Oil falls for third day as coronavirus travel bans escalate

REUTERS

TOKYO (Reuters) – Oil prices fell for a third session on Wednesday to be down about 17% so far this week as the outlook for fuel demand darkened amid travel and social lockdowns triggered by the coronavirus epidemic.

Brent crude LCOc1 was trading down 43 cents, or 1.5%, at $28.30 a barrel by 0650 GMT, after dropping to $28.26 the lowest since early 2016. The international benchmark fell 4.3% on Tuesday.

U.S. crude Clc1 was down 47 cents, or 1.7%, at $26.48 a barrel, after falling as low as $26.20, also the lowest in more than four years. West Texas Intermediate fell 6% on Tuesday.

A drop in U.S. inventories of crude, gasoline and distillates, as reported by an industry group, provided some support to prices, but the demand outlook remains grim amid a price war among major producers.

Oil jumps to highest in more than a week after Libyan shutdowns

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KEY POINTS
  • Brent crude futures were up by 74 cents, or 1.1%, to $65.59 by 0331 GMT, having earlier reached $66.00 a barrel, the highest since Jan. 9.
  • The West Texas Intermediate contract was up by 58 cents, or 1%, at $59.12 a barrel, after rising to $59.73, the highest since Jan. 10.
  • In the latest development in a long-running conflict in Libya, where two rival factions have claimed the right to rule the country for more than five years, the National Oil Corporation (NOC) on Sunday said two big oilfields in the southwest had begun shutting down after forces loyal to the Libyan National Army closed a pipeline.
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An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
Getty Images

Oil prices rose to their highest in more than week on Monday after two large crude production bases in Libya began shutting down amid a military blockade, setting the stage for crude flows from the OPEC member to be cut to a trickle.

Brent crude futures were up by 74 cents, or 1.1%, to $65.59 by 0331 GMT, having earlier reached $66.00 a barrel, the highest since Jan. 9. The West Texas Intermediate contract was up by 58 cents, or 1%, at $59.12 a barrel, after rising to $59.73, the highest since Jan. 10.

In the latest development in a long-running conflict in Libya, where two rival factions have claimed the right to rule the country for more than five years, the National Oil Corporation (NOC) on Sunday said two big oilfields in the southwest had begun shutting down after forces loyal to the Libyan National Army closed a pipeline.

“If this sort of disruption endures, it’s meaningful … the market is right to be reacting with a bullish tone,” said Lachlan Shaw, head of commodity research, at National Australia Bank in Melbourne.

“It just continues to emphasise, notwithstanding that the world market is clearly in surplus and there are plenty of stocks, the fact is the market still depends on a number of key regions that have heightened geopolitical risk.”

Oil prices had fallen back in the last two weeks. After the outbreak of hostilities between the United States and Iran at the beginning of the year triggered a jump, both sides took steps to pull back from conflict, calming the market’s mood.

If exports are halted for any sustained period, tanks for storage will fill within days and production will slow to 72,000 barrels per day (bpd), an NOC spokesman said. Libya has been producing around 1.2 million bpd recently.

Also on Sunday, foreign countries agreed at a summit in Berlin on Sunday to shore up a shaky truce in Libya, even as the talks were overshadowed by the latest blockade.

German Chancellor Angela Merkel told reporters that the Berlin summit, attended by the main backers of the rival Libyan factions, had agreed that a tentative truce in Tripoli over the past week should be turned into a permanent ceasefire to allow a political process to take place.

Oil edges up on trade optimism, eyes on Middle East tensions

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KEY POINTS
  • West Texas Intermediate (WTI) crude futures edged up 5 cents to $61.77 a barrel by 0529 GMT. The U.S. benchmark is up about 36% so far this year.
  • Brent crude futures were at $68.36 a barrel, up 20 cents, or 0.3%.
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Workers cross walkways between zones aboard an offshore oil platform in the Persian Gulf’s Salman Oil Field, near Lavan island, Iran, on Jan. 5. 2017.
Ali Mohammadi | Bloomberg | Getty Images

Oil prices traded at three-month highs on Monday, underpinned by optimism over an expected U.S.China trade deal, while traders kept a close eye on the Middle East following a U.S. air strike.

Markets showed little initial reaction to news of the U.S. strikes in Iraq and Syria against an Iran-backed militia group, even as U.S. officials warned “additional actions” may be taken.

West Texas Intermediate (WTI) crude futures edged up 5 cents to $61.77 a barrel by 0529 GMT. The U.S. benchmark is up about 36% so far this year.

Brent crude futures were at $68.36 a barrel, up 20 cents, or 0.3%. The international benchmark has risen around 27% in 2019.

″(Trading) has been relatively flat due to lack of market participants in the holiday season,” said market analyst Margaret Yang of CMC Markets.

“Oil prices have reached their highest level since the Saudi oil field attack in Mid Sep, and thus traders are also cautious about profit-taking possibilities,” she added.

