Oil rises after OPEC’s Barkindo says US shale growth may slow in 2020

CNBC

Reuters
KEY POINTS
  • Brent futures rose 16 cents, or 0.3%, to $62.53 per barrel by 0250 GMT.
  • U.S. West Texas Intermediate crude gained 22 cents, or 0.4%, to reach $57.34.
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The Sedco 714 oil platform, operated by Transocean, stands in the Port of Cromarty Firth in Cromarty, United Kingdom, on February 16, 2016.
Matthew Lloyd | Bloomberg | Getty Images

Oil prices rose on Thursday after industry data showed a surprise drop in U.S. crude inventories while comments from an OPEC official about lower-than-expected U.S. shale production growth in 2020 also provided some support for oil.

However, prices were capped by mixed signs for oil demand in China, the world’s biggest crude importer, as industrial output increased in October at a less-than-expected rate but oil refinery throughput last month rose 9.2% from a year earlier to the second-highest ever.

Brent futures rose 16 cents, or 0.3%, to $62.53 per barrel by 0250 GMT while U.S. West Texas Intermediate crude gained 22 cents, or 0.4%, to reach $57.34.

The Secretary General of the Organization of the Petroleum Exporting Countries (OPEC) Mohammad Barkindo said on Wednesday that there would likely be downward revisions of supply going into 2020 especially from United States shale, adding that some U.S. shale oil firms see output growing by only around 300,000-400,000 barrels per day (bpd).

While Barkindo’s comments supported oil prices, there is not a clear way for OPEC to forecast oil production outside the group, Howie Lee, an economist at Singapore’s OCBC bank said.

“I don’t see much changes in supply so prices are still trading within the same range from the start of November,” he said.

Barkindo’s comments were in stark contrast with forecasts by the U.S. Energy Information Administration (EIA) on Wednesday that U.S. oil production is on course to hit new records this year and next.

The EIA raised its forecast for U.S. oil production this year by 30,000 bpd to 12.29 million bpd this year, after output at the world’s top oil producer hit a record of 13 million bpd this month.

U.S. oil output is expected to rise by 1 million bpd to 13.29 million bpd in 2020, the agency said.

The American Petroleum Institute reported on Wednesday an unexpected drop in crude stockpiles by 541,000 barrels in the week to Nov. 8, against analysts’ expectations of an increase of 1.6 million barrels. Gasoline and distillates inventories increased, the API data showed.

Official weekly EIA data is due at 11:00 a.m. EST (1600 GMT) on Thursday.

Both reports were delayed a day for the U.S. Veterans Day holiday on Monday.

OPEC and its allies, including Russia, meet on Dec. 5-6 to discuss output policy and production curbs of 1.2 million bpd that have been in place since January with the aim of supporting crude prices. The pact runs to March 2020.

Barkindo said on Wednesday it was too early to say if further output cuts would be needed and said OPEC and it allies needed to continue working together to cope with uncertainty in the market.

“They have made it quite clear that they are not reducing production further,” OCBC’s Lee said.

“What Saudi can do now is to urge compliance among members especially Iraq and Nigeria. If they can comply, then they can talk about cuts.”

Oil slips as US-China trade deal hopes dwindle

CNBC

Reuters
KEY POINTS
  • Brent crude futures edged down 18 cents, or 0.3%, to $61.88 a barrel by 0411 GMT.
  • U.S. West Texas Intermediate crude was at $56.67, down 13 cents or 0.2%.
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Cowboy farmer and oil pumpjack
Getty Images

Oil prices dipped on Wednesday as prospects for a trade deal between the United States and China dimmed, weighing on the outlook for the global economy and energy demand.

U.S. President Donald Trump said on Wednesday that the two countries were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony, disappointing investors.

Brent crude futures edged down 18 cents, or 0.3%, to $61.88 a barrel by 0411 GMT, while U.S. West Texas Intermediate crude was at $56.67, down 13 cents or 0.2%.

A forecast by the International Energy Agency for slower global oil demand growth post-2025 also weighed on the market.

Global oil demand is expected to grow by 1 million barrels per day (bpd) on average to 2025, but is forecast to slow to 100,000 bpd a year from then on as fuel efficiency improves and more electric vehicles hit the road, the IEA said in its annual World Energy Outlook for the period to 2040.

