Oil declines as market surplus forecast counters Libya worries

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Reuters
KEY POINTS
  • Brent crude was down 24 cents, or 0.4%, at $64.35 a barrel at 0309 GMT, after dropping 0.3% on Tuesday.
  • U.S. oil fell 29 cents, or 0.5%, to $58.09 a barrel, having declined 0.3% the day before.
Reusable: Oil tanker France sunset 151016
Jean-Paul Pelissier | Reuters

Oil prices eased on Wednesday, extending declines as the International Energy Agency (IEA) forecast a market surplus in the first half, helping ease concerns about disruptions that have slashed Libya’s crude output.

Brent crude was down 24 cents, or 0.4%, at $64.35 a barrel at 0309 GMT, after dropping 0.3% on Tuesday. U.S. oil fell 29 cents, or 0.5%, to $58.09 a barrel, having declined 0.3% the day before.

The head of the IEA, Fatih Birol, said on Tuesday he expects the market to be in surplus by a million barrels per day (bpd) in the first half of this year.

“I see an abundance of energy supply in terms of oil and gas,” Birol told the Reuters Global Markets Forum, while he was attending World Economic Forum meeting in Davos, Switzerland.

“It’s the reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn’t boost international oil prices,” Birol said, referring to the U.S. killing of an Iranian commander and retaliation by Tehran that sent prices briefly soaring earlier this month.

Libya’s National Oil Corp on Monday declared force majeure on the loading of oil from two major oil fields after the latest development in a long-running military conflict.

“Market participants are already starting to fade this story – believing that this is a transitory outage,” said Helima Croft, global head of commodity strategy at RBC Capital Markets.

However, Croft warned that the “multi-year proxy war leaves Libyan production at high risk for extended outages and there are no indications that the country is close to turning the corner.”

Unless oil facilities quickly return to operation Libya’s oil output will be reduced from about 1.2 million barrels per day (bpd) to just 72,000 bpd.

Still, U.S. crude production in large shale deposits is expected to rise to record highs in February, although the pace of increase is likely to be the lowest in about year, the U.S. Energy Information Administration (EIA) said on Tuesday.

Away from oil fundamentals, markets have been roiled by the emergence of a new strain of a coronavirus out of China amid concern about the impact of a possible pandemic on economic growth.

Oil falls as US, China add more tariffs in trade war

CNBC

Reuters
KEY POINTS
  • Brent crude was down 27 cents, or 0.5%, at $58.98 a barrel by 0324 GMT.
  • U.S. oil was down 2 cents at $55.083 at barrel.
RT: Iraq oil OPEC 181212
A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018.
Essam al-Sudani | Reuters

Oil prices were lower on Monday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude.

Brent crude was down 27 cents, or 0.5%, at $58.98 a barrel by 0324 GMT, while U.S. oil was down 2 cents at $55.083 at barrel.

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday — including footwear, smart watches and flat-panel televisions — as China put new duties on U.S. crude, the latest escalation in a bruising trade war.

U.S. President Donald Trump said the sides would still meet for talks later this month.

Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China and he again urged American companies to find alternate suppliers outside China.

Beijing’s levy of 5% on U.S. crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.

“The trade and tariff overhang is inescapable for oil markets, so while trade uncertainties persist, it will be difficult for oil to shrug off concerns about the threat to global demand,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

South Korea’s exports tumbled in August for a ninth consecutive month, on sluggish demand from its biggest buyer, China, and depressed prices of computer chips globally, government data showed on Sunday.

The bleak data clouded the outlook for Asia’s fourth-largest economy as a brewing trade dispute with Japan emerged as a new risk on top of the prolonged U.S.-China trade war.

Elsewhere, oil output from members of the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by U.S. sanctions on Iran, a Reuters survey found.

In the United States, energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.

Oil prices dip but set for solid weekly gains

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Reuters
KEY POINTS
  • Brent crude was down 7 cents, or 0.1%, at $61.01, by 0236 GMT after adding 1% on Thursday.
  • U.S. oil fell 11 cents, or 0.2%, to $56.60 a barrel. The contract is set for a gain of more than 4% this week.
reusable oil china
Jerome Favre | Bloomberg | Getty Images

Oil took a breather on Friday after three days of solid gains, but was set for its strongest week since early July, boosted by a decline in U.S inventories and a looming hurricane in Florida, while new signs of trade talks emerged.

Brent crude was down 7 cents, or 0.1%, at $61.01, by 0236 GMT after adding 1% on Thursday. Brent is heading for a gain of nearly 3% this week.

U.S. oil fell 11 cents, or 0.2%, to $56.60 a barrel. The contract is set for a gain of more than 4% this week.

“The frothy price action emphasises the store that energy markets place on trade progress to support further gains in prices going forward,” said Jeffrey Halley, senior market analyst at OANDA.

“What is given, can be taken away though, and the rally looks more like it’s running on vapours than petrol,” he said.

Worries about a slowdown in economic growth due to the U.S.-China trade war and the flow-on to oil demand kept a lid on price gains, even as falling inventories indicate a balancing market.

However, the United States and China gave signs on Thursday that they will resume trade talks as the two economic superpowers discussed the next round of in-person negotiations in September ahead of a looming deadline for additional U.S. tariffs.

The approach of Hurricane Dorian toward Florida raised fears that offshore U.S. crude producers may slow output if the storm passes into the Gulf of Mexico over the weekend.

Dorian is heading toward landfall on the Atlantic coast of Florida over the weekend and may enter into the eastern Gulf of Mexico next week. It is is forecast to strengthen and become a highly dangerous Category 4 hurricane on Sunday, the National Hurricane Center said.

Chevron’s 356,440 barrel-per-day Pascagoula, Mississippi, refinery is closely monitoring the progress of Hurricane Dorian, a company spokesman said on Thursday.

