Oil prices hit fresh mid-2015 highs despite higher US output

CNBC

  • Oil prices hit a fresh mid-2015 high, beating the level reached the previous session.
  • Unrest in Iran is expected to keep prices firm.
  • There was also some concern that output by Russia was in fact not falling.

An oil pump jack in the oil town of Gonzales, Texas.

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

U.S crude oil hit a fresh 2½-year high on Wednesday as high output in the United States and Russia balanced tensions from a sixth day of unrest in OPEC member Iran.

U.S. West Texas Intermediate (WTI) crude futures were at $60.86 a barrel by 7:51 a.m. ET (1251 GMT), up 49 cents from their last close, after touching $60.90, the highest since June 2015.

Brent crude futures — the international benchmark for oil prices — were at $67 a barrel, up 43 cents but still trailing Tuesday’s high of $67.29 that was the most since May 2015.

Traders said lags to Tuesday highs followed indications that markets had recently overshot as U.S. production is set to rise further and doubts are emerging about whether demand growth can continue at current levels.

Ole Hansen, head of commodity strategy at Denmark’s Saxo Bank, warned “multiple but temporary supply disruptions” like the North Sea Forties and Libyan pipeline outages (and) protests across Iran … helped create a record speculative long bet.”

Russia staying in OPEC agreement reluctantly: BAML

Expect OPEC to signal cut agreement exit strategy by the end of fourth quarter: BAML  

With the pipeline outages resolved and the protests in Iran showing no signs of impacting its oil production, Hansen said there was potential for a price downturn in early 2018, especially due to rising U.S. output.

“It is only a matter of time before the 10 million barrel per day (bpd) (U.S.) production target will be reached,” Hansen said.

Still, David Madden, market analyst at CMC Markets, said concerns over unrest in Iran would keep prices firm and should prevent any selloff as traders factored in the risks of potential supply disruptions.

“With this in mind, WTI will be hanging north of $60 until the market is confident tensions in Iran are cooling,” Madden said.

Supplies were healthy. U.S. oil production has risen by almost 16 percent since the middle of 2016, hitting 9.75 million bpd at the end of last year.

There was also some concern that Russian oil output is in fact not falling.

The country is the world’s biggest oil producer and one of the key backers, together with the Organization of the Petroleum Exporting Countries (OPEC), of cutting supplies.

Is a fresh supply response in store on higher oil prices?

Is a fresh supply response in store on higher oil prices?  

As part of the supply cut deal, Russia pledged to reduce its output by 300,000 bpd from the 30-year monthly high of 11.247 million bpd hit in October 2016, which it achieved by the second quarter of 2017, according to Russian energy ministry data.

For the whole of 2017, however, Russian output rose to an average of 10.98 million bpd, compared with 10.96 million bpd in 2016 and 10.72 million bpd in 2015.

“Even though they have reduced that astronomical number (from Oct. 2016), they are still producing more (in 2017 than in 2016),” said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.

Saxo Bank’s Hansen said he also had “some concerns about the Chinese economy in 2018 that ultimately could lead to lower than expected demand growth.”

As a result, he said his bank saw lower crude prices by the end of the year, with Brent at $60 per barrel and WTI at $57.

Oil edges up, though 2018 outlook cites ample supplies

CNBC

  • Oil edged up on Monday
  • Traders said the slightly higher prices came on the back of the North Sea Forties pipeline system outage
  • Rising U.S. output undermines efforts by the Organization of the Petroleum Exporting Countries to withhold production

An oil pump jack in the oil town of Gonzales, Texas.

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

Oil edged up on Monday, lifted by an ongoing North Sea pipeline outage and over signs that booming U.S. crude output growth may be slowing, although the outlook for oil markets cites ample supplies despite ongoing production cuts led by OPEC.

U.S. West Texas Intermediate (WTI) crude futures were at $57.39 a barrel at 0447 GMT, up 9 cents or 0.2 percent from their last settlement.

Brent crude futures, the international benchmark for oil prices, were at $63.37 a barrel, up 14 cents or 0.2 percent from their last close.

Traders said the slightly higher prices came on the back of the North Sea Forties pipeline system outage, which provides crude that underpins the Brent price benchmark, as well as indicators that U.S. oil production growth may be slowing down.

“The shutdown of the Forties pipeline in the North Sea, combined with inventories hitting a two-year low, helped paint a positive (oil price) picture,” ANZ bank said on Monday.

In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday.

Despite this dip in drilling, activity is still well above this time last year, when the rig count was below 500, and actual U.S. production has soared by 16 percent since mid-2016 to 9.8 million barrels per day (bpd).

This means U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.

The rising U.S. output also undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC), which is de-fecto led by Saudi Arabia, and a group of non-OPEC producers including Russia to withhold production to tighten the market and prop up prices.

Largely because of rising shale output from the United States, the International Energy Agency (IEA) said global oil markets would show a slight supply surplus of around 200,000 bpd during the first half of 2018.

Data from the U.S. Energy Information Administration (EIA)showed a similar surplus for that period and still indicate a supply overhang of 167,000 bpd for all of 2018.

