Oil rebounds from 18-year lows after US, Russia agree to talks

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Reuters
KEY POINTS
  • Brent crude was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.
  • U.S. crude was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002.
GP: Oil Pumping Jacks
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil recovered ground on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilize energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Brent crude was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.

U.S. crude was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002.

Oil markets have faced a double whammy from the coronavirus outbreak and a price war between Saudi Arabia and Russia after OPEC and other producers failed to agree on deeper cuts to support oil prices in early March.

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday.

“Oil prices are clawing back from a near 18-year low on hopes that oversupply concerns may finally see some relief,” said Edward Moya, senior market analyst at broker OANDA.

“Much of the focus has fallen on a key call between the Presidents of the United States and Russia.”

With a plunge in prices that has knocked around 60% off oil this year, a commissioner with the Texas state energy regulator renewed his call for restrictions on crude production because of the national supply glut.

In a sign of how well the market is supplied, the front-month Brent futures contract for May, is currently at a discount of $13.95 per barrel to the November contract, the widest contango spread ever seen.

A contango market implies traders expect oil to be higher in the future, prompting them to store oil for later sales.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), plans to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption, a Saudi energy ministry official said.

Global oil refiners, meanwhile, have cut their throughput because of the slump in demand for transportation fuel, with European refineries slashing output by at least 1.3 million bpd, sources told Reuters.

UBS estimated global oil demand to fall by 1.2 million bpd, or 1.2%, over the whole of 2020, weighed down by the coronavirus pandemic, the Swiss bank said in a note.

Others, including the chief economist for global commodities trader Trafigura, have said that oil demand could fall as much as 30% from the end of last year over coming weeks.

Oil prices climb as US ramps up economic support measures

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Reuters
KEY POINTS
  • Brent crude oil futures for May delivery rose by 62 cents, or 2.3%, to $27.65 a barrel by 0346 GMT while West Texas Intermediate (WTI) crude futures gained 76 cents, or 3.3%, to $24.12.
  • Both price benchmarks had risen over $1 earlier before pulling back slightly.
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 rose on Tuesday on hopes that the United States will reach a deal soon on a $2 trillion coronavirus aid package which could blunt the economic impact of the outbreak and in turn support oil demand.

Brent crude oil futures for May delivery rose by 62 cents, or 2.3%, to $27.65 a barrel by 0346 GMT while West Texas Intermediate (WTI) crude futures gained 76 cents, or 3.3%, to $24.12. Both price benchmarks had risen over $1 earlier before pulling back slightly.

“Oil is clawing its way higher mainly on the back of the weaker dollar that stemmed from the Fed’s unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.

“WTI crude volatility will remain high and traders should not be surprised if this rally eventually gets faded.”

The U.S. Federal Reserve on Monday rolled out an extraordinary array of programs to backstop an economy reeling from restrictions on commerce that scientists say are needed to slow the coronavirus pandemic.

While a $2 trillion coronavirus economic stimulus package remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, U.S. Treasury Secretary Steven Mnuchin voiced confidence that a deal would be reached soon.

The expected stimulus pushed the U.S. dollar lower as it will increase the cash supply. The dollar index, which measures the greenback against six major currencies, fell 0.5% on Tuesday.

A weaker greenback boosts dollar-denominated oil prices since buyers paying in other currencies will pay less for their crude.

Still, the overall crude demand outlook remains low as long as travel restrictions are in place and governments curtail commercial activities to prevent the coronavirus spread.

Prices and profit margins for motor and aviation fuels globally are under severe pressure from a plunge in demand as countries enforce lockdowns and airlines ground planes, forcing more refineries to reduce output and lower their crude oil demand.

Concerns over oil demand were also stoked by a doubling of new coronavirus cases in China, the world’s biggest oil importer, caused by a jump in infected travelers returning home from overseas. That is raising the risk of transmissions in Chinese cities and provinces that had seen no new infections in recent days.

“While the anticipated lengthy absence of air traffic presents a significant obstacle in its own right, … the expected ramp in supply, which suggests storage will fill very quickly, and then prices will plummet as physical demand continues to evaporate,” said Stephen Innes, chief global markets strategist at AxiCorp.

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.