Oil prices dip with possiblity of easing OPEC supply curbs

Oil Stock Markets

Oil prices edged lower on Wednesday with the possibility of higher OPEC output weighing on the market, although geopolitical risks are expected to keep prices near multi-year highs.

Brent LCOc1 futures fell 43 cents, or 0.5 percent, to $79.14 a barrel by 0218 GMT, after climbing 35 cents on Tuesday. Last week, the global benchmark hit $80.50 a barrel, the highest since November 2014.

U.S. West Texas Intermediate (WTI) crude CLc1 futures eased 25 cents, or 0.4 percent, to $71.95 a barrel, having climbed on Tuesday to $72.83 a barrel, the highest since November 2014.

The Organization of the Petroleum Exporting Countries (OPEC) may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources familiar with the discussions

The OPEC-led supply curbs have largely cleared an inventory surplus in industrialized countries based on the deal’s original goals, and stocks continue to decline.

Rising supply in the United States, where shale production is forecast to hit a record high in June, has limited the upward move in prices.

Concerns about a potential drop in Iranian oil exports following Washington’s exit from a nuclear arms control deal with Tehran have driven prices to multi-year highs.

On Monday, the United States demanded Iran make sweeping changes - from dropping its nuclear programme to pulling out of the Syrian civil war - or face severe economic sanctions.

Iran dismissed Washington’s ultimatum and one senior Iranian official said it showed the United States is seeking “regime change” in Iran.

In addition, Venezuela’s crude output could drop further following a disputed presidential election.

The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.

U.S. crude and distillate stockpiles fell last week, while gasoline inventories increased unexpectedly, data from industry group the American Petroleum Institute showed on Tuesday.

US Treasurys tick higher after reaching multiyear highs

Global Stock Markets

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 3.0613 percent, while the yield on the 30-year Treasury bond was also lower at 3.1900 percent.

In oil markets, Brent crude traded at around $77.83 a barrel on Wednesday morning, down 0.77 percent, while U.S. crude was around $70.92 a barrel, around 0.5 percent lower.

U.S. government debt prices rose into positive territory on Wednesday, as investors continued to monitor an upswing in bond yields.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 3.0613 percent, while the yield on the 30-year Treasury bond was also lower at 3.1900 percent.

U.S. government debt prices rose into positive territory on Wednesday, as investors continued to monitor an upswing in bond yields.

The yield on the benchmark 10-year Treasury note, which moves inversely to price, was lower at around 3.0613 percent, while the yield on the 30-year Treasury bond was also lower at 3.1900 percent.

Robust retail sales and factory data lifted the U.S. 10-year yield through a psychologically important level to hit 3.095 percent — it's highest since 2011. The rise in yields hampered U.S. share markets amid fears it could undercut stock valuations.

In data, housing starts and industrial production data for April are both scheduled to be released on Wednesday morning.

In oil markets, Brent crude traded at around $77.83 a barrel on Wednesday morning, down 0.77 percent, while U.S. crude was around $70.92 a barrel, around 0.5 percent lower.

Oil markets fell away from multi-year highs on Wednesday, weighed down by ample supplies despite ongoing production cuts by OPEC and looming sanctions against Iran.

Oil prices soars to multi-year highs as traders adjust to renewed US sanctions

Oil Stock Markets

Oil prices clocked up to highest in years on Thursday as marketers adjusted to the prospects of renewed U.S. sanctions against major crude exporter Iran amid an already tightening market. 

The United States plans to impose new sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 which limited Tehran’s nuclear ambitions in exchange for removing U.S.-Europe sanctions.

Oil prices rose sharply in response to the announced measures.

Brent crude futures, the international benchmark for oil prices, hit their strongest since November 2014 above $77.80 per barrel at 0421 GMT on Thursday.

U.S. West Texas Intermediate (WTI) crude futures also marked a November-2014 high, at $71.75 a barrel at that time.

In China, which is Iran’s single biggest buyer of oil, Shanghai crude futures posted their biggest intra-day rally since their launch in March, rising more than 4 percent to a dollar-denominated record of around $73.40 per barrel.

Analysts had little hope that opposition to the U.S. action would prevent sanctions from going ahead.