Crude Oil Prices Struggle, Gold May Return to the Offensive

NASDAQ

DailyFX.com –

Talking Points:

  • Crude oil prices struggle to find fuel to break range boundaries
  • Gold prices may return to the offensive following a brief pause
  • Haggling over US tax cut plan may inspire week-end volatility

Crude oil prices corrected gently higher but didn’t to make significant progress outside of recent ranges. Baker Hughes rig count data as well as ICE and CFTC speculative sentiment statistics are due out, but these are rarely market-moving. That makes continued consolidation likely into the week-end.

Gold prices paused to digest gains as expected following a sharp surge in the aftermath of the FOMC monetary policy announcement. A quiet data docket Friday hints the path of least resistance might favor the upside as “fade the Fed” dynamics re-emerge .

Politics may complicate things however as Congressional Republicans delay until Monday a tax cut plan reconciling proposals from the Senate and the House of Representatives. That’s after two senators planned to oppose it, with two more undecided. That’s two possibly lost votes too many to assure passage.

The absence of top-tier scheduled event risk might put the spotlight on Washington DC horse-trading. Headlines suggesting the voting math will work after all may stoke risk appetite, sending yields higher and hurting gold. A confirmed breakdown will probably produce the opposite result.

What are the long-term drivers of crude oil price trends? See our guide to find out!

GOLD TECHNICAL ANALYSIS – Gold prices continue to eye resistance at 1264.92, the 23.6% Fibonacci expansion, with a daily close above that targeting the 38.2% level at 1282.61. Alternatively, a turn below the 14.6% Fib expansion at 1241.36 exposes the December 12 low at 1236.32, followed by the 23.6% expansion at 1230.45.

Crude Oil Prices Struggle, Gold May Return to the Offensive Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices remain stuck in what is increasingly looking like a Triangle chart pattern. That setup typically precedes trend continuation, which is a bullish sign in this case. A daily close above the Triangle top (58.42) exposes the 23.6% Fibonacci expansion at 59.83. Alternatively, a push below the formation’s bottom (56.20) targets the 23.6% Fib retracement at 55.04.

Crude Oil Prices Struggle, Gold May Return to the Offensive Chart created using TradingView

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

Oil prices stable on tighter market, but rising US output looms for 2018

CNBC

  • Oil markets were stable on Friday
  • Traders said markets were overall well supported by efforts led by OPEC and Russia to withhold supply to prop up prices
  • The outage of the Forties pipeline was also buoying crude prices, traders said

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 markets were stable on Friday as the Forties pipeline outage in the North Sea and ongoing OPEC-led production cuts supported prices, while rising output from the United States keptcrude from rising further.

U.S. West Texas Intermediate (WTI) crude futures were at $57.18 a barrel at 0539 GMT, up 14 cents from their last settlement.

Brent crude futures, the international benchmark for oil prices,were at $63.34 a barrel, up 3 cents from their previous close.

Traders said markets were well supported overall by efforts led by Organization of the Petroleum Exporting Countries (OPEC) and Russia to withhold supply to prop up prices.

The ongoing outage of the Forties pipeline, which carries North Sea oil to Britain, was also buoying crude prices, traders said.

“Forties pipeline operator Ineos declared force majeure on crude deliveries following Tuesday’s discovery of leaks in the pipeline, indicating that repairs could take several weeks,” U.S. investment bank Jefferies said.

While the pipeline outage physically mostly affects the North Sea region, it is of global relevance as the crude it supplies is part of the supply that underpins the Brent price benchmark.

“If the duration of the outage is for several weeks it should put upwardpressure on the Brent price,” Jefferies said.

Goldman Sachs said that market conditions allowed the major oil companies, which it referred as Big Oil, to enter “a positive earnings-revision cycle” and that “this should allow Big Oil to re-employ capital at double-digit returns”.

How the Forties Pipeline closure will affect oil markets  

The U.S. bank said that the improved market conditions were a result of a higher Brent crude oil price outlook of an expected annual average of $62, $60, and $55 per barrel for 2018, 2019 and 2020 respectively.

The companies usually associated with ‘Big Oil’ are BP, Royal Dutch Shell, ExxonMobil, Chevron and Total.

Undermining OPEC’s efforts to tighten the market is U.S. oil production, which has soared by 16 percent since mid-2016 to 9.78 million barrels per day (bpd), close to levels of top producers Russia and Saudi Arabia.

Rising U.S. supply, driven largely by shale drilling, will likely move oil markets into a supply surplus in the first half of 2018, the International Energy Agency (IEA) said on Thursday.

“Total supply growth could exceed demand growth: indeed, in the first half the surplus could be 200,000 barrels per day (bpd) before reverting to a deficit of about 200,000 bpd in the second half, leaving 2018 as a whole showing a closely balanced market,” the Paris-based IEA said in its monthly oil market report.

