Brent approaches $70 as oil prices rise for fourth day

CNBC

Reuters

KEY POINTS
  • Brent futures rose 35 cents, or 0.5 percent, to $69.72 a barrel by 0207 GMT, after earlier reaching $69.87, the highest since Nov. 12 and within touching distance of $70.
  • U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since Nov. 7.
RT: Oil tankers Qi Lin Zuo of China and Sti-Matador
Oil tankers Qi Lin Zuo of China and Sti-Matador.
Lucas Jackson | Reuters

Oil prices rose for a fourth day on Wednesday, with support from OPEC-led supply cuts and U.S. sanctions overshadowing an industry report showing an unexpected rise in U.S. inventories last week.

Brent futures rose 35 cents, or 0.5 percent, to $69.72 a barrel by 0207 GMT, after earlier reaching $69.87, the highest since Nov. 12 and within touching distance of $70.

U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since Nov. 7.

“The production cuts by OPEC plus are providing a nice backdrop here for higher prices and until we see U.S. production reassert itself, the easier move is higher for oil,” said Edward Moya, senior market analyst at OANDA.

Supply from the Organization of the Petroleum Exporting countries hit a four-year low in March, a Reuters survey found earlier this week.

Oil production from Russia, which has joined OPEC in agreeing to supply cuts to prop up prices, fell to 11.3 million barrels per day (bpd) last month, but missed the country’s target under the deal.

Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.

Vice President Mike Pence said on Tuesday the United States would continue to pressure Venezuela’s oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.

Venezuela’s state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data, Reuters reported later in the day.

U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said late on Tuesday.

Official numbers from the U.S. Department of Energy (DoE) are due out later on Wednesday.

“As long as we don’t see a major build with the DoE crude oil inventories, we could see a clean move higher,” Moya said.

Oil logs strongest weekly performance in over 8 months

MarketWatch

Monthly IEA report, Syria tensions lift oil

Reuters

By

MyraP. Saefong

Markets/commodities reporter

SaraSjolin

Markets reporter

Crude-oil prices rose for a fifth straight session Friday, with U.S. benchmark crude tallying a gain of nearly 9% for the week, driven by fears of a U.S.-led military conflict in Syria.

A report from the International Energy Agency on Friday also indicated that OPEC soon will have succeeded in reaching its target for reducing the global supply glut.

May West Texas Intermediate crude CLK8, +0.48%  tacked on 32 cents, or 0.5%, to settle at $67.39 a barrel on the New York Mercantile Exchange. For the week, the U.S. oil benchmark rallied by roughly 8.6%, which was the strongest weekly percentage performance since late July of last year.

June Brent LCOM8, +0.83% added 56 cents, or 0.8%, to $72.58 a barrel on ICE Futures Europe. For the week, in the international benchmark was up about 8.2%.

On Friday, the IEA indicated that global oil stockpiles are dwindling and approaching the five-year average the Organization of the Petroleum Exporting Countries is targeting.

“It is not for us to declare on behalf of the Vienna agreement countries that it is ‘mission accomplished,’ but if our outlook is accurate, it certainly looks very much like it,” the IEA said in its report.

The Vienna agreement refers to the group of OPEC and non-OPEC countries that in 2016 agreed to cut output in an effort to reduce a global supply glut that had dragged oil prices substantially lower. The IEA report echoes the monthly data from OPEC earlier this week, which showed the group’s output declined by 201,000 in March and that the supply surplus is evaporating.

The IEA also noted that the continuing U.S.-China trade spat could dent oil demand.

Longer term, “we are bullish on oil prices as continued global economic growth drives demand higher by approximately 1.5% per year,” said Jay Hatfield, chief executive officer and founder of InfraCap. Global supply also “remains constrained by declines in Venezuela production, flat to declining production in offshore areas such as the North Sea, offset by steady growth in U.S. production of approximately 1 million barrels per day.”

Hatfield expects WTI to trade in the $60-70 range this year and $70-80 in 2019, “with more risk to the upside.”

Read: Here’s why Credit Suisse just boosted its oil price forecast by 18%

In the U.S., Baker Hughes BHGE, +1.37%  on Friday reported that the number of active domestic oil rigs edged up by 7 this week. The figure, which offers a peek at U.S. oil activity, was up a second straight week.

Still, market participants said crude futures have come under pressure amid fears that Russia may retaliate against the U.S. by imposing sanctions in response to sanctions levied against Moscow last week in response to what the U.S. said was attempts to subvert Western democracies, and malicious cyber activities.

