecutive weeks, and the figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a two-year crash.

Surging U.S. production is offsetting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) until the end of 2018.

Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply.

Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.