Oil jumps more than 6% following worst day since 1991

CNBC

International benchmark Brent crude futures rose 7.13% to $36.81 per barrel while U.S. West Texas Intermediate futures jumped 6.55% to $33.17 per barrel.

The moves came following a tumble in oil prices in the previous trading session. WTI and Brent dropped 24.59% and 24.1%, respectively, sinking to more than 4-year lows.

The steep sell-off came amid escalating tensions between Saudi Arabia and Russia, which traders fear could lead to an excess supply of crude.

On Friday, OPEC ally Russia rejected the additional 1.5 million barrel per day production cut that the 14-member cartel proposed. After the unsuccessful talks concluded, OPEC’s de facto leader Saudi Arabia on Saturday slashed its official oil prices as it reportedly gets set to ramp up production.

The current production cuts expire at the end of March, which means that beginning April 1 nations can pump as much oil as they want.

This potential supply glut comes at a time when prices were already suppressed thanks to the coronavirus outbreak. A slowdown in travel has already hit demand, and a global economic slowdown could depress oil further.

On Monday the U.S. Department of Energy said the Trump administration is monitoring the situation following oil’s steep slide.

“These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world. The United States, as the world’s largest producer of oil and gas, can and will withstand this volatility. The growth of the unconventional oil and gas industry in the United States has led to a more secure, resilient and flexible market,” the statement said.

— CNBC’s Eustance Huang contributed to this report.

Oil clambers higher as OPEC, allies move closer to deeper output cuts

CNBC

Reuters
KEY POINTS
  • Brent crude rose by 78 cents, or 1.50%, to $52.64 a barrel at 0502 GMT, after settling down 4 cents in the previous session.
  • U.S. West Texas Intermediate (WTI) futures rose by 72 cents, or 1.53%, to $47.90 a barrel, up for a third session.
GP: Oil production facilities 200205 ASIA
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices jumped 1.5% on Wednesday on hopes that major producers have made progress towards sealing an agreement to implement deeper output cuts aimed at offsetting the slump in demand caused by the global coronavirus outbreak.

Brent crude rose by 78 cents, or 1.50%, to $52.64 a barrel at 0502 GMT, after settling down 4 cents in the previous session. U.S. West Texas Intermediate (WTI) futures rose by 72 cents, or 1.53%, to $47.90 a barrel, up for a third session.

A panel of the Organization of Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, recommended cutting oil output by an extra 1 million barrels per day (bpd) on Tuesday. The recommendation may mean that Russia and Saudi Arabia, the two biggest producers in the OPEC+ group, are close to a deal to support prices.

That would be in addition to 2.1 million bpd in current output cuts that include a 1.7 million bpd in curbs by OPEC+ and other voluntary reductions by Saudi Arabia, the world’s biggest exporter. The group is set to meet formally in Vienna on March 5-6.

“This is no time for caution for OPEC+. Second-quarter oversupply needed some heavy lifting from the group to offset even before the COVID-19 (coronavirus disease) outbreak, but now it is a must,” Barclays analysts said in a research note.

Brent and WTI have each fallen about 27% from their 2020-peak reached in January.

The expected 1 million bpd additional cut by OPEC+ would still fall well short of the newly increased 2.1 million bpd expected global demand loss in the first half alone, Goldman Sachs analysts wrote in a research note.

U.S. crude oil inventories rose in the most recent week, while gasoline and distillate stocks fell, data from industry group the American Petroleum Institute showed on Tuesday.

Crude inventories rose by 1.7 million barrels in the week to Feb. 28 to 446.6 million barrels, compared with analysts’ expectations for a build of 2.6 million barrels.

Goldman has again cut its Brent price forecast to $45 a barrel in April, while expecting Brent gradually recovering to $60 a barrel by year-end.

Morgan Stanley on Tuesday also cut its second-quarter 2020 Brent price forecast to $55 per barrel and its WTI outlook to $50 on expectations that China’s 2020 oil demand growth would be close to zero and that demand elsewhere may weaken because of the virus.

Elsewhere, the U.S. Federal Reserve cut interest rates on Tuesday in a bid to shield the world’s largest economy from the impact of the coronavirus.

