Oil prices seesaw after Navarro walks back U.S.-China trade deal comment

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Reuters
KEY POINTS
  • Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.
  • Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices were volatile on Tuesday after markets were spooked by surprise comments from White House trade adviser Peter Navarro saying a hard-won U.S-China trade deal was “over”, though he later said his comments had been taken out of context.

Jangled nerves were also soothed to some degree after U.S. President Donald Trump later tweeted that the China trade deal was fully intact, adding he hoped China would continue to live up to the terms of the agreement.

Brent crude fell by 7 cents, or 0.1%, to $43.01 a barrel by 0253 GMT, after earlier skidding to a session low of $42.21. U.S. oil was down 14 cents, or 0.3%, at $40.59 a barrel, having dropped to a low of $39.76.

U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Trump and his administration repeatedly have accused Beijing of not being transparent about the outbreak.

Prices had slid suddenly after Navarro told Fox News in an interview that the trade deal with China was “over”, linking the breakdown in part to Beijing not sounding the alarm earlier about the outbreak of the coronavirus pandemic.

He later issued a statement saying that he had been “speaking to the lack of trust” in the Chinese administration, the comments had been “taken wildly out of context” and the trade deal remains in place.

“These comments from Navarro came out of nowhere,” said Edward Moya, senior market analyst at brokerage OANDA. “Energy traders will likely remain sceptical of the relationship between the U.S. and China if the Chinese fail to quickly make up for the shortfall with their promises of agricultural goods (purchases).”

Prices had risen earlier in the session, with the reopening of some U.S. states and countries around the world after coronavirus lockdowns sustaining a rally as demand for fuel returns. In New York, streets were clogged with traffic as the worst affected city in the United States emerged from more than 100 days of lockdown.

Tensions in the Middle East also lent some support to oil prices.

The Saudi-led coalition in Yemen said early on Tuesday it intercepted three ballistic missiles launched by Yemen’s Houthis towards the Saudi Arabian cities of Najran and Jizan, according to the Saudi state TV.

On the supply side, meanwhile, U.S. and Canadian oil and gas drillers cut the number of the rigs they are operating to a record low. That leaves them with a steep slope to scale towards recovery in output even with higher prices to spur them on.

“U.S. onshore production has now given up two full years of (volume) gains,” said Stephen Innes, chief global markets strategist, at AxiCorp. “It supports the market supposition that even with a rebound in price, the capital investment that had already been tapering off in Q1 isn’t flowing back quickly.”

U.S. oil rigs contracted for drilling dropped by 10 to 189 last week, their lowest since June 2009, according to weekly data from energy services firm Baker Hughes Co.

Gas rigs fell by three to 75, the lowest on record according to data going back to 1987.

Oil prices drop as rise in coronavirus cases stokes fuel demand fears

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Reuters
KEY POINTS
  • Brent crude fell 20 cents, or 0.5%, at $39.52 a barrel by 0424 GMT, having gained 2.6% on Monday.
  • U.S. oil dropped 21 cents, or nearly 0.6%, to $36.91 a barrel, after closing 2.4% higher in the previous session.
  • Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks. But some observers said they didn’t expect to see any return to the stringent lockdowns seen at the start of the year.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices slid on Tuesday on lingering concerns over the threat to fuel demand from the resurgence of new coronavirus infections around the world, though hopes for further cuts in crude supplies stemmed losses.

Brent crude fell 20 cents, or 0.5%, at $39.52 a barrel by 0424 GMT, having gained 2.6% on Monday. U.S. oil dropped 21 cents, or nearly 0.6%, to $36.91 a barrel, after closing 2.4% higher in the previous session.

Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks. But some observers said they didn’t expect to see any return to the stringent lockdowns seen at the start of the year.

“While the run of COVID-19 headlines emphasise that a demand recovery is likely to be a slow process, it seems unlikely that we see a return to the lockdown measures of 1H,” said Stephen Innes, Chief Global Markets Strategist at AxiCorp, in a note.

Hopes of more cuts in oil supplies by major producers also helped prevent steeper price drops, analysts said.

Prices rose on Monday after the United Arab Emirates’ energy minister expressed confidence that OPEC+ producers – members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – that have not been in full compliance with previously agreed cuts would up their game.

“Renewed optimism that OPEC+ production cuts could remain in place if we see second-wave (coronavirus) concerns intensify have oil prices refusing to enter freefall,” said Edward Moya, senior market analyst at OANDA.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July. They also called on members that have not been complying to make up their commitments with extra cuts later.