U.S. bank Goldman Sachs said renewed sanctions and risks to supplies elsewhere, especially in Venezuela, meant there was a high possibility of higher prices than the bank’s summer Brent price forecast of $82.50 per barrel.

The threat of new sanctions come amid an oil market that has already been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and top producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.

U.S. crude inventories fell by 2.2 million barrels in the week to May 4, to 433.76 million barrels, according to the Energy Information Administration (EIA), slightly above the 420 million barrels five-year average level.

One factor that could prevent markets from tightening further is soaring U.S. oil output.
“Higher prices are more than likely to be capped as...U.S. shale producers turn the taps back on the longer prices remain above break-evens,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

Weekly U.S. crude oil production hit another record last week, climbing to 10.7 million barrels per day (bpd).

That’s up 27 percent since mid-2016 and means U.S. output is creeping ever closer to that of top producer Russia, which pumps around 11 million bpd.

Oil prices jumps more than 2% after U.S. abandons Iran nuclear deal

Oil Stock Markets

Oil prices rose more than 2 percent on Wednesday, with Brent hitting a 3-1/2-year high, after U.S. President Donald Trump walks away from a nuclear deal with Iran, likely curbing the OPEC member’s crude exports in an already tight market. 

Trump on Tuesday pulled the United States out of an international nuclear deal with Iran that was agreed in late 2015, raising the risk of conflict in the Middle East and casting uncertainty over global oil supplies.

Brent crude oil futures LCOc1 rose to a session high of $76.75 per barrel, their highest since November 2014. They were still at $76.73 per barrel at 0344 GMT, up $1.88, or 2.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up $1.61 per barrel, or 2.3 percent, at $70.67 a barrel, close to highs also last seen in late 2014.

In China, the biggest single buyer of Iranian oil, Shanghai crude futures ISCc1 hit their highest in dollar terms since they were launched in late May, at around $73.25 per barrel.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran’s nuclear programme, with its April exports standing above 2.6 million barrels per day (bpd).

This makes Iran the third biggest exporter of crude within the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia and Iraq.

Walking away from the deal means that the United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached before then.


ANZ bank said Trump’s decision “puts into place a scenario that could see the crude oil market tighten significantly in H2 2018 and into next year.”

Iran’s exports of oil to Asia and Europe will almost certainly decline later this year and into 2019 as some nations seek alternatives in order to avoid trouble with Washington and as sanctions start to bite.

Despite this, it is not yet clear how strongly global oil markets will be affected.

The United States buys no Iranian oil, while the other signatories of the agreement, Russia, Britain, France and Germany, are opposed to ending the agreement, and may continue to buy Iranian crude.
Asia, by far the biggest importer of oil from Iran, will likely continue to take in some supplies as well, as it did during the previous round of sanctions.

All key crude oil futures contracts saw traded volumes soar as speculators took on new positions in the hope of profiting from rising prices, and as refiners hedged in order to protect themselves from higher feedstock oil prices.

Brent hits highest since 2014 after Trump missile warning

Global Stock Markets

Oil hit its highest in more than three years on Wednesday after U.S. President Donald Trump threatened to fire missiles at Syria in response to a suspected chemical attack last week

Some major airlines were re-routing flights on Wednesday after Europe’s air traffic control agency warned aircraft flying in the eastern Mediterranean to exercise caution due to possible air strikes on Syria.

Trump has criticized Moscow for standing by Syrian President Bashar al-Assad.

“Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!’,” he wrote in a post on Twitter on Wednesday.

Brent crude jumped to a high of nearly $72 a barrel, its strongest since early December 2014, after Trump’s comments, while gold XAU= rallied for a fourth day as investors ditched risk-linked assets such as equities.

Brent rose 60 cents on the day to $71.64 a barrel by 1341 GMT, while U.S. crude futures CLc1 rose 58 cents to $66.09, down from a session peak of $66.44.

The United States and its allies are considering air strikes against Assad’s forces following a suspected poison gas attack last weekend.

Syria is not a significant oil producer, but any sign of conflict in the region tends to trigger concern about potential disruption to crude flows across the wider Middle East, home to some of the world’s biggest producers.

There are also concerns that the United States could renew sanctions against Iran.

“We think the fundamentals do not justify the current price, but unfortunately the market is focusing more on the politics and ignoring some of the warning signs, especially the hike in U.S. oil production.”