Even as U.S. production growth slows from the breakneck pace of recent years, the world’s top oil producer will still account for 85% of the increase in global oil output to 2030, and for 30% of the increase in gas, the agency said.

The share of global oil production by members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia is seen falling to 47% for much of the next decade, a level not seen since the 1980s.

“The effects have been striking, with U.S. shale now acting as a strong counterweight to efforts to manage oil markets,” IEA’s Executive Director Fatih Birol said.

In the United States, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

Five analysts polled by Reuters estimated, on average, that crude inventories rose around 1.6 million barrels in the week to Nov. 8.

ANZ analysts said the prospects for U.S. crude exports had turned bleak after shipping rates jumped last month, causing inventories to stay above both last year’s level and the five-year average.

The American Petroleum Institute (API) is scheduled to release its data for the latest week at 4:30 p.m. EST (2130 GMT) on Wednesday, while the weekly report from the U.S. Energy Information Administration (EIA) is due at 11:00 a.m. EST on Thursday.

Separately, the 590,000 barrel-per-day Keystone oil pipeline that transports Canadian heavy crude to the United States has restarted operations following an oil spill two weeks ago, a U.S. regulator said on Tuesday.

Traders are now eyeing next month’s meeting between the OPEC and Russia to determine if the group would deepen output cuts to prop up prices.

“We believe the production curbs could be extended beyond Q1 2020, although deeper cuts are unlikely,” ANZ analysts said.

Oil prices gain as market awaits signals on U.S.-China trade talks

REUTERS

TOKYO (Reuters) – Oil prices rose on Tuesday, reversing early losses on hopes that U.S. President Donald Trump may signal progress on trade talks with China in a speech later in the day.

Brent crude futures were up 31 cents, or 0.5%, at $62.49 a barrel by 0644 GMT, after dipping to as low as $61.90 earlier in the day.

U.S. West Texas Intermediate (WTI) crude was up 23 cents, or 0.4%, at $57.09 a barrel, having fallen to $56.55.

Worries about the impact on oil demand from the fallout of the 16-month U.S.-China trade war, which has weighed on global economic growth, sent prices lower on Monday.

Trump said on Saturday that talks with China were moving along “very nicely” but the United States would only make a deal if it was the right one for Washington. He also there had been incorrect reporting about U.S. willingness to lift tariffs.

Trump speaks to the Economic Club of New York later on Tuesday, and markets will be keen for any update on the talks.

“Positive commentary about a possible U.S. and China interim trade deal certainly helps, but the fundamentals are supportive,” said Virendra Chauhan, Oil Analyst at Energy Aspects in Singapore, pointing to an improved demand outlook.

“Six million barrels per day of refining capacity is due to return from turnarounds across November and December,” he said.

On the supply side, Goldman Sachs also cut its 2020 forecast for growth in U.S. oil production, which has surged in recent years.

The investment bank cut its growth forecast for next year by 100,000 barrels per day (bpd) to 600,000 bpd over 2019.

“We expect U.S. oil growth to decelerate into 2020 as many companies look to balance growth with capex,” Goldman Sachs said.

Elsewhere, U.S. data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.

Cushing inventories had grown for five weeks in a row through Nov. 1, according to government data.

Demand growth may pick up in 2020 after a year of dashed expectations amid the U.S.-China trade war, Fitch Solutions Macro Research analysts said in a new report.

“Our data show that 2019 will mark the nadir of oil demand growth over the next five years,” Fitch Solutions said.

“We forecast demand to (grow) by around 0.5% this year, rising to 0.8% in 2020,” the report said, although it added that “trade and political risks remain extremely elevated.”

Oil slips on uncertainty over US-China trade deal, surging inventories

CNBC

Reuters
KEY POINTS
  • Brent crude, the global benchmark, was down 16 cents, or 0.3%, at $62.13 a barrel by 0259 GMT, after gaining 0.9% in the previous session.
  • U.S. West Texas Intermediate (WTI) crude was down 23 cents, or 0.4%, at $56.92 a barrel. The contract rose 1.4% on Thursday.
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A photo taken August 19, 2013 shows a worker checking oil tanks at an oil well near Tioga, North Dakota.
Karen Bleier | AFP | Getty Images

Crude oil futures fell on Friday amid lingering uncertainty on whether, and when, the United States and China will agree a long-awaited deal to end their bitter trade dispute, the gloom compounded by rising crude inventories in the United States.