Elsewhere U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.

Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.

U.S. drillers have slashed production and the number of oil rigs fell below 200 last week, the lowest since June 2009, according to energy services company Baker Hughes Co.

Oil rises as coronavirus curbs ease, setting stage for demand boost

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Reuters
KEY POINTS
  • Brent crude was up by 42 cents, or 1.4%, at $29.88 a barrel by 0447 GMT, having fallen nearly 1% on Thursday.
  • U.S. oil gained 45 cents, or 1.9%, to $24.00 a barrel, after a decline of nearly 2% in the previous session.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices gained on Friday as more countries began relaxing restrictions put in place to halt the coronavirus pandemic, raising hopes that demand for crude and its products will start to pick up.

Brent crude was up by 42 cents, or 1.4%, at $29.88 a barrel by 0447 GMT, having fallen nearly 1% on Thursday.

U.S. oil gained 45 cents, or 1.9%, to $24.00 a barrel, after a decline of nearly 2% in the previous session.

Both contracts are heading for a second week of gains after the lows of April, when U.S. oil crashed below zero, with Brent up around 13% and WTI about 21% higher.

However, crude is still being pumped into storage, raising the prospect that any gains prompted by stronger demand will be capped.

“Oil is rallying on expectations of better demand. There are green shoots there but I think the market will need to see those broaden and extend to sustain the rally,” said Lachlan Shaw, head of commodities research at National Australia Bank in Melbourne.

On the supply side, North American oil companies are cutting production quicker than OPEC officials and industry analysts expected and are on track to withdraw about 1.7 million barrels per day of output by the end of June.

“The supply cuts we have seen announced, particularly in North America, are also giving the market confidence,” Shaw said.

Still, U.S. crude inventories at the Cushing storage hub in Oklahoma increased by around 407,000 barrels in the week through May 5, traders said on Thursday, citing Genscape data.

Australia on Friday became the latest country to plan an easing of lockdown restrictions as infections from the virus slow to a trickle, aiming to relax social distancing restrictions in a three-stage process.

France, parts of the United States and countries such as Pakistan are also planning to ease the restrictions instituted to stop the spread of the world’s worst health crisis in a century.

In the U.S., the biggest consumer of oil and its products, motorists are starting to take to the roads as the lockdowns ease. Gasoline supplied to the U.S. market rose to almost 6.7 million barrels per day (bpd) last week, according to estimates from the U.S. Energy Information Administration.

Oil prices extend rebound on output cuts, still set to end tumultuous week in the red

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Reuters
KEY POINTS
  • Brent crude was up 60 cents, or 2.8%, at $21.93 by 0133 GMT, having climbed 5% on Thursday.
  • U.S. oil gained 66 cents, or 4%, at $17.16 a barrel, after surging 20% in the previous session.
GP: Oil rig offshore platform Oil Prices Trade In Negative Numbers For First Time Amid Global Oil Glut
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices rose on Friday, gaining further ground as some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand for fuels caused by the coronavirus pandemic.

Brent crude was up 60 cents, or 2.8%, at $21.93 by 0133 GMT, having climbed 5% on Thursday. U.S. oil gained 66 cents, or 4%, at $17.16 a barrel, after surging 20% in the previous session.

But barring a sharper jump on the last trading day of the week, prices are heading for their eighth weekly loss in the last nine — one of the most tumultuous weeks in the history of oil trading, with U.S. West Texas Intermediate falling into negative territory to minus $37.63 a barrel on Monday, while Brent thudded to a two-decade low.

“The disruption relating to the coronavirus is set to cause the steepest fall in global GDP since the Second World War,” Capital Economics said in a note, forecasting a 5.5% contraction in global economies this year, dwarfing the 0.5% fall seen during the global financial crisis.

“Once the virus is under control output should rebound, but it will take years to return to its pre-virus path,” it said.

Under a deal agreed between the Organization of the Petroleum Exporting Counties (OPEC) and associated producers like Russia, a grouping known as OPEC+, production cuts equal to 9.7 million barrels of oil per day are due to kick in from May.

But Kuwait’s state news agency KUNA said on Thursday the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal.

Meanwhile Azerbaijan’s Azeri-Chirag-Guneshli oil project will have to cut output sharply from May onwards as the oil producer fulfills its commitments under the deal to cut production, four sources told Reuters.

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

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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.