″(The) Fed’s emergency rate cut underscores fragility of economic fundamentals, and this urges OPEC+ to expedite a deeper output cut to shore up energy prices,” said Margaret Yang, market analyst at CMC Markets.

Yang said from a technical analysis perspective, Brent has found strong support at around $50-52, while immediate resistance can be found at $54.70.

Oil rebounds amid broad market recovery; investors still wary

CNBC

Reuters
KEY POINTS
  • Brent crude rose 70 cents, or 1.3%, to $53.97 a barrel by 0428 GMT, retreating from an intraday high of $54.13.
  • U.S. West Texas Intermediate was up 61 cents, or about 1.2%, at $50.18 a barrel.
GP: Oil Tankers on the Mississippi in Louisiana 191029
A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.
Art Wager | Getty Images

Oil prices rose more than 1% on Tuesday in sympathy with a rally in equity markets but investors remained jittery over the Wuhan virus that has now killed over 1,000 in China.

Brent crude rose 70 cents, or 1.3%, to $53.97 a barrel by 0428 GMT, retreating from an intraday high of $54.13. U.S. West Texas Intermediate was up 61 cents, or about 1.2%, at $50.18 a barrel.

“A broad positive sentiment across Asia markets seems to have boosted crude oil prices,” Margaret Yang, market analyst of CMC Markets, told Reuters.

“The rebound is mild and might be short-lived as China’s energy demand is likely to remain soft in the near term due to virus impact. OPEC+ and Russia will need to come out with a cohesive output cut plan to shore up oil prices,” she said.

The number of coronavirus deaths in mainland China have now reached 1,016, its National Health Commission said, and the number of cases has topped 42,600.

The virus has also spread to two dozen other countries, with the head of the World Health Organization (WHO) cautioning on Monday that the cases outside of China could be “the spark that becomes a bigger fire”.

Traders remain concerned that China’s oil demand could take a further hit if the coronavirus cannot be contained. Chinese state refiners have already said they will cut as much as 940,000 barrels per day (bpd) from their crude runs in February due to the virus.

“China’s refiners are processing 15% less crude and that could get a lot worse if the virus doesn’t peak this month,” Edward Moya, senior market analyst at OANDA, told Reuters.

“OPEC+ appears to be stuck in a wait-and-see mode … Russia can live with $40 oil (and) thus might not be so eager to play ball with the other OPEC+ members in delivering another 600,000 bpd in production cuts,” Moya said.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+ and including Russia, proposed the additional cuts last week, but Russia said on Friday it needed more time to decide whether to join in any further output reductions.

The coronavirus outbreak could trim China’s full-year economic growth rate by as much as 1 percentage point in 2020, said the Chinese government think tank National Institute for Finance and Development.

U.S. crude oil stocks, meanwhile, were estimated to have risen for a third straight week, by 2.9 million barrels for the week ended on Feb. 7, a preliminary Reuters poll showed on Monday.

Oil supplies out of Brazil have also been growing, with Petrobras having hit a new production record in the last quarter of 2019 at more than 3 million barrels of oil equivalent per day.

Oil prices edge down as traders assess China’s oil demand, await OPEC+ cuts

CNBC

Reuters
KEY POINTS
  • Brent crude slipped to $53.63 a barrel in early Asian trade, the lowest since January 2019, before recovering to $54.37 by 0517 GMT, down 10 cents.
  • U.S. West Texas Intermediate fell 8 cents to $50.24 a barrel after striking a low of $49.56.
GP: China Oil Imports tanker 180704
An oil tanker sits beside transfer pipes at a terminal as it prepares to unload its cargo of fuel on July 4, 2018 in Zhoushan, China.
VCG | Getty Images

Oil prices edged down on Monday but held recent ranges as traders assessed China’s oil demand following the coronavirus outbreak and awaited a decision by major producers to cut output further to balance markets.

Oil is off more than 20% from peaks struck in January after a spreading virus hit demand in the world’s largest oil importer and fueled concerns of excess supplies.

