Oil prices mixed; Brent eases as trade tensions weigh

CNBC

  • Oil prices were mixed on Monday with U.S. benchmark WTI nudging higher after four weeks of declines.
  • Brent began the week lower as the fallout from trade tensions weighed on markets.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Oil prices were mixed on Monday with U.S. benchmark WTI nudging higher after four weeks of declines, while Brent began the week lower as the fallout from trade tensions weighed on markets.

U.S. West Texas Intermediate (WTI) crude futures were up 15 cents, or 0.2 percent, at $68.84 a barrel by 0309 GMT. WTI fell 1.3 percent on Friday.

Brent crude futures fell 5 cents to $74.24 a barrel, after notching up a 1.7 percent weekly increase last week, the first gain in four weeks.

The U.S. economy grew at its fastest pace in nearly four years in the second quarter, but trade tensions remain high between Washington and Beijing despite an easing between the United States and the EU.

“Concerns around the U.S.-China trade wars continue to weigh on prices, while the halt in Saudi shipments through the Red Sea waterway has seemingly failed to provide a bullish fillip,” said Stephen Innes, head of trading APAC at OANDA Brokerage.

Oil prices are in a constructive period, says Helima Croft

Oil prices are in a constructive period, says Helima Croft  

Saudi Arabia last week said it was suspending oil shipments through the Red Sea’s Bab al-Mandeb strait, one of the world’s most important tanker routes, after Yemen’s Iran-aligned Houthis attacked two ships in the waterway.

U.S. energy companies added three oil rigs in the week to July 27, the first time in the past three weeks that drillers have increased activity, data released on Friday that showed.

Hedge funds trimmed their bullish wagers on U.S. crude for the second week in a row to the lowest in nearly a month, data also showed on Friday, as oil prices remained volatile amid trade tensions and geopolitical risks.

The speculator group cut its combined futures and options position in New York and London by 11,362 contracts to 412,289 in the week to July 24, the U.S. Commodity Futures Trading Commission said. That was the lowest level since late June, the data showed.2.4 percent.

Russian energy minister Alexander Novak said on Friday the market remained volatile and responded to verbal interventions, adding that the market had priced in risks related to U.S. sanctions against Iran.

Crude oil futures soften as bearish factors come in to play; ICE Brent down to $74.37/b, NYMEX WTI $69.40/b

S&P GLOBAL

London — Crude oil futures were showing signs of shedding their recent gains in European morning trading Friday as a sense of unease in the market and trading activity showing signs of fatigue battled to outweigh the recent bullish geopolitical news and US stock draw.

At 1000 GMT, the September ICE Brent crude futures contract was down 17 cents from the Thursday’s settle at $74.37/b, while the NYMEX WTI September contract was down 21 cents at $69.40/b.

“The softening of the near-term structure points to an underlying sense of unease,” PVM analysts said in a report Friday morning.

Adding to the bearish weight are the signs of fatigue developing in the market.

ICE Brent volumes have declined by a significant 29% between Monday and Thursday of this week, which “bares all the hallmarks of rally fatigue and will do little to underpin meek levels of upside potential,” PVM analysts said.

There is however still plenty of bullish news in the market and “in the absence of any major political or economic turmoil, Brent is likely to remain at above $70/b in the coming weeks,” Commerzbank analysts said in a morning note Friday.

Saudi Arabia, the world’s largest crude exporter, suspended all its oil shipments through the Bab el-Mandeb strait at the southern tip of the Red Sea, following an attack on two VLCCs by Yemeni Houthi militia.

Many market participants were largely unfazed by this event saying that oil trade will not be significantly disrupted by the halting of Saudi Aramco’s shipments through the strait unless the security situation deteriorates.

“The news of Saudi shipments via the Red Sea being suspended had amazingly little impact on the oil price,” Commerzbank analysts said.

Energy Information Administration data released late Wednesday — showing US crude inventories fell 6.15 million barrels to 404.94 million barrels in the week ended July 20 — and rising geopolitical tensions between the US and Iran also appear to have been digested by the market and are no longer providing much in the way of support to the oil complex.

In response to the rising tensions, PVM analysts said “once upon a time, such threats would have propelled oil prices higher…[but now] they offer little in the way of price support with market players having become accustomed to such theatrics.”

