Oil slips as US stocks rise, but hopes for US-China trade deal stem losses

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Reuters
KEY POINTS
  • Brent crude futures dropped 15 cents, or 0.23%, to $64.12 a barrel by 0421 GMT.
  • West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.27%, to $58.25 per barrel.
GP: Tullow Oil 190812 EU
The Tullow Oil Plc Prof. John Evans Atta Mills Floating Production Storage and Offloading vessel sits docked in Singapore on Jan. 21, 2016.
Nicky Loh | Bloomberg | Getty Images

Oil eased on Wednesday following an industry report showing a surprise build in U.S. crude stockpiles, but hopes surrounding the signing of the first phase of a U.S.-China trade deal prevented a bigger drop in prices.

Brent crude futures dropped 15 cents, or 0.23%, to $64.12 a barrel by 0421 GMT, while West Texas Intermediate (WTI) crude futures fell 16 cents, or 0.27%, to $58.25 per barrel.

Wednesday’s decline reversed two days of gains, with WTI climbing 1.1% through Tuesday and Brent gaining 1.4% during the period, on the expectation that China and the United States, the world’s two biggest crude oil users, would soon sign a preliminary agreement beginning an end to their 16-month trade war.

But data from industry group the American Petroleum Institute late on Tuesday showed U.S. crude stocks rose by 3.6 million barrels in the week to Nov. 22 to 449.6 million, compared with analysts’ expectations for a decrease of 418,000 barrels.

“Strong builds in U.S. inventories have kept bullish gains measured as markets remain cautious over shaky economic fundamentals and demand-side concerns,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.

Later on Wednesday the U.S. Energy Information Administration (EIA) is due to publish official inventory data.

“If the (EIA) numbers are similar to the API, this would be the fifth straight week of stock builds, and would not be the most constructive reading for WTI as we head into the Thanksgiving holiday,” ING analyst Warren Patterson said in a note.

Still, optimism on global trade, along with market expectations for an extension in supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and associates, have supported oil prices, Phillip Futures analyst Lu said.

U.S. President Donald Trump said on Tuesday that the United States and China are close to agreement on the first phase of their trade deal, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

Elsewhere OPEC and its production-cutting allies, a grouping known as ‘OPEC+’, will begin holding meetings on Dec. 4 in Vienna to examine output policy.

A meeting of the OPEC+ group on Dec. 6 will make a final announcement on the future policy, with an extension of curbs, possibly until June, the expected outcome.

Oil dips on concerns of delay in US-China trade deal until next year

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Reuters
KEY POINTS
  • Brent crude futures fell 20 cents, or 0.32%, to $62.20 a barrel by 0330 GMT. The international benchmark rose 2.5% on Wednesday.
  • West Texas Intermediate (WTI) crude futures dropped 17 cents, or 0.3%, to $56.84 per barrel. U.S. crude closed up 3.4% in the previous session.
GP: Sinopec oil China 190322
A man working in a filling station of Sinopec, China Petroleum and Chemical Corporation, in Shanghai, China, on March 22, 2018.
Johannes EIsele | AFP | Getty Images

Oil prices retreated on Thursday after gaining more than 2% in the previous session on bullish U.S. crude inventory data, as a fresh spat over fueled concerns of a further delay in any U.S.China trade deal.

The trade war between the world’s two biggest economies has hit global growth prospects and dominated the outlook for future oil demand.

Trade experts have warned the first phase of a trade deal could slide into next year, while markets are wary negotiations might take a hit as the U.S. House of Representatives passed two bills to back protesters in Hong Kong, much to the disapproval of China.

Brent crude futures fell 20 cents, or 0.32%, to $62.20 a barrel by 0330 GMT. The international benchmark rose 2.5% on Wednesday.

West Texas Intermediate (WTI) crude futures dropped 17 cents, or 0.3%, to $56.84 per barrel. U.S. crude closed up 3.4% in the previous session.

“Delays in signing the ‘phase one’ deal is yet another sign that Washington and Beijing remain poles apart when it comes to resolving their trade conflict,” said Abhishek Kumar, head of analytics at Interfax Energy in London.