Last month, Hurricane Barry prompted offshore oil companies to shut as much as 74% of production, lifting U.S. crude prices, before it weakened to a tropical storm.

Government data on Wednesday showed U.S. crude stocks dropped last week by 10 million barrels to their lowest since October as imports slowed, while gasoline and distillate stocks each fell by over 2 million barrels. [EIA/S]

Inventories at the nation’s main delivery hub in Cushing, Oklahoma, where WTI futures are priced, slumped last week by nearly 2 million barrels to their lowest since December, the data showed.

Cushing stocks have dropped by over 300,000 barrels since the government report, traders said, citing market intelligence firm Genscape’s midweek report.

Oil falls as trade war raises recession fears

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Reuters
KEY POINTS
  • Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since Aug. 15.
  • U.S. oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9.
RT: Oil tanker Front Altair file photo
Undated handout archive photo by the Norwegian shipowner Frontline of the crude oil tanker Front Altair, released June 13, 2019.
NTB Scanpix | Reuters

Oil prices fell on Monday, pushing U.S. crude to its lowest in more than two weeks, as an intensifying U.S.China trade war knocked confidence in the global economy.

Brent crude was down 63 cents, or 1.1%, at $58.71 a barrel by 0232 GMT, having earlier touched $58.24, the lowest since Aug. 15.

U.S. oil was down 68 cents, or 1.3%, to $53.49 a barrel, having earlier fallen to $52.96, the lowest since Aug. 9.

Concerns about an economic slowdown are being fanned by a ratcheting up of trade tensions between the United States and China.

China’s commerce ministry said late last week it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products such as soybeans, and small aircraft.

In retaliation, President Donald Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

“The only thing that will lift the storm clouds over oil markets this week will be if both China and the U.S. talk and decide to mutually take a step back,” said Jeffrey Halley, market analyst at Oanda. “I can’t see that happening.”

U.S. Federal Reserve chair Jerome Powell told an annual economic symposium in Jackson Hole, Wyoming that the U.S. economy is in a “favourable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansion on track.”

The remarks gave few clues about whether the central bank will cut interest rates at its next meeting.

But exacerbating concern over the possibility of recession, U.S. manufacturing industries registered their first month of contraction in almost a decade.

The Brent/WTI spread was at minus $5.24, after widening 60 cents to settle at minus $5.17 on Friday. The spread blew out after China included U.S. oil for the first time in its tariff moves.

Hedge funds and other money managers raised their bullish wagers on U.S. crude to a three-month high in the latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.

U.S. energy companies cut the most oil rigs in about four months last week, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.

U.S. oil benchmark ends below $60 a barrel for first time in 2018

MarketWatch

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By

MyraP. Saefong

Markets/commodities reporter

NeandaSalvaterra

Oil futures fell for a sixth straight session on Friday, with the U.S. benchmark settling below $60 a barrel for the first time in 2018 to notch its biggest weekly loss in more than a year.

Data released Friday revealed the biggest weekly jump in the number of U.S. oil-drilling rigs since January 2017, contributing to concerns about a surge in U.S. production.

March West Texas Intermediate crude CLH8, -3.43% dropped $1.95, or 3.2%, to settle at $59.20 a barrel on the New York Mercantile Exchange. Prices saw their lowest finish since Dec. 22. For the week, it was down roughly 9.6%, which was the biggest such decline since January 2016.

April Brent crude LCOJ8, -3.24% the global oil benchmark, fell $2.02, or 3.1% to end at $62.79 a barrel on London’s ICE Futures exchange. Brent, which settled at its lowest since Dec. 13, retreated roughly 8.4% this week.

Baker Hughes BHGE, -3.64%  on Friday reported that the number of active U.S. rigs drilling for oil jumped by 26 to 791 this week. That marked a third straight week of increases and the largest weekly rise in more than a year.

This offers a “path for much more than a million barrels a day U.S. production increase this year, but prices will need to remain above $50,” said James Williams, energy economist at WTRG Economics. “Not a good Friday for OPEC.”

Until recently, oil prices have been buoyed by production cuts from the Organization of the Petroleum Exporting Countries and other large producers among other threats to supply.

However, OPEC member Iran also plans to raise its oil production in the next four years, according to a report from Reuters.

That has “added to market fears of an increase in global supplies,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments. “With reports suggesting China could be launching its crude oil futures contract next month, traders could be looking to the Far East to see how such a move could affect global prices.”

Oil-market fundamentals are also changing as recent increases in prices provided incentive for the U.S. to crank up output.

In a monthly report this week, the Energy Information Administration forecast record U.S. crude production of 10.59 million barrels a day this and 11.18 million barrels a day next year. A separate report from the agency also revealed that daily domestic output topped 10 million barrels a day last week—the highest such figure based on EIA records dating back to 1983.

Meanwhile, the downturn in the oil market has come amid a recent selloff in the equity markets, as investors there fret about the potential for higher inflation and central bank action. Stocks in Europe and Asia were on pace on Friday for their worst week in two years after a late slump Thursday pushed the Dow Jones Industrial Average DJIA, +1.38%  and S&P 500 SPX, +1.49%  into correction territory. U.S. stocks saw volatile Friday, with the Dow was set for a weekly loss of nearly 6%.

In other energy dealings, March gasoline RBH8, -3.66%  dropped 3.7% to $1.70 a gallon, with prices suffering a weekly loss of 9.2%, while March heating oil HOH8, -3.66%  lost 3.5% to $1.855 a gallon—down about 9.7% on the week.

March natural gas NGH18, -3.41%  fell 4.2% to $2.584 per million British thermal units, its lowest finish since late February 2017, for a weekly decline of 9.2%.

—Sara Sjolin contributed to this article