Looking towards the US, logistical issues remain, with pipeline capacity insufficient to keep up with rising production in the Permian basin.

“There is unlikely to be much relief until the second half of 2019, when new pipeline capacity is scheduled to start up,” ING analysts said in a note.

Market players will be looking towards the weather moving into next week — especially for any signs of potential hurricanes — as adverse weather conditions can have a significant impact on the oil market, potentially causing severe supply disruptions.

Brent oil gains $1 to claw back some losses

CNBC

  • Brent crude rose more than $1 on Thursday, recouping some ground after its biggest one-day drop in two years in the previous session.
  • Those declines came on news that Libya would resume oil exports and U.S.-China trade tensions.

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

Brent crude rose more than $1 on Thursday, recouping some ground after its biggest one-day drop in two years in the previous session on news that Libya would resume oil exports and U.S.-China trade tensions.

Brent crude rose $1.31, or 1.8 percent, to $74.71 by 0242 GMT after slumping 6.9 percent on Wednesday.

U.S. West Texas Intermediate (WTI) added 42 cents, or 0.6 percent, to $70.80, after falling 5 percent the previous session.

“Markets in Asia are a lot more settled today,” said Greg McKenna, chief market strategist at AxiTrader in Sydney.

“Moves, the like of which we saw in Brent and to a lesser extent WTI, last night are often followed by some sort of bounce the following day or session,” he said.

The announcement by Libya’s National Oil Corp that four export terminals were being reopened, ending a standoff that had shut down most of Libya’s oil output, was one of the catalysts for a correction, analysts said.

The reopening allows the return of as much as 850,000 barrels per day of crude into international markets, while an escalating U.S.-China trade row has raised concerns about demand.

Oil had some supportive news late on Wednesday that U.S. crude oil stocks fell by nearly 13 million barrels last week, the most in nearly two years, dropping overall crude stocks to their lowest point since February 2015.

The decline in overall inventories was partially due to a fall-off in stocks at the Cushing, Oklahoma, delivery hub for U.S. crude futures, which were down by 2.1 million barrels.

“For WTI there is tightness at Cushing, which will be supportive over July and August,” said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.

Supply to the U.S. market has also been squeezed by the loss of some Canadian oil production.

US crude rises 1%, settling above $74 for first time since Nov 2014 as sanctions on Iranian oil loom 

CNBC

  • Oil prices rose as U.S. sanctions against Iran threatened to remove a substantial volume of oil from world markets.
  • OPEC and Russia have said they will raise output to meet demand, but many analysts think that the extra supply may be inadequate.
  • A Canadian production outage disrupted the North American market.

Oil prices rose on Friday as U.S. sanctions against Iran threatened to remove a substantial volume of crude from world markets at a time of rising global demand.

U.S. West Texas Intermediate (WTI) crude ended Friday’s session up 70 cents, or 1 percent, at $74.15, its best closing price since Nov. 24, 2014. WTI hit a session peak of $74.46, also its highest level since November 2014.

Brent crude rose $1.59, or 2 percent, to $79.44, just shy of a 3½-year closing price.

“All the potential shortfalls could outstrip the production increase agreed to by OPEC and Russia,” said Dominick Chirichella, Director of Risk Management at EMI DTN. There’s a risk that supplies from Iran could be cut further as there’s pressure on other countries to join the United States in sanctions, he said.

Iran is the fifth-largest oil producer in the world, pumping about 4.7 million barrels per day (bpd), or almost 5 percent of world’s oil, much of it to China and other energy-hungry nations such as India.

Crude oil prices hit 3.5-year high

Crude oil prices hit 3.5-year high  

The U.S. government wants to stop Tehran exporting oil to cut off a vital supply of finance and hopes other big oil producers in the Organization of the Petroleum Exporting Countries and Russia will make up for the deficit.

But the world oil market is already tight and many analysts and big investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.

But the world oil market is already tight with unplanned disruptions in Canada, Libya and Venezuela removing supply.

Many analysts and investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.

“It is becoming increasingly clear that Saudi Arabia and Russia will struggle to compensate for potential losses in oil production from the likes of Venezuela, Iran and Libya,” said Abhishek Kumar, analyst at Interfax Energy in London.