“The Sino-U.S. trade war is already taking its toll on the world economy, which in turn will weigh on the growth in global oil demand.”

U.S. President Donald Trump said he is inclined to raise tariffs on Chinese imports if a trade deal is not reached.

A smaller-than-expected build in weekly U.S. inventories, however, propelled oil prices higher on Wednesday.

Crude stocks at the U.S. delivery hub of Cushing, Oklahoma fell by 2.3 million barrels, while U.S. crude stocks rose by 1.4 million barrels in the week to Nov. 15, compared with expectations for an increase of 1.5 million barrels, data from the Energy Information Administration showed.

“It was significantly lower than the 6 million barrels gain that API (American Petroleum Institute) data showed earlier in the week. However, it was a fall in stockpiles at the key pricing point of Cushing that drove prices higher,” ANZ Research said.

Russian President Vladimir Putin said on Wednesday Russia and OPEC have ‘a common goal’ of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

The Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

Oil prices rise as investors put hopes on China stimulus

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Reuters
KEY POINTS
  • Brent crude futures were up 24 cents, or 0.4%, at $60.85 a barrel by 0221 GMT, having fallen earlier in the session. They dropped by 1.6% on Wednesday.
  • U.S. West Texas Intermediate (WTI) crude futures were up by 10 cents, 0.2%, at $55.16 a barrel. They ended 0.9% lower the previous session.
GP: Sinopec oil China 190322
A man working in a filling station of Sinopec, China Petroleum and Chemical Corporation, in Shanghai, China, on March 22, 2018.
Johannes EIsele | AFP | Getty Images

Oil prices rose on Thursday as investors banked on more economic stimulus by China after weak PMI data, partly recovering from losses in the previous session on a surprise build in U.S. crude stocks.

Brent crude futures were up 24 cents, or 0.4%, at $60.85 a barrel by 0221 GMT, having fallen earlier in the session. They dropped by 1.6% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures were up by 10 cents, 0.2%, at $55.16 a barrel. They ended 0.9% lower the previous session.

Factory activity in China shrank for a sixth straight month in October, while growth in China’s services sector activity slowed to the lowest since February 2016, official data showed on Thursday.

“The move up in oil is driven by the expectation that more China stimulus is now on the way after the six-month low in the China manufacturing PMI,” said Jeffrey Halley, senior market analyst at OANDA.

“The kneejerk response …. was to sell commodities and energy, but central banks globally have itchy trigger fingers at the moment with regards to easing and I believe China will be no different,” he said.

The U.S. Federal Reserve on Wednesday cut interest rates for a third time this year with the Fed’s stance vouching for the durability of an economic expansion that is now the longest on record.

Rate cuts can often be bullish for oil prices because a stronger economy typically implies higher demand for crude.

Still, prices are likely to be capped until inventories start to show sustained declines.

Crude inventories rose 5.7 million barrels in the week to Oct. 25, the U.S. Energy Information Administration said on Wednesday, compared with analysts’ expectations for a 494,000-barrel build.

 

Oil dips amid trade worries, but expectations of more OPEC cuts support

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Reuters

KEY POINTS
  • International benchmark Brent crude futures, were at $57.20 a barrel by 0324 GMT, down 18 cents, or 0.3%, from their previous settlement.
  • U.S. West Texas Intermediate (WTI) futures were at $52.45 per barrel, down 9 cents, or 0.2%, from their last close.
Reusable: Idled oil pump jack
An idled pump jack, once used to extract crude oil from the ground, sits above a well on the edge of a farmer’s field near Ridgway, Ill., Jan. 21, 2015.
Getty Images

Oil prices fell on Friday amid fears over demand as the U.S-China trade row casts its shadow over markets, although prices got some support from expectations of more OPEC production cuts.

International benchmark Brent crude futures, were at $57.20 a barrel by 0324 GMT, down 18 cents, or 0.3%, from their previous settlement.

U.S. West Texas Intermediate (WTI) futures were at $52.45 per barrel, down 9 cents, or 0.2%, from their last close.

