Oil falls after Trump says he pressed OPEC to make up for Iranian sanctions

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Reuters

KEY POINTS
  • Oil prices continue to fall after Friday’s sharp pullback.
  • President Donald Trump on Friday said he called OPEC and told the producer group to pump more oil to offset U.S. sanctions on Iran.
  • Oil markets are already tight as OPEC and allies cut supplies and U.S. sanctions curb Iranian and Venezuelan exports.
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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
Getty Images

Oil prices fell on Monday, extending a slump from Friday that ended weeks of rallying, after President Donald Trump claimed that he demanded OPEC raise output to soften the impact of U.S. sanctions against Iran.

Brent crude futures were down 14 cents at $72.01 a barrel around 8:35 a.m. ET (1235 GMT). U.S. West Texas Intermediate crude futures lost 14 cents to $63.16.

Both benchmarks fell around 3% in the previous session, after Trump said he told OPEC to lower oil prices.

“Gasoline prices are coming down. I called up OPEC, I said you’ve got to bring them down. You’ve got to bring them down,” Trump told reporters on Friday.

“Spoke to Saudi Arabia and others about increasing oil flow. All are in agreement,” the president later tweeted.

The national average U.S. gasoline price is actually still rising, and sources denied that several high-level OPEC and Saudi officials spoke to Trump.

Trump’s remarks triggered a selloff, putting at least a temporary ceiling on a 40 percent price rally in oil prices since the start of the year.

The rally had gained momentum in April after Trump tightened sanctions against Iran by ending all exemptions that major buyers, especially in Asia, previously had.

U.S. sanctions on Venezuela are also working to tighten global supply as fighting in Libya threatens to curb output there as well.

“We are dealing with a market that’s not actually short of supply but is short due to politically-motivated action, and we know how quickly that can be turned around if necessary,” Saxo Bank analyst Ole Hansen told Reuters.

“Being a bear in the market is a very lonely place now.”

Traders said the market was shifting its focus to the voluntary supply cuts led by OPEC, de facto headed by the world’s top exporter Saudi Arabia.

“We are of the view that Saudi Arabia will increase output as soon as May, something they were likely to do anyway in the lead up to summer,” ING bank said. “The Kingdom could increase output by 500 million barrels per day (bpd) and still be in compliance with the OPEC+ deal for the month of May.”

The cuts have been supported by some non-OPEC producers, notably Russia, but analysts said this cooperation may not last beyond a meeting between OPEC and its other allies, a group known as OPEC+, scheduled for June.

Russia has said it would be able to meet China’s oil demand needs as Beijing tries to replace the imports it usually gets from Iran.

“Russia appears to have every reason to resume ramping up production levels and the base case should start to become (that) we will not see OPEC+ agree upon extending production cuts, with tweaks to cover the shortfall from Iran,” said Edward Moya, senior analyst at futures brokerage OANDA.

— CNBC’s Tom DiChristopher contributed to this report.

Oil near 2019 highs after US ends all Iran sanction exemptions

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Reuters

KEY POINTS
  • Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
  • U.S. West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
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Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, October 14, 2016.
Essam Al-Sudani | Reuters

Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.

Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.

U.S. West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.

The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.

Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries(OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.

Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets”.

The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel”.

ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya. ”

The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.

Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”

Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.

“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Meanwhile, the Atlantic Council said the U.S. move would hurt Iranian citizens.

“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the U.S. sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”

Oil prices slip amid ample US output, Brent drifts away from five-month high

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Reuters

KEY POINTS
  • Brent crude futures were at $71.42 a barrel at 0235 GMT, down 20 cents, or 0.3 percent, from their last close. Brent fell 0.1 percent on Wednesday, after earlier touching its highest since Nov. 8 at $72.27 a barrel.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.69 per barrel, down 7 cents, or 0.1 percent, from their previous settlement. WTI closed the last session down 0.5 percent.
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An oil pumpjack operates near Williston, North Dakota.
Andrew Cullen | Reuters

Oil prices dropped on Thursday as the impact of plentiful U.S. production offset a surprise decline in U.S. inventories, leaving international benchmark Brent retreating from a five-month high touched in the previous session.

Brent crude futures were at $71.42 a barrel at 0235 GMT, down 20 cents, or 0.3 percent, from their last close. Brent fell 0.1 percent on Wednesday, after earlier touching its highest since Nov. 8 at $72.27 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were at $63.69 per barrel, down 7 cents, or 0.1 percent, from their previous settlement. WTI closed the last session down 0.5 percent.

U.S. crude inventories fell by 1.4 million barrels in the week to April 12, compared with analyst expectations for an increase of 1.7 million barrels, Department of Energy (DoE) showed on Wednesday.

