Oil prices rise on signs Iranian crude exports are falling further in October

CNBC

  • Iran’s exports of 1.33 million barrels per day of crude oil in the first two weeks of October, according to data from Refinitiv Eikon.
  • Meanwhile, Saudi Arabia continues to face political pressure over the disappearance of journalist Jamal Khashoggi.

Oil prices rose on Tuesday on signs Iranian oil exports this month have fallen from September ahead of U.S. sanctions against Tehran that are set to start in November.

International benchmark Brent crude for December delivery rose 27 cents, or 0.33 percent, to $81.05 per barrel by 0325 GMT.

U.S. West Texas Intermediate crude for November delivery was up 12 cents at $71.90 a barrel.

Iran has exported 1.33 million barrels per day (bpd) to countries including India, China and Turkey in the first two weeks of October, according to Refinitiv Eikon data. That was down from 1.6 million bpd in September, the data showed.

The October exports are a sharp drop from the 2.5 million bpd exported in April before U.S. President Donald Trump withdrew from a multi-lateral nuclear deal with Iran in May and ordered the re-imposition of economic sanctions on the country, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC).

The sanctions on Iran’s petroleum sector will go into effect on Nov. 4.

“Uncertainties will remain until Nov. 4 when it would be clear whether the United States would want to cut Iran oil exports to zero or grant waivers,” said Vincent Hwang, commodity analyst at NH Investment & Securities in Seoul.

“Brent prices are likely stay in the range of $80 a barrel or slightly higher, while WTI prices are likely to be $70-$75 a barrel,” Hwang added.

Crude prices have also been supported by geopolitical tensions caused by the disappearance of a Saudi Arabian journalist in Turkey. Turkish official have alleged Saudi Arabian intelligence officers killed the journalist Jamal Khashoggi on Oct. 2 at the Saudi consulate in Istanbul.

U.S. President Donald Trump threatened “severe punishment” for the kingdom if the journalist is found to have been killed. Trump dispatched Secretary of State Mike Pompeo to Saudi Arabia to meet with the country’s leader King Salman.

Saudi Arabia, the world’s largest oil exporter, has denied the allegation. Saudi Arabian officials said it would retaliate against any actions taken over the Khashoggi case.

With the world’s only sizable spare oil output capacity, Saudi Arabia is expected to export more to offset the loss of Iranian oil supply from the sanctions.

Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday at a conference in New Delhi that the kingdom is committed to meeting India’s rising oil demand and is the “shock absorber” for supply disruptions in the oil market.

The country is preparing to admit to causing the death of Khashoggi, according to CNN and New York Times reports on Monday.

“For now, concerns around the disappearance of a Saudi Arabian national appear to be limited to the political sphere,” a Houston-based consultancy Stratas Advisors said in a note.

But WTI prices could fall in the back half of the week, weighed by an increase in U.S. crude inventories, the note said.

U.S. crude stockpiles were forecast to have risen for the fourth straight week by about 1.1 million barrels in the week ended Oct.12, according to a Reuters poll ahead of reports from the American Petroleum Institute (API) and the U.S. Department of Energy’s Energy Information Administration (EIA).

The API’s data is due for publication at 4:30 p.m. EDT (2030 GMT) on Tuesday, and the EIA report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

Oil extends losses as other markets fall, inventories rise

CNBC

  • Oil prices continued to decline on Thursday after suffering losses in the last session.
  • U.S. crude inventories increased more than expected last week, according to the American Petroleum Institute on Wednesday.

Oil prices fell to two-week lows on Thursday as they extended big losses from the previous session amid a rout in global stock markets, with oil also taking a hit from an industry report showing U.S. crude inventories rose more than expected.

Supply worries also eased as Hurricane Michael likely spared oil assets from significant damage as it smashed into Florida, even as it caused at least one death, injuries and widespread destruction.

Brent crude futures were down $1.22, or 1.5 percent, at $81.87 a barrel by 0237 GMT. They earlier touched their lowest since Sept. 28 at $81.61, after closing 2.2 percent lower on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were down by $1, or 1.4 percent, at $72.17, having also fallen to their lowest since Sept. 28. They dropped 2.4 percent in the previous session.

Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3 percent, its biggest one-day decline since February.

Technology shares tumbled on fears of slowing demand and concerns about U.S.-China tensions. Japan’s Nikkei 225 was down nearly 4 percent on Thursday.

“Ugly, very very ugly,” Greg McKenna an independent market strategist based near Sydney said in a morning note, referring to declines in global markets including oil.

U.S. crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday.

Crude inventories climbed by 9.7 million barrels in the week to Oct. 5 to 410.7 million, compared with analyst expectations for an increase of 2.6 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.2 million barrels, API said. [API/S]

The U.S. Energy Information Administration (EIA) is due to release official government inventory data Thursday at 11 a.m. EDT.

In the U.S. Gulf of Mexico, producers have cut daily oil production by roughly 42 percent due to the storm, the Bureau of Safety and Environmental Enforcement said. The cuts represent 718,877 barrels per day of oil production.

While production has been cut because of the hurricane, “down time is expected to be brief and Gulf of Mexico output now accounts for a comparatively small portion of total U.S. production,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

U.S. oil output is expected to rise 1.39 million bpd to a record 10.74 million bpd, the EIA said in its monthly forecast on Wednesday.