Both contracts jumped more than 2% on Thursday to recover from January lows, buoyed by reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the recent slide in crude prices.

Oil prices have still lost more than 20% from peaks reached in April, putting them in bear territory.

Global financial markets have been rocked over the past week after U.S. President Donald Trump said he would impose 10% tariffs on more Chinese goods starting September and as a fall in the Chinese yuan sparked fears of a currency war.

“The tentative oil rebound could be short-lived as the U.S.-China trade dispute is providing no real reasons to be optimistic,” said Edward Moya, senior market analyst at Oanda in New York.

Bloomberg reported that Washington was holding off a decision about licences for U.S. companies to restart business with Huawei Technologies.

Meanwhile, Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries (OPEC), plans to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories, a Saudi oil official said on Wednesday.

“Saudi’s production in September will also be lower than it is currently. This helped crude oil rebound from its lowest level since January,” ANZ bank said in a note.

The United Arab Emirates also will continue to support actions to balance the oil market, the country’s energy minister Suhail al-Mazrouei said in a tweet on Thursday.

The minister said the OPEC and non-OPEC ministerial monitoring committee would meet in Abu Dhabi on Sept. 12 to review the oil market.

OPEC and its allies including Russia agreed in July to extend their supply cuts until March 2020 to boost oil prices.

Oil prices rise, escalating US-China trade war caps gains

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Reuters
KEY POINTS
  • Brent crude futures climbed 47 cents, or 0.8%, to $60.28 a barrel by 0351 GMT after earlier dipping to $59.07, their lowest since Jan. 14.
  • West Texas Intermediate (WTI) crude futures rose 47 cents, or 0.9%, to $55.16 per barrel.
Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Brent crude rose on Tuesday, after earlier falling to its lowest since January, as traders betting on falling prices bought back contracts to lock in profits from recent declines caused by the escalating trade dispute between the U.S. and China.

Brent prices have plunged 7.6% since their close on July 31, the day before U.S. President Donald Trump vowed to impose new tariffs on Chinese imports, causing China to retaliate against agricultural imports from the United States, which responded to a decline in the Chinese yuan on Monday by branding the country a currency manipulator later in the day.

Brent fell more than 3% on Monday as traders are concerned the ongoing trade dispute between the world’s two biggest oil buyers will dent demand.

Brent crude futures climbed 47 cents, or 0.8%, to $60.28 a barrel by 0351 GMT after earlier dipping to $59.07, their lowest since Jan. 14.

West Texas Intermediate (WTI) crude futures rose 47 cents, or 0.9%, to $55.16 per barrel.

“The market is back short-covering and there’s also some amount of profit-booking today,” said Sukrit Vijayakar, director of Indian energy consultancy Trifecta, referring to when traders with short positions, or bets on falling prices, buy back futures to lock in profits.

The United States accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade. The falling yuan would support Chinese exports by making them cheaper but would raise the cost of oil imports that are priced in dollars. China is the world’s biggest oil importer.

“Oil prices can’t shake off falling demand concerns, as China’s latest escalation with devaluing the yuan and limiting U.S. agricultural purchases derail hopes for a trade deal to be reached this year,” said Edward Moya, senior market analyst at OANDA in New York.

Concerns that the trade conflict has entered a phase of retaliatory action was weighing down on the sentiments in the oil market, which at the moment is taking lesser notice of the Middle East tensions, analysts said.

“Despite the ongoing threat of supply disruption in the Middle East, it is clear that the U.S.-China trade dispute is of more significant concern at the moment,” Stephen Innes, managing partner at VM Markets said in a note.

Iran on Monday said it will no longer tolerate “maritime offences” in the Strait of Hormuz, a day after it seized a second oil tanker near the strategic waterway that it accused of smuggling fuel.

Iran’s seizure of the Iraqi oil tanker had raised some concerns about potential Middle East supply disruptions.

Oil prices may find some support later this week with a preliminary Reuters poll showing U.S. crude oil inventories were expected to fall for an eighth consecutive week.