On Sunday, China’s Commerce Ministry said it is in close touch with the United States on the signing of a long-awaited trade deal.

The two countries on Dec. 13 announced a “Phase one” agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.

Oil prices were also supported by declining U.S. crude stocks which fell by 5.5 million barrels in the week to Dec. 20, far exceeding a 1.7-million-barrel drop forecast in a Reuters poll.

In the Middle East, the United States carried out air strikes on Sunday in Iraq and Syria against the Kataib Hezbollah militia group, while protesters in Iraq on Saturday forced the closure of its southern Nassiriya oilfield.

U.S. officials said the air strikes in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base were successful, but warned that “additional actions” may still be taken.

Iraq’s oil ministry said the production halt at the Nassiriya oilfield will not affect the country’s exports as it will use additional output from southern oilfields in Basra.

Elsewhere, Libyan state oil firm NOC said it is considering the closure of its western Zawiya port and evacuating staff from the refinery located there due to clashes nearby.

However, the holiday season meant “oil will continue to struggle for meaningful moves,” said Edward Moya, analyst at brokerage OANDA.

Oil hits three month highs as strong US consumer spending underpins growth hopes

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KEY POINTS
  • Brent crude futures were up 6 cents, or 0.1%, at $67.98 a barrel at 0612 GMT.
  • The West Texas Intermediate contract was up 11 cents, or 0.2%, at $61.79 a barrel.
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Jean-Paul Pelissier | Reuters

Oil prices rose on Friday, hitting three-month highs after data showed record online spending by U.S. consumers, stoking faith in the world’s no. 1 economy even before the hoped-for end to the trade war between Washington and Beijing.

Brent crude futures were up 6 cents, or 0.1%, at $67.98 a barrel at 0612 GMT, after rising to as high as $68.10, the highest since September. The West Texas Intermediate contract was up 11 cents, or 0.2%, at $61.79 a barrel.

A survey on Thursday showed that online holiday purchases by U.S. consumers reached a record, beating analysts’ expectations and sending U.S. stocks to fresh.

U.S. consumers are “showing few signs of tightening their purse strings, which is positive for oil also,” said Stephen Innes chief Asia market strategist at AxiTrader.

Oil prices have also been buoyed by robust hopes that the New Year will usher in an end to the long-running U.S.-China trade tariff war, a dispute that has overshadowed global economic growth prospects and left question marks over future demand for crude.

The lingering ripple effect of the trade row showed up again in data from Japan, the world’s third-biggest economy, on Friday showing that industrial output shrank for a second month in November.

Still, the price Brent has jumped more than a quarter in 2019, while WTI is up around 35%, boosted by moves by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to curb production. Earlier this month OPEC and its allies agreed to extend and deepen those cuts.

“The short-term momentum remains positive although I expect Asia to content itself with remaining on the sidelines today,” said Jeffrey Halley, senior market analyst, at OANDA.

Oil steady amid optimism U.S.-China close to signing trade deal

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KEY POINTS
  • Oil prices were mostly steady on Monday after three weeks of gains.
  • U.S. drillers may be anticipating higher prices as well and last week increased the number of their oil rigs by the most in a week since February 2018.
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A general view of the Novokuibyshev Refinery owned by Rosneft oil company on March 15, 2012 in Novokuibyshevsk, Samara region, Russia.
Sasha Mordovets | Getty Images

Oil prices were mostly steady on Monday after three weeks of gains amid optimism the United States and China were close to signing a trade deal to end a tariff war, with President Donald Trump saying an agreement would be signed “very shortly.”

Brent crude was down 4 cents at $66.10 a barrel by 0100 GMT. West Texas Intermediate was also down 4 cents at $60.40 a barrel.

A so-called phase one deal was announced earlier in December as part of a bid to end the months-long tit-for-tat trade war between the world’s two largest economies, which has sent shockwaves through markets and roiled global growth.

The United States is to agree to reduce some tariffs in return for a big increase in purchases by Chinese importers of American farm products, according to the deal that is due to be signed in January.

“We just achieved a breakthrough on the trade deal and we will be signing it very shortly,” Trump said at a Turning Point USA event in Florida on Saturday.

The easing of tensions has improved business confidence and boosted the outlook for economic growth and energy demand.

“Oil prices will continue to benefit from the positive developments in the U.S.-China trade,” said Stephen Innes, chief Asia market strategist at AxiTrader.

“With a more constructive global macro outlook than at any time in the last year, oil is well-supported by both fundamental factors and sentiment now,” he said.

U.S. drillers may be anticipating higher prices as well and last week increased the number of their oil rigs by the most in a week since February 2018.

Drillers added 18 oil rigs in the week to Dec. 20, bringing the total to 685, the most since November, Baker Hughes, an energy services company, said in its weekly report.

U.S. economic growth nudged up in the third quarter, latest data shows, and the economy appears to have maintained the moderate pace of expansion as the year ended, supported by a strong labor market.