Oil dips as IMF lowers global growth outlook; eyes on US hurricane

CNBC

  • The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday.
  • Meanwhile, Hurricane Michael caused the shutdown of nearly 40 percent of U.S. Gulf of Mexico crude output.

Oil prices edged lower on Wednesday after the IMF lowered its global growth forecasts but prices were supported as Hurricane Michael churned towards Florida, causing the shutdown of nearly 40 percent of U.S. Gulf of Mexico crude output.

Brent crude futures were down 21 cents at $84.79 a barrel by 0434 GMT, after a 1.3 percent gain on Tuesday.

U.S. West Texas Intermediate (WTI) crude was down by 34 cents, or 0.5 percent, at $74.62 a barrel, after rising nearly 1 percent in the previous session.

The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday, raising concerns that demand for oil products may slump as well.

Trade tensions and rising import tariffs were taking a toll on commerce, while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said.

“Prices are peaking at the most opportunistic time given waning global growth narrative,” said Stephen Innes, head of trading APAC at OANDA in Singapore.

In the United States, nearly 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday on the Florida Panhandle.

The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said late on Tuesday it had halted operations at its marine terminal.

The facility is the only U.S. port able to fully load and unload tankers with a capacity of 2 million barrels of oil.

Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement.

Iran’s crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4.

Industry and government data on U.S. crude inventories will be delayed by one day this week because of a public holiday on Monday. The American Petroleum Institute is due to release data on Wednesday, while the U.S. Energy Information Administration is due to publish on Thursday.

“There seems to more positive supply chatter in the equation this week, and even although we know its maintenance season the markets are so long positioned that we could see an outsized move on a big build,” Innes said.

Oil prices rise on signs that Iranian crude exports fall further

CNBC

  • Iran’s crude oil exports declined further in the first week of October, according to tanker data and an industry source.
  • The decline comes ahead of the re-imposition of sanctions by the U.S. on Iran in the coming weeks.

Oil prices rose on Tuesday as more evidence emerged that crude exports from Iran, OPEC’s third-largest producer, are declining in the run-up to the re-imposition of U.S. sanctions and as a hurricane moved across the Gulf of Mexico.

Brent crude was up 26 cents, 0.3 percent, at $84.17 a barrel by 0244 GMT. On Monday, Brent fell to a low of $82.66, but mostly recovered as investors bet China’s economic stimulus would boost crude demand. Brent rose to a four-year high of $86.74 last week.

U.S. West Texas Intermediate (WTI) crude futures were down by 24 cents, or 0.3 percent, at $74.53 a barrel. WTI fell to as low as $73.07 in the previous session but closed just 5 cents lower.

Iran’s crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers are seeking alternatives ahead of the start of the U.S. sanctions on Nov. 4 and creating a challenge to other OPEC oil producers as they seek to cover the shortfall.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments were so far below 1 million bpd.

That is down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and re-imposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.

Last week, Saudi Arabia, the biggest producer among the Organization of the Petroleum Exporting Countries (OPEC), announced plans to lift crude output next month to 10.7 million bpd, a record.

“Iranian barrels are declining fast, and Saudi Arabia’s promise to balance will face a reality check in a month’s time,” J.P.Morgan said in an oil market note.

Iran’s Oil Minister Bijan Zanganeh on Monday called a Saudi claim that the kingdom could replace Iran’s crude exports “nonsense.”

“Iran’s oil cannot be replaced by Saudi Arabia nor any other country,” Zanganeh said, according to his ministry’s website.

Oil companies operating in the Gulf of Mexico shut down 19 percent of oil production as Hurricane Michael moved toward eastern Gulf states including Florida.

If current forecasts prove accurate, the hurricane would largely miss major producing assets in the Gulf, analysts said, but any change of track could widen the impact.

The International Monetary Fund on Tuesday cut its global economic growth forecasts for 2018 and 2019, saying that trade policy tensions and rising import tariffs were taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.

Oil prices fall as US may grant some waivers on Iran crude sanctions

CNBC

  • Oil prices saw declines on Monday following a development on the impending U.S. sanctions on Iran in November.
  • Last Friday, a U.S. government official said the country could potentially grant waivers to the sanctions for nations which already showed efforts to reduce their imports of Iranian oil.

Oil prices fell on Monday after a U.S. government official said Washington was considering granting waivers to its sanctions against Iran’s crude exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran.

International benchmark Brent crude oil futures were at $83.53 per barrel at 0028 GMT, down 63 cents, or 0.75 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 39 cents, or 0.5 percent, at $73.95 a barrel.

U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero.

However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil.

Further weighing on prices. Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also “chatter that Saudi Arabia has replaced all of Iran’s lost oil”.

But Innes warned that limited spare production to deal with further supply disruptions meant “the capacity is quickly declining due it Asia’s insatiable demand”.

The U.S. oil drilling rig count fell for a third consecutive week, as rising costs and pipeline bottlenecks have hindered new drilling since June.

Drillers cut two oil rigs in the week to Oct. 5, bringing the total count down to 861, energy services firm Baker Hughes said in its weekly report on Friday.

That is the longest streak of weekly cuts since October last year.

With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in U.S. drilling, U.S. bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to “stay long Jan ’19 WTI on supply risks to crude”.