Oil rises as China, US set for trade talks, but markets weary of slowing demand

CNBC

  • Oil prices on Thursday recouped some of the previous day’s losses.
  • Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.

Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Getty Images
Pump jacks in an oil field over the Monterey Shale formation near Lost Hills, Calif.

Oil prices on Thursday recouped some of the previous day’s losses after Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.

Brent crude oil futures were at $71.03 per barrel at 0455 GMT, up 27 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 5 cents at $65.06 a barrel, held back somewhat by rising U.S. crude production and storage levels.

Both benchmarks lost more than 2 percent during the previous day’s trading.

Traders said Thursday’s markets were pushed up by news that a Chinese delegation led by Vice Minister of Commerce Wang Shouwen will hold talks with U.S. representatives led by Under Secretary of Treasury for International Affairs David Malpass later in August.

China and the United States have implemented several rounds of tit-for-tat tariffs on each others goods and threatened further tariffs on exports worth hundreds of billions of dollars.

Sentiment in oil markets was also cautious due to the rise in U.S. crude production and storage levels as well as weakness in emerging market economies, especially in Asia, that could limit demand growth.

Oil prices sink to lows not seen since June

Oil prices sink to lows not seen since June  

Output of U.S. crude rose by 100,000 barrels per day (bpd) in the week ending Aug. 10, to 10.9 million bpd, according to the U.S. Energy Information Administration (EIA) weekly production and storage report.

At the same time, U.S. crude inventory levels climbed by 6.8 million barrels, to 414.19 million barrels, the EIA said.

“This build certainly hasn’t helped market sentiment,” Dutch bank ING said after the release of the EIA report.

While supply rose in the United States, Asia’s markets were showing signs of economic slowdown due to trade disputes with the United States and currency weakness, dragging on oil market sentiment.

“Oil prices continue to exude for bearish signals as investors worry on weaker global demand and rising production levels,” Benjamin Lu of Singapore-based brokerage Phillip futures wrote in a note.

In Japan, official data on Thursday showed a slowdown in export growth as well as a decline in crude oil imports.

Asia’s currencies also remained under pressure, with the dollarholding near 13-month peaks on Thursday as political turmoil in Turkey and concerns about China’s economic health continued to support safe-haven assets.

Providing Brent crude with some support were looming U.S. sanctions against Iran’s oil exports, set to start from November, with Asian buyers including India, South Korea and Japan already scaling back orders in anticipation.

“The might of U.S sanctions has shown… as petroleum importers have reduced purchase orders from Tehran,” Lu said.

Oil prices drop on worries about oversupply

CNBC

  • Oil prices extended declines into a second session on Tuesday.
  • Attention shifted to the risk of oversupply, with market participants shrugging off escalating tensions between the United States and Iran.

A pump jack and pipes at an oil field near Bakersfield, California.

Lucy Nicholson | Reuters
A pump jack and pipes at an oil field near Bakersfield, California.

Oil prices extended declines into a second session on Tuesday as attention shifted to the risk of oversupply, with market participants shrugging off escalating tensions between the United States and Iran.

Brent crude oil was down 19 cents, or 0.3 percent, at $72.87 a barrel by 0345 GMT, after settling down 1 cent on Monday. U.S. crude was down 21 cents, or 0.3 percent, at $67.68 a barrel. The contract fell 37 cents the previous day.

Earlier in Monday’s session, the market had risen after President Donald Trump warned of dire consequences for Iran if it threatened the United States.

“While oil prices were the primary beneficiary of the weekend’s headline battle between President Trump and Iranian President Rouhani, that boost started to fizzle as traders then veered to oversupply concerns,” said Stephen Innes, head of trading for APAC at brokerage OANDA.

Iran has been under increasing pressure from the United States, with Trump’s administration pushing countries to cut all imports of Iranian oil from November.

Saudi Arabia and large producers are ramping up output to offset losses that are likely to come as the November deadline approaches.

Meanwhile, U.S. crude inventories at the delivery hub at Cushing, Oklahoma gained in the four days to Friday, according to information supplier Genscape, traders said.

On a weekly basis, stockpiles at the hub were expected to fall for the 10th consecutive week, traders said.

The market has also been dented by concerns about the impact on global economic growth and energy demand of escalating disputes over global trade.

G20 finance leaders on the weekend voiced concern about the risk to global growth from trade tensions between the United States and China, among others.

“The lingering trade war effects continue to raise global growth concerns that continue to dampen sentiment,” Innes said.

Oil rises on supply disruptions, US push to shut out Iran

CNBC

  • Oil prices rose on Wednesday, pushed up by supply disruptions in Libya and Canada.
  • U.S. officials said all countries should stop Iranian crude imports from November.

A pump jack in Midland Texas.

Justin Solomon | CNBC

Oil prices rose on Wednesday as a supply disruption in Canada tightened the market and after U.S. officials told importers to stop buying Iranian crude from November.

Uncertainty over Libyan exports also supported crude, traders said.

Brent crude futures had risen 18 cents, or 0.2 percent, from their last close to $76.49 per barrel by 0604 GMT.

U.S. West Texas Intermediate (WTI) crude futures were at $70.69, up 16 cents, or 0.2 percent.

The United States demanded all countries stop imports of Iranian oil from November, a State Department official said on Tuesday.

Oil markets did not react more strongly to Washington’s pressure as the move was expected.

In addition, top exporter Saudi Arabia plans to raise output to make up for lost supplies.

“It is very unlikely the U.S. will succeed in ending Iranian oil sales on this timetable, but we are increasing our estimate of oil likely to come off the market by November to about 700,000 barrels per day (bpd) – another bullish factor for prices,” said risk consultancy Eurasia Group.

During the last round of sanctions, which ended in 2016, several Asian countries received waivers from Washington allowing them to continue to import from Iran.

Oil is spiking on new Iran sanctions — is the energy trade about to catch fire?

Oil is spiking on new Iran sanctions — is the energy trade about to catch fire?  

This time, Washington already hinted when announcing renewed sanctions in May that it was unwilling to grant waivers.

And while Tokyo and Seoul said on Wednesday they were still hoping to receive waivers from Washington, Japanese and South Korean buyers have already started dialing back purchases.

Tight market

Beyond looming sanctions, other threats to supply are keeping markets on edge.

In Libya, a power struggle between the official government and rebels has left it unclear who will handle the country’s large oil exports, although as of Tuesday the oil ports of Hariga and Zueitina in eastern Libya were working normally.

In North America, a supply outage at Syncrude in Canada has locked in 350,000 bpd of crude, with repairs expected to last at least through July.

Stephen Innes of futures brokerage OANDA said the outage had contributed to a major draw in U.S. crude oil inventories.

The American Petroleum Institute (API) on Tuesday reported a 9.2 million barrel reduction in U.S. crude inventories in the week to June 22 to 421.4 million barrels.

Trying to make up for disrupted supply, the Organization of the Petroleum Exporting Countries (OPEC) said late last week it would increase output.

Top exporter and de-facto OPEC leader Saudi Arabia plans to pump a record 11 million bpd in July, up from 10.8 million bpd in June.

Despite this, French bank BNP Paribas said the “agreement to elevate output still leaves production restraints in place, limiting the market’s ability to rebuild inventories.”

“Considering significant future supply losses faced by Iran (under U.S. sanctions) and supply risks in Venezuela and Libya … oil fundamentals still remain favorable for oil prices to rise over the next 6 months despite the OPEC+ decision,” BNP said.