Saudi Arabia Energy Minister Khalid al-Falih said on Wednesday that his country would not sit by and let another supply glut surface, implying that the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC) would continue to withhold supply.

Not all oil market indicators suggest the price will continue to rally strongly, analysts said.

U.S. crude inventories rose by 1.8 million barrels to 429.1 million barrels in the week to April 6, according to a report by the American Petroleum Institute (API) on Tuesday, compared with analysts’ expectations for a decrease of 189,000 barrels.

The U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output.

Oil prices rise as OPEC seen continuing supply cuts through 2018

Oil Stock Markets

Oil prices rose on Thursday as the producer cartel OPEC and other suppliers look set to continue withholding output for the rest of the year and potentially into 2019. 

U.S. WTI crude futures CLc1 were at $64.62 a barrel at 0354 GMT, up 24 cents, or 0.4 percent, from their previous settlement.

Brent crude futures LCOc1 were at $69.81 per barrel, up 28 cents, or 0.4 percent.

The Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) together with a group of non-OPEC producers led by Russia started cutting output in 2017 to rein in oversupply and prop up the market.

Brent, off which OPEC prices most its crude exports, has risen by around a quarter since then, which has lead to speculation that the restraints on production may be lifted.

But sources at OPEC told Reuters this week that the group and its allies were set to keep their deal on cutting production for the rest of 2018.

Despite this, Brent remained below $70 and WTI under $65 per barrel, weighed by rising crude inventories and production in the United States.

Commercial U.S. crude inventories rose by 1.6 million barrels in the last week C-STK-T-EIA to 429.95 million barrels, the Energy Information Administration (EIA) said on Wednesday.

U.S. crude oil production hit a record, at 10.43 million barrels per day (bpd) C-OUT-T-EIA. That puts the United States ahead of top exporter Saudi Arabia. Only Russia pumps out more, at 11 million bpd.

In China, Shanghai crude oil futures ISCc1 opened Thursday’s morning session down nearly 2 percent, pushing the new market close to parity with U.S. prices.

The latest drop takes the fall since the contract’s launch on Monday to 10 percent.

Despite high volatility this week and some remaining scepticism about Shanghai’s trading hours as well as doubts about the process for physical delivery of crude under contract, most analysts expect the contract to establish itself as a third global oil price benchmark next to Brent and WTI.

The U.S. bank said Shanghai’s “start of trading was relatively successful (as)... it is the first onshore Chinese commodity contract that allows direct trading by foreign investors and is denominated in RMB (yuan), indirectly promoting the use of the Chinese currency.”

Goldman said Shanghai crude futures represented 3 percent of combined WTI and Brent trading volumes since its launch on March 26.

Oil eases back from 2018 highs above $70 a barrel

Oil Stock Markets

Oil fell on Wednesday as investors took profit on a rally the previous day to this year’s highs after a report showed a surprisingly large increase in U.S. crude inventories.

May Brent crude futures LCOc1, which expire on Thursday, were at $69.70 per barrel, down 41 cents on the day by 0917 GMT, while June futures LCOc2 were down 44 cents at $69.02.

WTI futures CLc1 were down 60 cents at $64.65 a barrel.

Traders said most pressure ensued after the American Petroleum Institute (API) on Tuesday reported a surprise 5.3 million barrels rise in crude stocks in the week to March 23, against expectations for a decline of to 430.6 million barrels.

The oil price has risen in seven out of the last 9 months and has increased by more than 4 percent this year, making this the third consecutive quarter of gains, which is the longest stretch since late 2010.

“This was exacerbated by an appreciating U.S. dollar and an unexpected 5.3 million barrel rise in US crude oil stocks last week, as reported by the API after close of trading yesterday.”
Official U.S. inventory data will be published by the Energy Information Administration (EIA) late on Wednesday.

Robert Carnell, chief economist and head of research at Dutch bank ING in Asia told the  Global Markets Forum on Wednesday that “more supply coming from the U.S.” would also likely weigh on oil prices.

U.S. oil production has risen by nearly 25 percent in the last two years to over 10 million barrels per day, C-OUT-T-EIA, taking it past top exporter Saudi Arabia and within reach of the biggest producer, Russia, which pumps around 11 million bpd
.
Wednesday’s price falls came despite Saudi Arabia saying it was working with Russia on a historic long-term pact that could extend controls over world crude supplies by major exporters for many years.

