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

CNBC

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

CNBC

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.

Oil prices mixed amid US-China trade impasse

CNBC

Reuters

KEY POINTS
  • U.S. West Texas Intermediate (WTI) futures were at $61.58 per barrel, down 9 cents, or 0.2% at 0223 GMT, from their previous settlement. WTI closed the last session steady on the day.
  • Meanwhile Brent crude futures were at $70.73 a barrel, up 11 cents, or 0.2%, from their last close. Brent ended the previous session little changed.
Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images

Oil futures were mixed on Monday, with U.S. crude edging lower, as investors and traders fretted over global economic growth prospects amid a standoff in Sino-U.S. trade talks.

U.S. West Texas Intermediate (WTI) futures were at $61.58 per barrel, down 9 cents, or 0.2% at 0223 GMT, from their previous settlement. WTI closed the last session steady on the day.

Meanwhile Brent crude futures were at $70.73 a barrel, up 11 cents, or 0.2%, from their last close. Brent ended the previous session little changed.

The trade conflict between the world’s top two economies escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after President Donald Trump said Beijing “broke the deal” by reneging on earlier commitments made during months of negotiations.

The parties appeared at a deadlock over negotiations on Sunday as Washingtondemanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed.

“The US-China trade war is set to intensify, which will limit gains in prices,” said Abhishek Kumar, head of analytics at Interfax Energy in London.

“Market participants will closely watch China’s retaliatory steps in response to the imposition of additional US tariffs on Chinese goods,” Kumar said, adding the dispute “could be particularly detrimental to the growth in global oil demand”.

Separately, in an early indicator of future output, U.S. energy companies last week reduced the number of oil rigs operating for the third time in four weeks.

Drillers cut two oil rigs in the week to May 10, bringing the total count down to 805, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.

The rig count has declined over the past five months as independent exploration and production companies cut spending on new drilling.

Oil firm as Iran sanctions loom, but US seeks to prevent supply shortfall

CNBC

  • U.S. sanctions to target Iran oil exports from November.
  • Washington wants other producers replace falling Iran exports.
  • Asian refiners buy American oil to make up for Iranian supply.

Oil was steady on Tuesday, supported by looming U.S. sanctions against Iran’s petroleum industry.

But prices were capped by signs that increased supplies by other major producers, including the United States and Saudi Arabia, could make up for the disruptions from Iran.

U.S. West Texas Intermediate (WTI) crude futures were at $67.61 per barrel at 0112 GMT, up 7 cents from their last settlement.

Brent crude futures climbed 11 cents to $77.48 a barrel.

“It was a mixed performance in the crude oil market,” said ANZ bank in a note, pointing to Washington’s sanctions against Iran’s oil exports that will be enforced from November.

Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line.

ANZ bank said prices were capped “amid speculation later in the day that Saudi Arabia and Russia will fill any gap.”

U.S. Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih on Monday in Washington, the U.S. Energy Department said, as the Trump administration encourages big oil-producing countries to keep output high ahead of the renewed sanctions.

Perry will also meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

Russia, the United States and Saudi Arabia are the world’s three biggest oil producers by far, meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption.

Combined output by these three producers has risen by 3.8 million bpd since Sept. 2014, more than the peak 3 million bpd Iran has managed during the last three years.

Big U.S. discount

With Middle East crude markets tightening because of the U.S. sanctions against Iran, many Asian refiners are seeking alternative supplies, with South Korean imports of U.S. crude likely hitting a record in November.

At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.

Traders said this pulled wide open the discount of U.S. WTI crude versus Brent to almost $10 per barrel, the biggest since June.

Crude oil is getting crushed, but one expert sees year-end rally

CNBC

Oil expert sees oil heading higher after a volatile week for crude

Oil expert sees oil heading higher after a volatile week for crude  

Crude oil just posted its worst week since July as a surging dollar, slowing emerging markets and supply concerns have all weighed on the commodity. But despite the price declines, one commodities trader sees a rally in the cards.

Bill Baruch, president of Blue Line Futures, told CNBC’s “Trading Nation” on Thursday what investors can expect next. Here’s what he said.

· A bearish inventory report earlier in the week pushed oil down to its lowest level since June, but crude bulls still have reasons to feel good. For instance, it’s easy to forget crude oil is still trading near multiyear highs, with a gain of 9 percent year to date and 40 percent in the last 12 months.

· One of the biggest stories weighing on crude may be set to dissipate and take some pressure off the commodity: trade tension between the U.S. and China. We may see meaningful headway on trade over the coming weeks, and fears of slowing growth in China may be alleviated.

· My biggest concern, however, is spare capacity. Saudi Arabia promised to ramp up crude production in July, but it actually fell 200,000 barrels per day. Still, the U.S. estimated that production in the lower 48 states has stalled over the last three weeks, and tighter spare capacity can be extremely bullish.

· During this seasonally weak time for crude, investors should look to buy pullbacks; the technical picture should support this strategy. There is tremendous support from $62.50 to $64.50 per barrel, and oil should be positioned to rally back up to between $70 and $80 per barrel later this year. The key level to the downside would be $62.

Bottom line: Despite a 3 percent decline in crude oil this week, Baruch sees the commodity surging into year-end.