Brent crude slipped to $53.63 a barrel in early Asian trade, the lowest since January 2019, before recovering to $54.37 by 0517 GMT, down 10 cents.

U.S. West Texas Intermediate fell 8 cents to $50.24 a barrel after striking a low of $49.56.

“The overall sentiment is still bearish but markets are oversold,” said Avtar Sandu, a senior commodities manager at Phillips Futures in Singapore. He added traders took profit after prices hit technical support levels.

Beijing has orchestrated support for its companies and financial markets in the past week and investors are hoping for more stimulus to lift the world’s second-biggest economy.

“Normally it takes at least two quarters before things start to pick up but there’s always hope for new stimulus in the market that will buoy the economy,” Sandu said.

Worries over supply were not alleviated on Friday when Russia said it needed more time to decide on a recommendation from a technical committee that has advised the Organization of the Petroleum Exporting Countries (OPEC) and its allies to cut production by a further 600,000 barrels per day.

Algeria’s oil minister Mohamed Arkab said on Sunday the committee had advised further output cuts until the end of the second quarter.

“The coronavirus epidemic has a negative impact on economic activities, especially on the transport, tourism and industry, in China particularly, and also increasingly in the Asian region and gradually in the world,” Arkab said.

Russia Energy Minister Alexander Novak said Moscow needed more time to assess the situation, adding that U.S. crude production growth would slow and global demand was still solid.

The proposal for the further cuts “failed to alleviate the pressure on oil, in part because the proposal has yet to be formally discussed by OPEC ministers and because Russia continues to push back against further cuts,” Stephen Innes, chief market strategist at AxiCorp said in a note.

“If the cartel fails to reach an agreement, there will be more pain to come in oil (on the) downside.”

Oil traders also said they are concerned the proposed reduction would not be sufficient to tighten global markets.

Oil falls for sixth day as China virus raises global growth, demand concerns

CNBC

Reuters
KEY POINTS
  • Brent crude was down 37 cents, or 0.6%, to $58.95 at around 0348 GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.
  • U.S. West Texas Intermediate was down 29 cents, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.
Reusable: Rusted oil jacks Texas 150326
Rusted out “pump-jacks” in the oil town of Luling, Texas.
Getty Images

Oil futures fell for a sixth session on Tuesday as the spread of a new virus in China and several countries raised concerns about a hit to economic growth and oil demand.

Brent crude was down 37 cents, or 0.6%, to $58.95 at around 0348 GMT, after touching a three-month low on Monday at $58.50, as the virus outbreak triggered a global sell-off in riskier assets.

U.S. West Texas Intermediate was down 29 cents, or 0.6%, at $52.85, after slipping to its lowest since early October in the previous session at $52.13.

The United States warned against travel to China and other countries put out advisories as the death toll from the spreading coronavirus outbreak rose to more than 100 people and left millions of Chinese stranded during the biggest holiday of the year.

Oil investors are concerned travel advisories, other restrictions and any sizable impact on growth in the world’s second-biggest economy and elsewhere will dampen demand for crude and its products, amid plentiful supply.

“The near-term potential of a nationwide travel shutdown is high,” said Ian Bremmer, president of Eurasia Group, a political and market risk consultancy.

Barclays said oil prices could be $2 below its forecasts of Brent to be $62 a barrel over 2020 and $57 a barrel for WTI.

The bank expects the grouping known as OPEC+ to take further steps to support the market when it meets in March if demand lags its forecast of between 600,000 and 800,000 barrels per day (bpd) in the first quarter of 2020.

“While it remains to be seen how quickly the spread of the virus is contained, experience from the 2003 SARS outbreak suggests demand worries are likely overdone,” the bank said.

The Organization of the Petroleum Exporting Countries (OPEC), has been trying to play down the fallout from the virus, while Saudi Arabia, its de-facto leader, said on Monday the group could respond to any changes in demand.

OPEC and producers including Russia, known as OPEC+, have been cutting supply to support oil prices for nearly three years and recently agreed to withhold a further 500,000 barrels bpd to 1.7 million bpd through March.

Underlining the supply concerns, a Reuters poll forecast U.S. crude stockpiles to have risen last week.