Saudi Crown Prince Mohammed bin Salman told Reuters that Riyadh and Moscow were considering greatly extending a short-term alliance on oil curbs that began in January 2017 after a crash in crude prices, with a partnership to manage supplies potentially growing “to a 10-to-20-year agreement.”
In Asia, Shanghai crude oil futures posted high volumes and volatile trade on their third day of trading.

Spot Shanghai crude futures ISCc1 were down 3.75 percent on Wednesday, to 410.4 yuan ($65.37) per barrel by 0700 GMT.

($1 = 6.2782 Chinese yuan renminbi)

Oil futures dipped as U.S. trade dispute with China looms

Oil Stock Markets

Brent and WTI crude oil futures dipped on Monday as concerns of a looming trade dispute between the United States and China weighed on global markets. 

In Asia, Shanghai crude oil futures debuted strongly, both in terms of volume and prices, with front-month contracts soaring as much as 6 percent ISCc1 as investors bought into the world’s newest financial oil trading instrument. 

Looming over oil markets, however, was the possibility of a full-blown trade war between the United States and China battered Asian shares CSI300 .N225 on Monday. The falls came after U.S. President Donald Trump last week signed a memorandum that could impose tariffs on up to $60 billion of imports from China. 

This weighed on crude oil futures as well. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $65.49 a barrel at 0543 GMT, down 39 cents, or 0.6 percent, from their previous close.

Brent crude futures LCOc1 were at $70.18 per barrel, down 27 cents, or 0.4 percent. 

Crude was also weighed by a rise in the number of U.S. rigs drilling for oil to a three-year high of 804, implying further rises in production C-OUT-T-EIA, which has already jumped by a quarter since mid-2016 to 10.4 million barrels per day (bpd)

Financial oil markets have long been dominated by Europe’s Brent and America’s WTI.

Asia, despite being the world’s biggest and fastest growing oil consumer, has so far not had a benchmark. 

That possibly changed on Monday, as China saw the launch of Shanghai crude oil futures <0#ISC:>.

Few analysts doubt that Asia is overdue a financial oil price benchmark, and that China with its vast consumer and production base is a prime location for it.

Despite this, there were concerns over regulatory interference, as seen in other Chinese commodities like iron ore and coal.

That concern did not scare off global commodity trading giant Glencore (GLEN.L), which according to Chinese brokerage Xinhu Futures carried out the first trade on the Shanghai crude oil futures.

Oil prices rise pushed up by Saudi plans for OPEC and Russian-led production curbs

Oil Stock Markets

Oil prices rose by around 1 percent on Friday, pushed up by Saudi plans for OPEC and Russian-led production curbs introduced in 2017 to be extended into 2019 to further tighten the market. 

 

The rise in oil prices defied global stock markets, which slumped on the back of worries about a trade stand-off between the United States and China. Gold XAU=, seen as a safe haven in times of economic turmoil, rallied to a two-week high on Friday.

U.S. President Donald Trump signed a memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, while China unveiled plans on Friday to impose tariffs on up to $3 billion of U.S. imports.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.95 a barrel at 0753 GMT, up 65 cents, or 1 percent, from their previous settlement.

Brent crude futures LCOc1 were at $69.51 per barrel, up 60 cents, or 0.9 percent. For the week, Brent was set for a gain of about 5 percent, its strongest showing since July last year, while WTI was up about 4.2 percent.

The driver for crude futures was a statement by Saudi Arabian Energy Minister Khalid al-Falih, who said on Thursday that OPEC members will need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply curbs in 2019 to reduce global oil inventories.

The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, as well as a group of non-OPEC countries led by Russia, struck an agreement in January 2017 to remove 1.8 million barrels per day (bpd) from markets to end oversupply.

Although analysts said the stand-off between the United States and China could hit oil markets, for now most said demand looked healthy.

Morgan Stanley also cited a pick-up in seasonal demand in the coming months and geopolitical risk as potential supports for oil prices.

Oil prices fall with higher output from U.S. drilling

Oil prices fell on Monday as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply. 

