Oil markets tense on Middle East crisis, US-China trade spat

CNBC

  • Oil markets remained tense on Thursday on concerns of a military escalation in Syria.
  • Prices were some way off Wednesday’s 2014 highs as bulging American supplies weighed.

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Oil markets remained tense on Thursday on concerns over a military escalation in Syria, although prices remained some way off Wednesday’s highest since late 2014 as bulging American supplies weighed.

Ongoing trade disputes between the United States and China also kept markets on edge, traders said.

Brent crude futures were at $72.14 per barrel at 0536 GMT, up 8 cents, or 0.1 percent from their last close.

U.S. WTI crude futures were at $67.03 a barrel, up 21 cents, or 0.3 percent from their last settlement.

In China, Shanghai crude futures were also up, rising 8.9 yuan to 427.1 yuan ($68.03) per barrel, up 2.1 percent and with record volumes traded on the product that was only launched in late March.

Both Brent and WTI hit their highest since late 2014 of $73.09 and $67.45 per barrel on Wednesday, respectively, after Saudi Arabia said it intercepted missiles over Riyadh and U.S. President Donald Trump warned Russia of imminent military action in Syria.

“Geopolitical risks outweighed an unexpected rise in inventories in the U.S.,” ANZ bank said on Thursday.

Ongoing concerns of a prolonged trade dispute between the United States and China are also keeping markets on edge.

China lashed out at the United States on Thursday saying that the trade disputes, in which both sides have threatened to impose tariffs on imports of several products, were “single-handedly provoked by the U.S.” and that Beijing was prepared to escalate the spat if Washington did not back off from its threatened import tariffs.

The Chinese Commerce Ministry also said there had been no bilateral negotiations with the United States on the trade frictions.

Although markets are tense, supplies remain ample especially due to the United States.

U.S. crude oil inventories rose by 3.3 million barrels to 428.64 million barrels.

Meanwhile, U.S. crude oil production last week hit a fresh record of 10.53 million barrels per day (bpd), up by a quarter since mid-2016.

The United States now produces more crude than top exporter Saudi Arabia. Only Russia, at currently just under 11 million bpd, pumps out more.

“Barring any geopolitical shocks, we see limited upside potential for oil prices from current levels due to ongoing oversupply, mainly from the U.S. and Russia, and also a slowing demand growth outlook,” said Georgi Slavov, head of research at commodities brokerage Marex Spectron.

Oil prices near 2014 highs over warnings of western air strikes against Syria

CNBC

  • Oil prices edged higher on Wednesday, adding to steep gains in the previous session.
  • Markets eyed an escalation of Middle East tensions after Europe’s air traffic control agency warned of possible air strikes on Syria in the next 72 hours.

A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil prices edged higher on Wednesday, adding to steep gains in the previous session, as markets eyed an escalation of Middle East tensions after Europe’s air traffic control agency warned of possible air strikes on Syria in the next 72 hours.

Brent crude futures rose to $71.09 per barrel at 0104 GMT, up 7 cents from their last close. Brent surged more than 3 percent on Tuesday to hit its highest level since late 2014, at $71.34 a barrel.

U.S. WTI crude futures were at $65.63 a barrel, up 12 from their last settlement.

The United States and its allies are considering a strike against Syrian President Bashar al-Assad’s forces following a suspected poison gas attack last weekend.

Pan-European air traffic control agency Eurocontrol said air-to-ground and/or cruise missiles could be used within the next 72 hours, warning that there was a possibility of intermittent disruption of radio navigation equipment.

Although Syria itself is not a significant oil producer itself, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.

Oil markets were also supported by easing concerns over a prolonged trade spat between the United States and China after China’s President Xi Jinping on Tuesday gave a speech with a conciliatory tone.

“The relaxation of tensions between the U.S. and China (is) allowing oil traders to exercise their worries over geopolitics,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Not all oil market indicators pointed to ongoing price rises, however.U.S. crude inventories rose by 1.8 million barrels in the week to April 6 to 429.1 million, according to a report by the American Petroleum Institute on Tuesday, compared with analysts’ expectations for a decrease of 189,000 barrels.

And the U.S. Energy Information Administration said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output.

In its monthly short-term energy outlook, the agency forecast that U.S. crude oil output will rise by 750,000 barrels per day to 11.44 million bpd next year. Last month, it expected a 570,000 bpd year-over-year increase to 11.27 million bpd.

That will likely make the United states the world’s biggest oil producer by 2019, surpassing Russia which currently pumps out almost 11 million bpd.

Oil prices seesaw as US trade dispute with China rattles market

CNBC

  • Oil prices dipped on Tuesday, easing after strong gains in the previous session.
  • Despite a softening of trade concerns, oil markets still face an abundance of supplies.
  • The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

An oil pump jack in Gonzales, Texas.

Getty Images
An oil pump jack in Gonzales, Texas.

Oil prices dipped on Tuesday, easing after strong gains in the previous session when hopes that trade disputes between the United States and China could be resolved buoyed global markets.

Despite a softening of trade concerns, oil markets still face an abundance of supplies that puts pressure on producers to keep their prices competitive in order not to lose market share.

U.S. WTI crude futures were at $63.26 a barrel at 0031 GMT, down 16 cents, or 0.3 percent, from their previous settlement.

Brent crude futures were at $68.52 per barrel, down 13 cents, or 0.2 percent.

The dips came after a more than 2 percent rally on Monday during European and American trade hours.

“Oil prices rose sharply (on Monday) as a weaker U.S.-dollar and easingconcerns about the trade war saw investor appetite return,” ANZ bank said.