Brent crude, the global benchmark, was down 16 cents, or 0.3%, at $62.13 a barrel by 0259 GMT, after gaining 0.9% in the previous session.

U.S. West Texas Intermediate (WTI) crude was down 23 cents, or 0.4%, at $56.92 a barrel. The contract rose 1.4% on Thursday.

The trade war between the world’s two biggest economies has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

On Thursday, the Chinese commerce ministry said the two countries have agreed in the past two weeks to cancel trade tariffs in different phases, without giving a timeline.

But that comment was shrouded in doubt soon after when Reuters reported that the plan faces stiff internal opposition in the U.S. administration.

“Oil is in pause mode as traders await more details on the trade talks,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Also concentrating minds among sector watchers were remarks by OPEC Secretary-General Mohammad Barkindo this week that he was more optimistic about the outlook for 2020 because of potentially positive developments on trade disputes, appearing to downplay any need to cut output more deeply.

A deal between the Organization of the Petroleum Exporting Countries (OPEC) and allies, such as Russia, is limiting supplies until March next year. The producers meet on Dec. 5-6 in Vienna to review that policy.

Barkindo’s comments are “spooking the market, especially in the face of the seemingly never-ending run of U.S. inventory builds,” said AxiTrader’s Innes.

U.S. crude oil stockpiles rose sharply last week as refineries cut output and exports dropped, while refined products extended a multi-week drawdown, the Energy Information Administration said on Wednesday.

Stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.7 million barrels, the EIA said.

Oil falls as big US crude build offsets hopes for US-China trade talks

CNBC

Reuters
KEY POINTS
  • Brent crude futures were at $62.60 a barrel by 0330 GMT, down 36 cents, or 0.6%. Brent settled up 1.3% on Tuesday.
  • U.S. West Texas Intermediate (WTI) crude futures fell 29 cents, or 0.5%, to $56.94 per barrel, having closed up 1.2% in the previous session.
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Oil refinery at Corio, Australia silhouetted at sunset.
Richard I’Anson | Lonely Planet Images | Getty Images

Oil prices fell on Wednesday, pulled down by a larger-than-expected build-up in U.S. crude stocks, after gaining for three straight sessions on expectations of an easing of in U.S.-China trade tensions.

Brent crude futures were at $62.60 a barrel by 0330 GMT, down 36 cents, or 0.6%. Brent settled up 1.3% on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures fell 29 cents, or 0.5%, to $56.94 per barrel, having closed up 1.2% in the previous session.

U.S. crude inventories rose by 4.3 million barrels in the week ended Nov. 1 to 440.5 million barrels, according to data from the American Petroleum Institute (API) released on Tuesday. That was nearly triple analysts’ forecast for an increase of 1.5 million barrels.

Official data from the Energy Information Administration (EIA) is due later on Wednesday.

“This morning’s price action suggests that Asia is being more circumspect about oil and is concerned that bearish news was ignored entirely overnight,” Jeffrey Halley, senior market analyst at OANDA.

However, hopes remain for a breakthrough on trade in talks between the United States and China, the world’s two biggest oil consumers, keeping price falls in check.

China is pushing U.S. President Donald Trump to drop more tariffs imposed on Beijing as part of a ‘Phase One’ U.S.-China trade deal, according to people familiar with the negotiations.

“Investors will continue to take cues from U.S.-China trade talks,” ANZ Research said in a note.

Looking ahead, next year’s oil market outlook may have upside potential, Mohammad Barkindo, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday.

But in the next five years, OPEC would supply a diminishing amount of oil, squeezed by rising U.S. shale output and other rival sources, according to the oil producer group’s 2019 World Oil Outlook, released on Tuesday.

OPEC and its partners, including Russia, previously agreed to cut oil production by 1.2 million barrels per day until March 2020. They will meet in early December to review output policy.