U.S. West Texas Intermediate (WTI) crude futures were at $62.02 a barrel at 0350 GMT, down 32 cents, or 0.5 percent, from their previous close. 

Brent crude futures were at $65.85 per barrel, down 36 cents, or 0.5 percent. 

Monday’s price falls in part reversed increases last Friday, which came on concerns over tensions in the Middle East. 

On a simple supply versus demand basis, however, oil markets are facing the possibility of a renewed glut after being in a slight deficit for much of last year. 

U.S. drillers added four oil rigs in the week to March 16, bringing the total count to 800, the weekly Baker Hughes drilling report said on Friday. 

The U.S. rig count, an early indicator of future output, is much higher than a year ago as energy companies have boosted spending.

Thanks to the high drilling activity, U.S. crude oil production has risen by more than a fifth since mid-2016, to 10.38 million barrels per day (bpd), pushing it past top exporter Saudi Arabia. 

Only Russia produces more, at around 11 million bpd, although U.S. output is expected to overtake Russia’s later this year as well. 

Soaring U.S. output, as well as rising output in Canada and Brazil, is undermining efforts by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) to curb supplies and bolster prices. 

Many analysts expect global oil markets to flip from slight undersupply in 2017 and early this year into oversupply later in 2018. 

One risk to supplies, however, is Venezuela.

The International Energy Agency said last week that Venezuela, where an economic crisis has cut oil production by almost half since early 2005 to well below 2 million bpd, was “clearly vulnerable to an accelerated decline”, and that such a disruption could tip global markets into deficit despite soaring U.S. output.

Oil prices heading for a weekly drop; concerns about rising supply from U.S.

Oil Stock Markets

Oil prices were set to fall this week, with both benchmarks dropping slightly on Friday, on concerns among investors about rising supply from the U.S. and other nations threatening to undermine efforts by OPEC and other producers to tighten the market. 

West Texas Intermediate (WTI) oil futures for April delivery CLc1 fell 3 cents, or 0.1 percent, to $61.16 a barrel at 0354 GMT, after settling up 23 cents on Thursday. WTI is set to fall 1.4 percent this week, reversing the previous week’s 1.3 percent gain.

Brent crude futures trading in London LCOc1 fell 7 cents to $65.05 a barrel after settling up 23 cents. Brent is down 0.7 percent for the week.

Several reports this week renewed investor focus on the potential for rising supply to overwhelm the expected gains in crude demand for 2018.

On Thursday, the International Energy Agency (IEA) said global oil supply increased in February by 700,000 barrels per day (bpd) from a year ago to 97.9 million barrels per day.

The IEA also said supply from producers outside of the Organization of the Petroleum Exporting Countries (OPEC), led by the United States, will grow by 1.8 million bpd this year versus an increase of 760,000 bpd last year.

The supply increase is more than the IEA’s expected demand growth forecast for this year of 1.5 million bpd.

The agency also reported that commercial oil inventories in industrialised nations rose in January for the first time in seven months.

That directly undermines the efforts of producers led by OPEC and Russia, the world’s biggest oil producer, to cut supply in order to reduce global stockpiles.

OPEC and other producers began cutting supply in January 2017 to erase a global crude glut that had built up since 2014.

On Wednesday, the U.S. government reported that crude stockpiles there increased by a more-than-expected 5 million barrels, rising for a third straight week. 

 

Oil prices got scant support from the equities market. Asian stocks declined on Friday, following a four-day losing streak in the S&P 500 a day earlier, amid concerns about more changes in the administration of U.S. President Donald Trump.

Recently, crude futures have moved in sync with equities.

Oil prices stable but capped by the relentless rise in U.S. production

Oil Stock Markets

Oil prices held steady on Thursday, supported by healthy global demand but capped by the relentless rise in U.S. production that is undermining efforts led by producer cartel OPEC to cut supplies and prop up markets. 

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 17 cents, or 0.3 percent, to $61.13 a barrel by 0245 GMT. 

Brent crude futures LCOc1 were at $65 per barrel, up 11 cents, or 0.2 percent. 

Reuters technical commodity analyst Wang Tao said market signals for Brent pointed to a continuation of recent sideways movements, although he added that technical chart indicators were “indicating the current sideways move may end very soon.”