“A persistent rise in U.S. oil output, together with lingering demand-side concerns emerging from the U.S.-China trade dispute, is limiting price gains, ” Abhishek Kumar, Head of Analytics at Interfax Energy in London.

While official data on Wednesday showed China’s economy grew by 6.4 percent in the first quarter, defying expectations for a further slowdown, talks on a U.S.-China trade deal have yet to bear fruit.

While the U.S.-China trade war has rumbled on, prices have been supported this year by an agreement reached by the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, to limit their oil output by 1.2 million barrels per day.

Global supply has also been tightened further by U.S. sanctions on OPEC members Venezuela and Iran.

Iran’s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.

Surging U.S. production has filled some of the gap in supplies, although not all of the lost production can be immediately replaced by U.S. shale oil due to refinery configurations.

“The unexpected drawdown in U.S. commercial crude oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Kumar said.

Gasoline stocks fell by 1.2 million barrels, less than analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.

Distillate stockpiles, which include diesel and heating oil, fell 362,000 barrels, also not as much as forecasts for a 846,000-barrel drawdown, the EIA data showed.

Net U.S. crude imports fell last week by 659,000 barrels per day.

Oil edges lower as supply concerns check losses

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Reuters

KEY POINTS
  • Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.
  • Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.
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Ismail Zitouny | Reuters

Oil prices edged lower on Monday after international benchmark Brent hit a fresh five-month high in the previous session, but concerns over global supplies provided a floor to losses.

Brent crude oil futures were at $71.40 a barrel at 0015 GMT, down 15 cents, or 0.2 percent, from their last close. Brent closed up 1 percent on Friday when prices hit a high of $71.87 a barrel, the highest since Nov. 12.

U.S. West Texas Intermediate (WTI) crude futures were at $63.60 per barrel, down 29 cents, or 0.5 percent, from their last settlement. WTI rose 0.5 percent on Friday.

The head of Libya’s National Oil Corp warned on Friday that renewed fighting could wipe out crude production in the country.

“Supply side issues remained a concern for the market. Libyan rebel leader Khalifa Haftar moved forces closer to Tripoli,” ANZ Bank said in a research note.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies meet in June to decide whether to continue withholding supply. OPEC, Russia and other producers, an alliance known as OPEC+, are reducing output by 1.2 million bpd from Jan. 1 for six months.

OPEC’s de facto leader, Saudi Arabia, is considered keen to keep cutting, but sources within the group said it could raise output from July if disruptions continue elsewhere.

Russia’s Finance Minister Anton Siluanov was quoted by the TASS news agency as saying on Saturday that Russia and OPEC may decide to boost production to fight for market share with the United States but this would push oil prices as low as $40 per barrel.

Oil prices fall on surging US crude supply, economic slowdown

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Reuters

KEY POINTS
  • International benchmark Brent futures were at $71.44 per barrel at 0424 GMT, down 29 cents, or 0.4 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents, or 0.5 percent, from their previous settlement.
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Sergei Karpukhin | Reuters

Oil prices fell on Thursday, pressured as U.S. crude stockpiles surged to their highest levels in almost 17 months amid record production and as economic concerns cast doubt over growth in demand for fuel.

International benchmark Brent futures were at $71.44 per barrel at 0424 GMT, down 29 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude oil futures were at $64.28 per barrel, down 33 cents, or 0.5 percent, from their previous settlement.

U.S. crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017, the Energy Information Administration said on Wednesday.

U.S. crude oil production remained at a record 12.2 million barrels per day (bpd), making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

There are also concerns that an economic slowdown will soon dent fuel consumption after the International Monetary Fund this week downgraded its global growth forecast to the lowest in a decade.

Despite the surge in U.S. supply and the economic concerns, global oil markets remain tight amid supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), U.S. sanctions on oil exporters Iran and Venezuela, and escalating fighting in Libya.

”(Oil markets will remain tight) as long as Saudi Arabia continues to back the production cut deal as aggressively as it has done so far,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Brent and WTI have risen by around 30 and 40 percent respectively since the start of the year.

“Pressure to global supplies continues to mount because of sanctions-linked problems in Iran and Venezuela and rising geopolitical risk in Libya,” said Stephen Innes, head of trading at SPI Asset Management.

Beyond the short-term outlook for oil markets, a lot of attention is on the future of demand amid the rise of alternative fuels for transport.

“We believe global demand has another 10 million barrels bpd of growth, with over half from China,” Bernstein Energy said in a note on Thursday.

Current oil demand stands around 100 million bpd.

Bernstein said it expected oil demand to peak around 2030, but added that “we expect a long plateau rather than a sharp decline” in consumption after that.

“While no industry lasts forever, the age of oil is far from over,” Bernstein said.