US crude oil little changed after losses, record output weighs

CNBC

  • U.S. crude oil steadied on Friday after deep losses in the previous session.
  • U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.
  • Expectations of higher OPEC output have weighed on the market.

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.

U.S. crude oil steadied on Friday after deep losses in the previous session on pressure from all-time high U.S. production and expectations of higher OPEC output.

U.S. West Texas Intermediate crude rose 2 cents to $67.06 a barrel by 0805 GMT after dropping almost 2 percent on Thursday. Brent crude, which was little changed in the previous session, added 17 cents, or 0.2 percent, to $77.73 per barrel.

U.S. crude production has been rising to record high levels since late last year. In March it jumped 215,000 bpd to 10.47 million bpd, a new monthly record, the Energy Information Administration (EIA) said on Thursday.

Still, U.S. crude stockpiles fell 3.6 million barrels last week, the EIA said, exceeding expectations for a decline of 525,000 barrels.

“A drop in inventories in the U.S. was overshadowed by U.S. output which jumped to a record high level,” ANZ said in a note.

“With the markets still concerned about supply-side issues in OPEC, this has pushed the Brent-WTI spread out to nearly $11/bbl, the highest level for three years.”

Oil price decline 'temporary', says pro

Oil price decline ‘temporary’, says pro  

Brent hit a three-week low below $75 a barrel on Monday after OPEC and its allies, including Russia, indicated they could adjust their deal to curb supplies and increase production, but recovered later in the week.

OPEC and non-OPEC producers have committed to cut output by 1.8 million bpd until the end of 2018 but are ready to make gradual supply adjustments to deal with shortages, a Gulf source familiar with Saudi thinking told Reuters late on Wednesday.

Sources told Reuters last week that Saudi Arabia, the effective leader of OPEC, and Russia were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.

Russia would be able to raise its oil output back to pre-cut levels within months if there is a decision to unwind the price-protection deal with OPEC and other producers, a Russian energy ministry official said.

Concerns about U.S. bottlenecks are contributing to the decline in U.S.futures as well. Prices for physical barrels of U.S. light sweet crude delivered at Midland are at their largest discount to the benchmark U.S. futures price in almost four years.

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.