Oil rockets nearly 20% as investors hail coronavirus stimulus spending — for now

CNBC

Reuters
KEY POINTS
  • Brent crude was up $2.10, or 8%, at $26.98 a barrel by 0028 GMT after tumbling 13% on Wednesday in a third day of relentless selling.
  • U.S. oil gained $3.44, or 17%, to $23.81 a barrel after slumping nearly 25% in the previous session.
GP: Oil field 200310 Asia
A pumpjack near the Yamashinskoye rural settlement in the Almetyevsk District.
Yegor Aleyev | TASS | Getty Images

Oil prices surged as much as nearly 20% on Thursday, bouncing back from days of heavy losses in a relief rally that may yet be short-lived, analysts warned, but which was stoked by economic stimulus efforts to ward off a global coronavirus recession.

Brent crude was up $2.10, or 8%, at $26.98 a barrel by 0028 GMT after tumbling 13% on Wednesday in a third day of relentless selling. U.S. oil gained $3.44, or 17%, to $23.81 a barrel after slumping nearly 25% in the previous session.

“After a 24% crash, oil prices are firming up on some selling exhaustion and as U.S. and European leaders unleash … aid and stimulus,” said Edward Moya, senior market analyst at OANDA in New York.

In the latest move by a central bank to try to halt the spiraling economic and financial crisis sparked by the coronavirus epidemic, the European Central Bank kicked off a 750 billion euro ($820 billion) emergency bond purchase scheme after an unscheduled meeting on Wednesday.

Still, the spread of coronavirus showing no sign of abating. Countries on every continent have resorted to drastic lockdowns, steps to try to tame a virus that has now infected more than 200,000 people worldwide, killing more than 8,000, with a major global recession in prospect.

OANDA’s Moya cautioned that the selling could start again in oil markets.

“A bottom for oil is not in place, but we could finally see some stabilisation if financial markets can maintain a somewhat constructive tone with all the stimulus that is about to hit,” he said.

Oil gains as optimism grows economic impact of coronavirus outbreak may be brief

CNBC

Reuters
KEY POINTS
  • Brent crude was up by 59 cents, or 1%, at $58.34 a barrel by 0439 GMT.
  • U.S. oil was up 55 cents, or 1.1%, at $52.60 a barrel.
GP: Offshore oil rig
An offshore oil platform.
Cavan Images | Cavan | Getty Images

Oil prices gained 1% on Wednesday, with Brent rising a seventh straight day, amid broad optimism as new coronavirus cases fell for a second day in China and concerns rose over supply after a U.S. move to cut more Venezuelan crude from the market.

Brent crude was up by 59 cents, or 1%, at $58.34 a barrel by 0439 GMT, while U.S. oil was up 55 cents, or 1.1%, at $52.60 a barrel.

China is still struggling to get manufacturing going again in the world’s second-largest economy, after imposing stringent city lockdowns and travel restrictions to contain the virus that has now killed more than 2,000 people, but investors remain optimistic that the economic fallout may be short-lived.

Official data showed that new cases in China fell for a second straight day, although the World Health Organization has cautioned there is not enough data to know if the epidemic was being contained.

Brent has risen nearly 10% since hitting a low for this year so far last week, most recently supported by a U.S. decision on Tuesday to blacklist a trading subsidiary of Russia’s Rosneft that President Donald Trump’s administration said provides a financial lifeline to Venezuela’s government.

The United States slapped sanctions on Rosneft Trading SA, the Geneva-based unit.

The Swiss subsidiary “has been Venezuela’s primary conduit for brokering cargos, which find their way predominantly to refineries in India and China,” said Stephen Innes, chief market strategist at AxiCorp.

“Throttling this Asian supply channel will provide some support for oil prices,” he said.

Prices have also been supported by hopes that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will deepen supply cuts.

The grouping, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic.

OPEC+ wants to “prevent the emergence of a large supply overhang caused by slumping demand amid the health crisis centred in China, the world’s biggest importer of crude oil,” Eurasia Group said in a note.

Oil declines as market surplus forecast counters Libya worries

CNBC

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

CNBC

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.