Prices were receiving support from healthy demand. The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that oil consumption was expected to grow by 1.62 million barrels per day (bpd) in 2018.

But looming over markets has been a relentless climb in U.S. crude output C-OUT-T-EIA, which hit another record last week by rising to 10.38 million bpd, up by more than 23 percent since mid-2016. 

Commercial crude inventories C-STK-T-EIA were up by 5 million barrels, at 430.93 million barrels. 

U.S. crude production, which has already overtaken that of top exporter Saudi Arabia, is expected to rise above 11 million bpd later this year, taking the top spot from Russia, according to the International Energy Agency.

Soaring U.S. output, as well as rising output in Canada and Brazil, is undermining efforts by Middle East dominated OPEC to withhold supplies in order to bolster prices.

OPEC on Wednesday raised its forecast for non-member oil supply to almost double the growth predicted four months ago.

The group said non-OPEC producers would boost supply by 1.66 million bpd in 2018.

But since OPEC expects demand this year to grow by only 1.62 million bpd, that would leave the market slightly oversupplied and may require more or longer supply restraint.

OPEC and several other non-OPEC producers led by Russia began cutting supply in January, 2017 to erase a global glut of crude that had built up since 2014.

OPEC said its combined output dropped by 77,000 bpd to 32.186 million bpd in February, led by declines in Iraq, the United Arab Emirates and Venezuela.

These cuts and rising U.S. output mean that OPEC is losing market share.

Oil stable after two days of decline

Oil Stock Markets

Oil prices were stable on Wednesday after posting two days of declines at the start of the week. 

Support came from a report that U.S. crude inventories are not rising as much as expected during the spring season now starting, implying healthy demand, and from strong China data.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.76 a barrel at 0430 GMT, up 5 cents, or 0.1 percent, from their previous close.

Brent crude futures LCOc1 were at $64.59 per barrel, down 5 cents, or 0.1 percent.

U.S. crude inventories rose by 1.2 million barrels in the week to March 9, to 428 million barrels, the American Petroleum Institute said on Tuesday. That compared with analysts’ expectations for an increase of 2 million barrels.

Some support also came from China, where January-February domestic crude oil production fell 1.9 percent on the year to 30.37 million tonnes, equivalent to 3.77 million barrels per day (bpd),
according to data from the National Statistical Bureau on Wednesday. At the same time, crude oil throughput rose 7.3 percent to 93.4 million tonnes, implying a need for more imports.

Despite this, oil markets remain relatively weak. Prices have not returned to their January highs of over $70 per barrel for Brent and almost $67 for WTI.

U.S. crude production C-OUT-T-EIA has soared by almost a quarter since mid-2016 to 10.37 million bpd, overtaking output by top exporter Saudi Arabia.

U.S. production is expected to rise above 11 million bpd by late 2018, taking the top spot from Russia, according to the International Energy Agency (IEA).

Weekly U.S. crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday. [EIA/S]

The increases in U.S. production has this year exceeded the supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), which have been in place since 2017 in an effort by the cartel, and supported by non-OPEC member Russia, to prop up prices.

Estimates by the EIA show global supplies will exceed 100 million bpd for the first time in the second quarter of 2018, while demand will only break through that level in the third quarter, implying a slightly oversupplied market.

That would be a reversal from a supply deficit in 2017 and early 2018.

Oil prices set to slip over the week: pressure from rising U.S. output

Global Stock Markets

Oil prices were broadly steady on Thursday but still set to slip over the week for the second time in a row against a backdrop of rising U.S. crude production and an increase in inventories. 

Brent crude futures LCOc1 were down 3 cents at $64.31 per barrel by 1005 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 3 cents at $61.18 a barrel.

Brent was on track for a drop of around 0.1 percent this week, after last week’s 4.4 percent slide.

A build in U.S. crude inventory reported the previous day was not as large as expected, given that stocks tend to rise towards the end of the winter as refineries conduct maintenance.

But with the threat of the United States sparking a trade war with some of its largest partners, financial markets were on edge. Prices of commodities stayed under pressure. 

China reported a steep monthly drop in crude imports in February, when the Lunar New Year holidays took place. Imports of crude dropped by more than 20 percent to a daily rate of 8.2 million barrels per day (bpd) from 9.4 million bpd in January.