Vienna-based consultancy JBC Energy said the stronger the implementation and enforcement of U.S. sanctions, the higher the oil price will go. “Triple-digit oil prices are not off the table,” JBC said.

A Reuters survey of 35 economists and analysts on Friday forecast Brent would average $72.58 a barrel in 2018, 90 cents higher than the $71.68 forecast in last month’s poll and compared with the $71.15 average so far this year.

North American oil stocks have fallen as an outage at Canada’s Syncrude has locked in more than 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncor Energy.

Dan Eberhart: Oil prices to keep rising

Dan Eberhart: Oil prices to keep rising  

Outside North America, record demand and voluntary supply cuts led by OPEC have pushed up prices. Unplanned supply disruptions from Libya to Venezuela have further tightened the market.

Libya’s National Oil Corporation (NOC) said on Friday it expects to declare force majeure on loadings from the eastern ports of Zueitina and Hariga from July 1, raising losses in output from a power struggle over oil exports to 800,000 bpd

OPEC and Russia have said they will raise output to meet demand and replace crude from unplanned disruptions but many analysts think that the extra supply may be inadequate.

Major buyers of Iranian oil, including Japan, India and South Korea, have indicated that they may stop importing Iranian crude if U.S. sanctions are imposed.

Until then, however, Asia is buying as much Iranian oil as possible. Imports of Iranian crude oil by major buyers in Asia rose in May to the highest in eight months. China, India, Japan and South Korea last month imported 1.8 million bpd from Iran, up 15 percent from a year ago.

— CNBC’s Tom DiChristopher contributed to this report.

US oil dips as markets well supplied despite strong demand, outages

CNBC

  • U.S. oil prices dipped from three-and-a-half year highs on Thursday.
  • Physical markets remained well supplied despite record demand and ongoing disruptions.

Pumpjacks operating near Ruehlermoor, Germany.

Getty Images
Pumpjacks operating near Ruehlermoor, Germany.

U.S. oil prices dipped from three-and-a-half year highs on Thursday as physical markets remained well supplied despite record demand and ongoing disruptions.

U.S. West Texas Intermediate (WTI) crude futures were at $72.55 a barrel at 0114 GMT, down 21 cents, or 0.3 percent from their last settlement.

WTI hit its highest since November 2014 at $73.06 per barrel in the previous session.

Brent crude futures were at $77.63 per barrel, virtually unchanged from their last close and still below recent May highs.

Oil prices have been rallying for much of 2018 on tightening market conditions due to record demand and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Unplanned supply disruptions from Canada to Libya and Venezuela have added to those cuts.

Yet not all indicators point towards an ever-tightening market.

Although output growth is slowing, U.S. crude production is approaching 11 million barrels per day (bpd).

With Russia and Saudi Arabia at similar levels, and output expected to rise as OPEC and Russia ease their supply restrictions, there will soon be three countries pumping out 11 million barrels of crude each and every day.

Oil prices hit 3.5-year high

Oil prices hit 3.5-year high  

This unprecedented output means just three countries are meeting a third of world consumption.

“The physical oil market is well supplied,” said Konstantinos Venetis, senior economist at research firm TS Lombard, although he warned OPEC and Russia were producing at near maximum output “leaving a thinner margin of safety for the future.”

US inventories fall

Despite rising U.S. output, U.S. commercial crude oil inventories dropped by almost 10 million barrels in the week to June 22, to 416.64 million barrels, according to the Energy Information Administration on Wednesday.

That’s below the 5-year average level of around 425 million barrels.

Traders expect inventories to draw further in coming weeks as an outage of Canada’s Syncrude locks in over 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncot.

The draw in U.S. inventories was also due to high exports of almost 3 million bpd, coupled with domestic refinery activity hitting a utilization rate of 97.5 percent, the highest in more than a decade.

Oil demand has been chasing records for most of 2018, but the outlook is dimming amid escalating trade disputes between the United States and other major economies including China and the European Union.

“Our macroeconomic view remains overwhelmingly bearish,” commodity brokerage Marex Spectron said.

“Credit conditions have worsened again, which is likely to have an outright negative impact on the demand for crude oil in the next 4-6 weeks,” it said.