“This news offset good news about the ratcheted down of trade tensions with China and the possibility the U.S. could be re-entering the [Trans-Pacific Partnership],” said Phil Flynn, senior market analyst at Price Futures Group, in a note.

The fear is that sanctions from Russia could hurt demand and push prices lower, he explained.

More broadly, the stellar weekly performances for both WTI and Brent this week come as geopolitical tensions have returned to the fore after a suspected chemical-weapons attack in Syria that killed civilians over the weekend. That matter is also complicated by Syria’s friendly ties with Russia, Iran and Turkey.

U.S. President Donald Trump on Wednesday warned Russia that he was ready to launch an imminent military attack on Syria, but toned down his rhetoric on Thursday.

Among energy products, gasoline RBK8, +0.34%  settled 0.5% higher at $2.065 a gallon, for a 5.7% gain on the week. May heating oil HOK8, +0.87% added 0.8% to $2.10 a gallon—up about 7.3% for the week.

May natural gas NGK18, +1.86%  rose 1.8% to $2.735 per million British thermal units, for a weekly rise of 1.3%.

Oil settles higher, scores a second straight weekly gain

MarketWatch

Baker Hughes reports a weekly rise in active U.S. oil-rig count

AFP/Getty Images
By

MYRAP. SAEFONG

MARKETS/COMMODITIES REPORTER

WILLIAMWATTS

DEPUTY MARKETS EDITOR

Oil settled higher Friday, following an intraday U-turn that prompted a swing to a weekly gain.

Expectations for growth in global crude demand outweighed pressure from concerns over strong U.S. production and a weekly rise in the number of active domestic oil rigs.

April West Texas Intermediate crude CLJ8, +1.73%  on the New York Mercantile Exchange rose $1.15, or 1.9%, to settle at $62.34 a barrel after making only modest moves in either direction in early trading. It saw its highest finish since March 6 and climbed roughly 0.5% for the week, according to FactSet data.

May Brent crude LCOK8, +1.34% the global benchmark, added $1.09, or 1.7%, to end at $66.21 a barrel on ICE Futures Europe. That was its highest finish month to date and it rose 1.1% for the week.

The market went “from low volatility to wow,” said Phil Flynn, senior market analyst at Price Futures Group. There really wasn’t any one particular piece of fundamental news that drove the intraday turn higher, he said, adding that “when oil went higher on the week, prices exploded.”

“The consumer sentiment number was strong and that really signals record gasoline demand ahead,” he said. U.S. consumer sentiment in March rose to its highest reading in 14 years.

A monthly oil report from the International Energy Agency on Thursday said that global oil demand should grow by 1.5 million barrels a day, to average 99.3 million barrels a day in 2018. That was an upward revision of 90,000 barrels a day, compared with last month’s report.

Read: How Venezuela could be the ‘final element’ that tips oil market into deficit

But traders have been concerned about surging U.S. shale output.

Offering a peek at future production, Baker Hughes BHGE, +3.45%  reported Friday that the number of active U.S. rigs drilling for oil rose by four to 800 this week. The oil-rig count had fallen by four last week, marking their first decline in seven weeks.

The oil market is also seeing “a lot of short covering ahead of the April expiration on Tuesday” for WTI oil futures, said Flynn.

Meanwhile, expectations that the Trump administration will take a harder line on Iran’s nuclear deal or could move to impose an embargo on Venezuelan crude exports were providing some modest support, said Robert Yawger, director for energy at Mizuho Securities, in a Friday note.

Read: Here’s how Rex Tillerson’s exit could move oil prices

The replacement of Secretary of State Rex Tillerson with Central Intelligence Agency Director Mike Pompeo is seen as heralding a potential tougher stance on Iran that could result in a partial reinstatement of export sanctions, analysts said. Other potential changes, including reports that national security adviser H.R. McMaster could soon be replaced, have underlined those expectations. The White House denied any changes were coming to the National Security Council.

In other energy trading, April natural gas NGJ18, +0.56%  rose 0.3% to $2.688 per million British thermal units, but still marked a weekly loss of 1.6%.

April gasoline RBJ8, +0.87%  added 1.1% to $1.946 a gallon—roughly 2.2% higher for the week, while April heating oil HOJ8, +0.93% rose 1% to $1.912 a gallon, for weekly rise of 1.3%.