“Reports that back-channel talks over the trade dispute between the U.S. and China are ongoing helped soothe investor angst,” it added.

Concerns of a prolonged trade dispute between the world’s two biggest economies and uncertainty over the supply and demand balance of global oil markets have resulted in volatile yet range-bound recent trading.

“Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“U.S. oil inventories had been rising for the past couple of months but the data released last week showed an unexpected draw. This week’s data may be crucial for determining the direction of WTI,” he added.

The American Petroleum Institute is due to publish oil storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

Oil markets have generally been supported by healthy demand as well as supply restraint led by the Organization of the Petroleum Exporting Countries.

However, soaring U.S. crude production, which has jumped by a quarter since mid-2016 to 10.46 million barrels per day (bpd), is threatening to undermine OPEC’s efforts to tighten the market and prop up prices.

The United States late last year overtook top exporter Saudi Arabia as the world’s second biggest crude producer. Only Russia pumps more crude out of the ground, at almost 11 million bpd.

In a sign that oil supplies remain ample, China’s Sinopec, Asia’s largest refiner, plans to cut Saudi crude imports in May by 40 percent, instead buying from alternative sources, after Saudi Aramco set higher-than-expected prices, a company official said on Monday.

Oil prices firm, but trade dispute and Syria keep market on edge

CNBC

  • Oil markets stabilized after slumping around 2 percent last Friday.
  • Markets eyed the situation in Syria after reports – denied by the Pentagon – that U.S. forces had struck a major air base there.
  • Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil markets stabilized on Monday after slumping around 2 percent last Friday on concerns over an intensifying trade dispute between the United States and China, as well as increased U.S. drilling activity.

Markets on Monday were also eyeing the situation in Syria after reports – denied by the Pentagon – that U.S. forces had struck a major air base there.

U.S. WTI crude futures were at $62.34 a barrel at 0355 GMT, up 28 cents, or 0.45 percent, from their previous settlement.

Brent crude futures were at $67.43 per barrel, up 32 cents, or 0.5 percent.

Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China, reigniting fears of a trade war between the world’s two largest economies that could hurt global growth.

With Chinese markets closed last Thursday and Friday, Shanghai crude futures played catch-up on Monday, dropping 0.6 percent to around 400 yuan ($63.43) per barrel.

“Oil prices have been susceptible to the brewing trade tensions between China and the U.S….However, fundamental support levels have been demonstrated with OPEC’s suggestion on an production limit extension into 2019,” said Singapore-based Phillip Futures.

Oil prices have generally been supported by healthy demand as well as by supply restraint led by the Organization of the Petroleum Exporting Countries, which started in 2017 in order to rein in oversupply and prop up prices.

In physical oil markets, OPEC’s number two producer Iraq said on Monday that it is keeping prices for its crude supplies in May steady.

In the United States, drillers added 11 rigs looking for new production in the week to April 6, bringing the total count to 808, the highest level since March 2015, General Electric’s Baker Hughes energy services firm said on Friday.

As a result, U.S. exports have soared in recent months, “more than offsetting the Venezuelan supply disruption” as a result of the economic crisis in the South American OPEC-member, Innes said.

Oil inches lower on expectations for US crude stock build

CNBC

  • Oil prices slipped on expectations for a build-up in U.S. crude inventories.
  • Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.
  • Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

Oil jack pumps in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters
Oil jack pumps in the Kern River oil field in Bakersfield, California.

Oil prices slipped on Wednesday on expectations for a build-up in U.S. crude inventories, but Russian government comments on prospects for stepping up cooperation with OPEC to coordinate output cuts braked steeper declines.

U.S. WTI crude futures were at $63.36 a barrel at 0208 GMT, down 15 cents, or 0.24 percent, from their previous settlement.

Brent crude futures dipped to $67.94 per barrel, down 18 cents, or 0.26 percent, after it rose 0.7 percent on Tuesday.

U.S. crude inventories likely saw a build for the second straight week, while refined product stockpiles were forecast to have declined last week, an expanded Reuters poll showed on Tuesday.

“With the change in prices being only a few cents, I think the oil market is waiting for the next development and of course the U.S. inventories data due tonight (Wednesday) is very good reason for traders to be waiting,” said Michael McCarthy, Chief Market Strategist at brokerage CMC Markets.

Industry group the American Petroleum Institute, however, said on Tuesday U.S. crude stocks have unexpectedly fallen last week as refineries boosted output.

“With total combined stocks of crude oil and refined products coming in around unchanged on the week, I would call it a neutral data point,” said Dominic Chirichella, senior partner at the Energy Management Institute in New York.

Official U.S. inventory data will be published by the Energy Information Administration late on Wednesday.

“The EIA data has not (always) been in sync with the API data so we could see a different set of data points Wednesday morning,” Chirichella said.

Meanwhile, Russian Energy Minister Alexander Novak said on Tuesday that a joint organisation between the Organization of the Petroleum Exporting Countries and non-OPEC countries may be set up after the current deal on production cuts expires at the end of this year.

“Russia is testing the upper production bands but provided they don’t ramp up dramatically I think this news will be viewed in a positive light for prices,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.

Oil has risen from a multi-year low near $27 a barrel in January 2016, helped by production cuts led by OPEC and Russia, which began in 2017 in order to rein in over-supply and prop up prices.

Top producer Russia’s oil output rose in March to 10.97 million barrels per day, up from 10.95 million bpd in February, official data showed earlier this week, prompting some traders to worry the OPEC-non-OPEC alliance to help balance oil markets was under threat.