Oil prices nod up as US fuel supply falls and sanctions on Iran loom

CNBC

  • Oil prices were up slightly on Thursday, extending their gains from the prior session from a drop in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela.
  • The International Energy Agency said global oil markets are likely to tighten toward the end of 2018.

Oil prices inched up on Thursday, extending solid gains from the previous session on a fall in U.S. crude inventories and expected disruptions to supply from Iran and Venezuela.

International Brent crude oil futures were at $77.21 per barrel at 0114 GMT, up 7 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 14 cents at $69.65 a barrel.

The rises came after crude hit multi-week highs during the previous session.

U.S. commercial crude inventories fell by 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels. U.S. production was flat from the previous week’s record 11 million barrels per day (bpd).

“Oil prices rose on the back of an unexpected U.S. inventory draw, the second week in a row of declines, together with gasoline demand reaching a record high,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

“The looming sanctions against Iran are beginning to impact oil supply lifting crude prices,” added Alfonso Esparza, analyst at futures brokerage OANDA.

The Organization of the Petroleum Exporting Countries (OPEC), of which Iran is the third biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian oil supply after U.S sanctions against Tehran start in November, the head of Iraq’s state-oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.

Iran’s August crude oil exports will likely drop to just over 2 million bpd, versus a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.

The International Energy Agency (IEA) warned of a tightening market towards the end of the year, due to a combination of supply concerns, such as Iran and also Venezuela, and strong demand especially in Asia.

“Definitely there are some worries that oil markets can tighten towards the end of this year,” the IEA’s chief Fatih Birol told Reuters on Wednesday.

Crude oil exports in crisis-struck OPEC-member Venezuela have halved in recent years to only around 1 million bpd.

International oil prices slip amid escalation of US-China trade spat; drop in US crude inventories offers support

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  • U.S. crude oil prices saw more gains on Thursday as commercial crude inventories stateside declined.
  • Meanwhile, international crude markets were down as a result of concerns over the ongoing U.S.-China trade dispute.

International oil prices slipped on Thursday, weighed down by the escalating trade dispute between the United States and China, although a decline in U.S. commercial crude inventories offered some support.

International benchmark Brent crude oil futures were at $74.63 per barrel at 0422 GMT, down 18 cents, or 0.2 percent, from their last close.

West Texas Intermediate (WTI) crude futures were at $67.90 per barrel, up 4 cents from their last settlement, buoyed by the decline in U.S. crude inventories.

International markets weakened as the intensifying trade spat between the United States and China was seen as a drag on economic growth.

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of the other’s goods. Washington is holding hearings this week on a proposed list of an additional $200 billion worth of Chinese imports to face duties.

“These (overall) measures are expected to shave up to 0.3-0.5 percentage points from China’s real GDP growth in 2019,” said rating agency Moody’s Investor Service.

“For the U.S. … trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3 percent in 2019.”.

In U.S. oil markets, a decline in commercial crude inventories provided WTI with stronger support than Brent.

Greg McKenna, chief market strategist at futures brokerage AxiTrader said the U.S. crude price support came “as the EIA inventory data showed a big draw in U.S. crude and a solid run rate of 98.1 percent for refineries”.

U.S. commercial crude oil inventories fell by 5.8 million barrels in the week to Aug. 17 to 408.36 million barrels, the Energy Information Administration (EIA) said on Wednesday.

In production, U.S. crude oil output rose back to 11 million barrels per day, the EIA report said.

That means the world’s three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.

Oil prices mixed as producers adding more oil while US gasoline stocks drop

CNBC

  • Oil prices were mixed on Thursday.
  • The market struggled to digest signs of strong gasoline demand in the U.S., the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

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Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the United States, the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.

Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 percent, to $68.82.

Both benchmarks rose by 1 percent on Wednesday after inventory data from the U.S. Energy Information Administration reported on Wednesday U.S. gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.

However, the EIA also reported U.S. oil production reached a record 11 million barrels per day (bpd). The United States has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.

Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market.

Crude oil prices under pressure as supplies increase

Crude oil prices under pressure as supplies increase  

The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.

“President Trump is doing everything in his power to lower gasoline prices,” he said.

“With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market’s tide,” he said.

Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday.

A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.

A sharp jump in crude oil inventories in the United States also added to the bearish tone in the market.

U.S. crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.

Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased.

OPEC and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday.