Oil prices steady after last week’s gains, look to US-China talks

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Reuters
KEY POINTS
  • Brent crude futures were at $63.30 a barrel at 0512 GMT, unchanged from the previous session. The contract rose 1.3% last week.
  • West Texas Intermediate (WTI) crude were also unchanged at $57.72 a barrel, having gained 0.8% last week.
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An employee holds a control panel as barrels are filled with lubricant oil in Torzhok, Russia, on March 21, 2014.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices were little changed on Monday following steady gains in the previous week with investors awaiting fresh clues over prospects for a trade deal between the United States and China, shrugging off concerns over steadily rising oil supplies.

Brent crude futures were at $63.30 a barrel at 0512 GMT, unchanged from the previous session. The contract rose 1.3% last week.

West Texas Intermediate (WTI) crude were also unchanged at $57.72 a barrel, having gained 0.8% last week.

The “crude oil market is flat on Monday morning, as price consolidates after Friday’s big rally,” said Margaret Yang, market analyst at CMC Markets.

Oil futures gained nearly 2% on Friday as comments from a top U.S. official raised optimism for a U.S.-China trade deal, but worries about increasing crude supplies capped prices.

The 16-month trade war between the world’s two biggest economies and oil consumers has slowed growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

China and United States had “constructive talks” on trade in a high-level phone call on Saturday, state media Xinhua said, but offered few other details in a report released on Sunday.

“In the short term, U.S.-China trade talks and OPEC meeting in early December are the two biggest events oil traders are watching for,” said Yang.

The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020, supporting a view among market participants that there is a case for the group and other producers like Russia — collectively known as ‘OPEC+’ — to maintain limits on production that were introduced to cope with a supply glut.

OPEC and its allies are expected to discuss output policy at a meeting on Dec. 5-6 in Vienna. Their existing production deal runs until March.

A monthly report from the International Energy Agency (IEA) released on Thursday put downward pressure on prices, after it estimated that non-OPEC supply growth would increase to 2.3 million barrels per day (bpd) next year compared, with 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.

Data released on Thursday also showed weekly U.S. crude stockpiles grew by 2.2 million barrels, the Energy Information Administration (EIA) said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll.

Oil prices drop after data shows industrial profits decline in China

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Reuters
KEY POINTS
  • Brent crude was down 12 cents, or 0.2%, at $61.90 a barrel by 0409 GMT, having gained more than 4% last week, its best weekly gain since Sept. 20.
  • West Texas Intermediate (WTI) crude futures were down 16 cents, 0.3%, at $56.50 a barrel, after rising more than 5% last week, also the biggest weekly increase since Sept. 20.
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The Tullow Oil Plc Prof. John Evans Atta Mills Floating Production Storage and Offloading vessel sits docked in Singapore on Jan. 21, 2016.
Nicky Loh | Bloomberg | Getty Images

After strong gains last week, oil prices were slightly lower on Monday as data released in China reinforced signs that its economy is slowing, though progress in China-U.S. trade talks has supported prices.

Brent crude was down 12 cents, or 0.2%, at $61.90 a barrel by 0409 GMT, having gained more than 4% last week, its best weekly gain since Sept. 20.

West Texas Intermediate (WTI) crude futures were down 16 cents, 0.3%, at $56.50 a barrel, after rising more than 5% last week, also the biggest weekly increase since Sept. 20.

Profits at Chinese industrial companies fell for the second straight month in September as producer prices continued their slide, highlighting the toll a slowing economy and protracted U.S. trade war are having on corporate balance sheets.

“There have been some small profit-taking sells on the weak China data released on Sunday and unwinding of weekend hedges,” said Stephen Innes, Asia Pacific market strategist at Axi Trader.

“But the market remains well supported on the dip,” he added, pointing to signs of progress in China-U.S. trade talks.

The two sides issued a statement on Friday saying they are close to finalizing some parts of a trade agreement.

U.S. energy companies also reduced the number of oil rigs operating this week, leading to a record 11-month decline as producers follow through on plans to cut spending on new drilling.

Russia’s energy ministry said on Friday it is continuing close cooperation with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers to enhance market stability and predictability.

The statement came a day after Igor Sechin, CEO of Russian oil producer, Rosneft, said the September attacks on Saudi oil assets created doubts over its reliability as a supplier. The attacks temporarily shut down around half of the kingdom’s oil output.

OPEC+, an alliance of OPEC members and other major producers including Russia, has since January implemented a deal to cut output by 1.2 million bpd to support the market.

The pact runs to March 2020 and the producers meet to review policy on Dec. 5-6.

Elsewhere, a suggestion by U.S. President Donald Trump that Exxon Mobil or another U.S. oil company could operate Syrian oil fields drew rebukes from legal and energy experts.

Money managers cut their net long U.S. crude futures and options positions in the week to October 22, the U.S. Commodity Futures Trading Commission said on Friday.

Oil prices fall on weak demand outlook

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Reuters
KEY POINTS
  • Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session on the back of a surprise draw in U.S. crude stocks.
  • Brent crude futures fell 39 cents, or 0.6%, to $60.78 a barrel by 0111 GMT.
  • West Texas Intermediate (WTI) crude futures dropped 46 cents, or 0.8%, to $55.51 per barrel.
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A drilling crew member on an oil rig in the Permian Basin near Wink, Texas.
Nick Oxford | Reuters

Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session on the back of a surprise draw in U.S. crude stocks.

Brent crude futures fell 39 cents, or 0.6%, to $60.78 a barrel by 0111 GMT. The international benchmark crude rose 2.5% on Wednesday to settle at $61.17 a barrel, levels not seen since Sept. 30.

West Texas Intermediate (WTI) crude futures dropped 46 cents, or 0.8%, to $55.51 per barrel. U.S. crude closed 3.3% higher in the previous session.

U.S. crude inventories fell 1.7 million barrels in the week ended Oct. 18, compared with analysts’ expectations for a 2.2 million barrel build, data from the Energy Information Administration showed.

This was in stark contrast with earlier inventory data released by industry group the American Petroleum Institute (API), which showed a build of 4.5 million barrels in U.S. crude stocks.

The EIA said the drawdown in weekly stocks came as refineries hiked crude runs and oil imports fell, which prodded a jump in both benchmark crude grades on Wednesday.

“Given the unexpected drawdown in this week’s report, it is perhaps unsurprising that the market reaction was positive,” Kieran Clancy of Capital Economics said in a note.

“That said, with headwinds facing the U.S. and the global economy likely to intensify in the months ahead, it probably won’t be long before a return of fears over the health of demand.”

Some market participants said a decline in U.S. product inventories, as shown by the EIA data, could point to underlying demand.

“The EIA report may be an indication that oil demand is not as bad as a current dreary run of global headline macro data might suggest,” said Stephen Innes, market strategist at AxiTrader.

The prospects of deeper production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies also helped support the market.

Russian Energy Minister Alexander Novak, however, said on Wednesday that no formal calls have been made yet to change the current global oil supply deal.

OPEC, Russia and other producers have since January implemented a deal to cut oil output by 1.2 million barrels per day (bpd) until March 2020 to support the market. The producers will meet to review the policy on Dec. 5-6.

Oil prices fall after data shows bigger-than-expected build in US inventory

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Reuters
KEY POINTS
  • Oil fell on Wednesday after gaining over 1% in the previous session as U.S. industry data showed a bigger-than-expected build in crude stockpiles.
  • Brent crude futures dropped 31 cents, or 0.52%, to $59.39 a barrel by 0405 GMT on Wednesday.
  • West Texas Intermediate (WTI) crude futures for December delivery, the new front-month contract, fell 43 cents, or 0.79%, to $54.05 per barrel.
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Oil field workers tend to a pump jack.
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Oil fell on Wednesday after gaining over 1% in the previous session as U.S. industry data showed a bigger-than-expected build in crude stockpiles, but the possibility of deeper output cuts from OPEC and its allies contained the decline.

Brent crude futures dropped 31 cents, or 0.52%, to $59.39 a barrel by 0405 GMT on Wednesday.

West Texas Intermediate (WTI) crude futures for December delivery, the new front-month contract, fell 43 cents, or 0.79%, to $54.05 per barrel. The November contract expired on Tuesday at $54.16.

U.S. crude stocks rose by 4.5 million barrels to 437 million barrels in the week ended Oct. 18, compared with analysts’ expectations for a gain of 2.2 million barrels, data from industry group the American Petroleum Institute showed.

Inventory data from the U.S. Energy Information Administration (EIA) is due later on Wednesday.

The Organization of the Petroleum Exporting Countries (OPEC) is mulling whether to deepen production cuts amid concerns of weak demand growth next year, underpinning prices after helping to lift both benchmarks on Tuesday.

“The OPEC induced oil rally has come to a grinding halt in the wake of the bearish to consensus API inventory swell,” Stephen Innes, market strategist at AxiTrader, said in a note on Wednesday.

“Further OPEC cuts are unlikely the cure-all medicine. But by the numbers, the magnitude of the expected oversupply in 2020 is thought to be well within OPEC’s ability to manage,” Innes added.

OPEC and other oil producers including Russia, a group known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020.

OPEC and other non-members are scheduled to meet again from Dec. 5 to 6.

OPEC’s de facto leader Saudi Arabia, however, wants to focus first on boosting adherence to the group’s output reduction pact before committing to more cuts, sources from the oil-producing club said.

Meanwhile, easing trade tensions between China and the United States, the world’s two largest economies and biggest oil consumers, were also helping to cushion overall sentiment for oil, traders said.

U.S. President Donald Trump said earlier this week that efforts to end the trade war with China were going well, while a similar view was echoed by Chinese Vice Foreign Minister Le Yucheng on Tuesday.

Washington and Beijing are trying to finalize the first phase of a trade agreement for Trump and Chinese President Xi Jinping to sign in November at the Asia-Pacific Economic Cooperation summit in Chile.

“Overall oil appears somewhat directionless (at current levels). Prices seem to have reached an equilibrium, for now, awaiting developments on trade and ahead o

Oil prices rise after US confirms trade talks with China to start

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Reuters
KEY POINTS
  • Brent crude was up 21 cents, or 0.4%, at $60.91 a barrel by 0301 GMT. On Wednesday, Brent rose 4.2%.
  • West Texas Intermediate (WTI) was up 17 cents, or 0.3%, at $56.43 a barrel, having risen 4.3% the previous session, the biggest percentage gain in nearly two months.
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An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
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Oil prices rose on Thursday, rebounding from earlier losses, after the U.S. confirmed that talks with China to reach a trade agreement would be held in the coming weeks, giving hope that a dispute that has roiled global economies will be resolved.

The gains add to a surge in prices on Wednesday that had been driven by a survey showing activity in China’s services sector expanded at the fastest pace in three months in August, as new orders rose in the world’s second-biggest consumer of oil.

Brent crude was up 21 cents, or 0.4%, at $60.91 a barrel by 0301 GMT. On Wednesday, Brent rose 4.2%.

West Texas Intermediate (WTI) was up 17 cents, or 0.3%, at $56.43 a barrel, having risen 4.3% the previous session, the biggest percentage gain in nearly two months.

Both contracts were lower earlier in the Asian trading session after data late on Wednesday from the American Petroleum Institute (API) showed U.S. crude stocks rose last week, against expectations of a decline.

U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He and agreed to hold ministerial-level trade talks in Washington “in the coming weeks”, a USTR spokesman said late on Wednesday.

Shortly after in Beijing, China’s commerce ministry said the talks would be held and “both sides agreed that they should work together and take practical actions to create good conditions for consultations.”

As the trade war between the United States and China has rumbled on into a second year, evidence has been mounting that economies worldwide are being hit, prompting downgrades of oil demand growth expectations.

BP Plc’s Chief Financial Officer Brian Gilvary told Reuters on Wednesday that global oil demand is expected to grow by less than 1 million barrels per day in 2019 as consumption slows.

Still, supply looks set to stay constrained as Russian officials and sources from the Organization of the Petroleum Exporting Countries (OPEC) indicated the countries remain committed to an agreement to rein in production to support prices.

Crude inventories in the United States rose by 401,000 barrels in the week ended Aug. 30 to 429.1 million, compared with analysts’ expectations for a decrease of 2.5 million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub fell by 238,000 barrels, while refinery crude runs fell by 306,000 barrels per day, API said.