Iimports in January and February combined gave a daily rate of about 9.02 million bpd, up 10.8 percent from the same period last year. [RUSSELL/]

Rising U.S. production, which reached 10.37 million bpd last week, remains a focus for investors.

U.S. output is expected to surge beyond 11 million bpd by late 2018, which would surpass the current No. 1 producer Russia.

This U.S. increase is putting pressure on the Organization of the Petroleum Exporting Countries, Russia and other nations which have been curbing output to prop up prices but risk losing market share.

Oil prices Down; U.S. crude inventories decrease

Oil Stock Markets

Stronger dollar makes oil more expensive for some buyers

Dollar outweighs API report of lower U.S. crude inventories (Adds ANZ comment on OPEC cuts, updates prices)

Oil prices fell on Thursday, pulled down as a firmer dollar outweighed a report of a decrease in U.S. crude inventories.

U.S. West Texas Intermediate (WTI) crude futures were at $61.15 a barrel at 0640 GMT, down 53 cents, or 0.9 percent, from their last settlement.

Brent crude futures fell 42 cents, or 0.6 percent, from their last close to $65 per barrel.

The dollar rose to a one-week high against a basket of major currencies on Thursday, after minutes of the Federal Reserve's January meeting showed policymakers were more confident of the need to keep raising interest rates.

Since oil trading is conducted in dollars, a rise in the greenback makes fuel imports for countries using other currencies domestically more expensive, potentially curbing demand.

The firm dollar outweighed a reported fall in U.S. crude inventories.

The American Petroleum Institute on Wednesday reported an unexpected drop in U.S. crude oil inventories by 907,000 barrels to 420.3 million barrels for the week to Feb. 16.

Despite Thursday's falls, analysts said oil markets were generally well supported due to demand-growth coinciding with production restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

Oil falls as dollar firms, U.S. oil output expected to rise

Oil Stock Markets

Oil prices fell on Wednesday, weighed down by a rebound in the U.S. dollar from three-year lows hit last week and an expected rise in U.S. oil production. 

U.S. West Texas Intermediate (WTI) crude futures were at $61.07 a barrel at 0446 GMT, down 72 cents, or 1.2 percent, from their last settlement. 

Brent crude futures fell 60 cents, or 0.9 percent, from their last close to $64.65 per barrel.

Wang Tao, Reuters technical commodity analyst, said Brent could fall into a range of $63.92 to $64.41 per barrel, as suggested by its wave pattern and a projection analysis. 

Traders said the declines were driven by a recovery in the dollar, which potentially hits fuel demand as it makes greenback-denominated oil imports more expensive for countries using other currencies.

The dollar index, which measures the greenback against a basket of six major currencies, rose for a second day on Wednesday, moving further away from the three-year lows reached last week. 

Also pressuring prices is surging U.S. production, now the world’s second-largest oil stream at more than 10 million barrels per day (bpd), only slightly behind Russia and ahead of top exporter Saudi Arabia. 

The next set of weekly U.S. oil production data is due to be published by the Energy Information Administration (EIA) on Thursday after a one-day delay because of the President’s Day holiday on Monday. 

That data will also include U.S. inventory figures that are expected to show crude oil stockpiles rose 1.3 million barrels in the week to Feb. 16. Oil product stockpiles, including gasoline and distillate fuels, are all expected to decline. 

Despite the rising U.S. output, overall oil markets remain well supported due to healthy demand growth and supply restraint by the Organization of the Petroleum Exporting Countries (OPEC) that started last year to draw down excess global inventories. 

“A roughly balanced market is anticipated in calendar year 2018, with the risks around that view tilted toward surplus,” mining and energy giant BHP said in its economic and commodity outlook for the year, published this week.

Brent crude sags, while lower Canadian supply boosts U.S. futures

Global Stock Markets

Brent crude oil prices fell on Tuesday, pulled down by a stronger dollar and a bout of profit-taking, while U.S. futures gained, bringing the discount between the two key futures contracts to a six-month low.

Brent crude futures fell 73 cents from Monday’s close to $64.94 a barrel by 1017 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 20 cents from their last close on Friday at $61.88 a barrel. 

Reduced supply from Canada to the United States caused by pipeline reductions were supporting WTI, traders said. 