Chinese companies agree to develop LNG in Alaska as Trump visits

CNBC

  • Three major Chinese companies agreed to develop Alaska’s liquefied natural gas sector
  • The deal comes during President Donald Trump’s state visit to Beijing

China’s top state oil major Sinopec, one of the country’s top banks and its sovereign wealth fund have agreed to help develop Alaska’sliquefied natural gas sector as part of President Donald Trump’s visit, the U.S. government said on Thursday.

Alaska Gasline Development, the State of Alaska, Sinopec, China Investment Corp and the Bank of China have signed an agreement to advance LNG in Alaska, the U.S. government said in an email.

A full moon helps illuminate an Alaskan pipeline under the faint glow of the Aurora Borealis on November 19, 2002 near Milne Point, Alaska.

Greg A. Syverson/Getty Images
A full moon helps illuminate an Alaskan pipeline under the faint glow of the Aurora Borealis on November 19, 2002 near Milne Point, Alaska.

The agreement will involve investment of up to $43 billion, create up to 12,000 U.S. jobs during construction, reduce the trade deficit between the United States and Asia by $10 billion a year, and give China clean energy, it said.

There were no other details. AGDC is building a gas treatment plant, an 800-mile (1,287 km) pipeline to south central Alaska for in-state use, and a liquefaction plant in Nikiski to produce up to 20 million tons of LNG per year for export.

China, the world’s third-largest gas buyer, is importing more LNG as the government tries to wean the country off dirty coal as part of its push to clear the skies, while the United States wants to sell more of its excess gas abroad.

Oil prices edge lower after strong third quarter

CNBC

  • Oil prices edged lower on Monday in early Asian trading after posting gains of as much as 20 percent in the third quarter
  • U.S. crude was down 2 cents at $51.65 a barrel
  • Brent crude for December delivery was down 6 cents at $56.73 a barrel

80848321DM012_High_Oil_Pric

David McNew | Getty Images

Oil prices edged lower on Monday in early Asian trading, pausing for breath after posting gains of as much as 20 percent in the third quarter, after a survey pointed to a slight increase in OPEC production in September.

U.S. crude was down 2 cents at $51.65 a barrel at 0057 GMT. The U.S. benchmark on Friday posted its strongest quarterly gain since the second quarter of 2016 and the longest streak of weekly gains since January.

Global benchmark, Brent crude for December delivery, was down 6 cents at $56.73 a barrel. On Friday, Brent for November delivery closed 13 cents higher at $57.54 a barrel, notching up a third-quarter gain of around 20 percent, the biggest gain in five quarters. It was the biggest third-quarter increase since 2004.

The contract reached its highest in more than two years early last week, and posted its fifth consecutive weekly gain. It was Brent’s longest weekly bull run since June 2016.

The price gains have been supported by anticipated demand from U.S. refiners resuming operations after shutdowns due to Hurricane Harvey.

But oil output from the Organization of Petroleum Exporting Countries (OPEC) rose last month by 50,000 barrels per day (bpd), a Reuters survey found, as Iraqi exports increased and production edged higher in Libya, one of the producers exempt from a deal to curb output and support prices.

Middle Eastern oil producers are concerned the recent price rise will only stir U.S. shale producers into more drilling and push prices lower again.

U.S. energy companies added oil rigs for the first week in seven after a 14-month drilling recovery stalled in August, energy services firm Baker Hughes said on Friday.

Drillers added six oil rigs in the week to Sept. 29, bringing the total count up to 750.

US oil prices hit $50 on rising refinery demand, falling rig count

CNBC

  • U.S. Gulf refineries restarting after Hurricane Harvey
  • U.S. rig count falls to lowest since June
  • But analysts warn of distortions following hurricane damage

An oil pumpjack operates near Williston, North Dakota.

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

U.S. crude oil prices rose above $50 per barrel on Monday and were near last week’s multi-month highs as the number of U.S. rigs drilling for new production fell and refineries continued to restart after getting knocked out by Hurricane Harvey.

U.S. West Texas Intermediate (WTI) crude futures were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday.

Brent crude futures, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.

“Demand forecasts from OPEC and IEA … continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.

Oil refineries across the Gulf of Mexico and the Caribbean were restarting after being shut due to hurricanes Harvey and Irma, which battered the region over the past three weeks.

Royal Dutch Shell’s Deer Park refinery in Texas was among the latest, beginning its restart on Sunday. The plant can process 325,700 barrels per day.

US oil rig counts down to 749 from a week ago

US oil rig counts down to 749 from a week ago  

The refinery restarts are occurring “as signs emerge of stalling growth in the U.S. shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.

U.S. energy firms cut seven oil rigs in the week to Sept. 15, bringing the total to 749, the fewest since June, energy services company Baker Hughes said on Friday.

Despite these signs of a tightening market, analysts warned that distortions from the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals.

This week’s crude inventories data will almost certainly still show the distortions of Harvey and Irma and significant increases may be looked at by traders as outlier data,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.

Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to Sept. 12, the U.S. Commodity Futures Trading Commission reported on Friday.

Commerzbank said in a note on Monday that “speculative financial investors reduced their net long positions in WTI by 15,600 contracts,” warning that “because most of the latest price rise only happened after this, it is not yet reflected in the data.”