Brent is trading at a premium of less than $3 a barrel to WTI , down from over $$7 at the start of the year. 

A narrower premium of Brent to WTI means it is also less attractive for consumers in north-west Europe to import U.S. crude, especially with refiners conducting maintenance. Premiums for local North Sea grades are at multi-month lows. 

Logistical constraints in the United States have even caused prices for regional grades to diverge. [CRU/C] 

Louisiana light sweet crude is trading at a premium of around $2 a barrel to WTI, down from nearly $5 a month ago. 

Overall, oil markets remain supported by supply restraint on the part of the Organization of the Petroleum Exporting Countries (OPEC), which started last year to draw down excess global inventories. 

Saudi Arabia - not least in an attempt to give the planned listing of its state-owned oil giant Saudi Aramco a boost - wants Russia and other producers to keep withholding supplies to prop up prices. But soaring U.S. production is threatening to erode those OPEC’s efforts. 

Last week, the number of U.S. oil rigs drilling for new production rose for a fourth straight week to 798, an indication that U.S. crude output, already at a record 10.27 million bpd, may rise further.

Oil markets mixed on lower Canadian flows, firmer dollar

Oil Stock Markets

Oil markets were split on Tuesday, with U.S. crude was pushed up by reduced flows from Canada while international Brent prices eased.

U.S. West Texas Intermediate (WTI) crude futures were at $62.16 a barrel at 0153 GMT, up 48 cents, or 0.8 percent, from their last settlement. 

Traders said the higher WTI prices were a result of reduced flows from Canada’s Keystone pipeline, which has been operating below capacity since late last year due to a leak, cutting Canadian supplies into the United States. 

Outside North America, Brent crude eased on the back of a dip in Asian stocks and a stronger dollar, which potentially curbs demand as it makes fuel more expensive for countries using other currencies domestically. 

Brent crude futures were at $65.23 per barrel, down 44 cents, or 0.7 percent, from their last close.

Despite this, oil markets remain well supported due to supply restraint by the Petroleum Exporting Countries (OPEC), which started last year in order to draw down excess global inventories. 

OPEC Secretary-General Mohammad Barkindo said on Monday the organization registered 133 percent compliance with agreed output reduction targets in January. 

While most of OPEC, especially its de-facto leader Saudi Arabia, is showing strong support for the production restraint, non-OPEC producer Russia has shown signs it may at some stage gradually start to increase output again. 

Saudi Arabia - not least in an attempt to give the planned listing of its state-owned oil giant Saudi Aramco - a boost, is keen for Russia and other producers to keep withholding supplies to prop up prices. 

But soaring U.S. production is threatening to erode OPEC’s efforts. 

Last week, the amount of U.S. oil rigs drilling for new production rose for a fourth straight week to 798, in an indication that U.S. crude output, already at a record 10.27 million bpd, may rise further.

The United States late last year became the world’s second biggest oil producers, only slightly behind Russia and ahead of top exporter Saudi Arabia.

Oil gains as dollar sags near three-year low; many Asian markets shut

Oil Stock Markets

Oil prices edged higher on Friday as the dollar stood near a three-year low in subdued Asian trade, with many markets closed for the Lunar New Year holiday. 

NYMEX crude for March delivery was up 16 cents, or 0.3 percent, at $61.50 a barrel by 0200 GMT, after settling up 74 cents on Thursday.

For the week, the contract has risen nearly 4 percent after losing nearly 10 percent last week. 

London Brent crude was up 26 cents, or 0.4 percent, at $64.59 after settling down 3 cents. 

Brent is up nearly 3 percent for the week after falling more than 8 percent last week. 

“The market is quiet due to a slew of holidays in Asia.” 

The dollar languished near a three-year low against a basket of currencies on Friday, headed for its biggest weekly loss in two years. 

A weaker dollar often boosts prices for oil and other dollar-denominated commodities. 

Asian shares extended their recovery from two-month lows into a fifth day on Friday as Wall Street’s market volatility gauge fell, although Chinese and most Southeast Asian financial markets were closed for the Lunar New Year holiday. 

Oil producers led by Saudi Arabia and Russia aim to draft an agreement on a long-term alliance by the end of this year, United Arab Emirates energy minister Suhail al-Mazroui said on Thursday. 

OPEC and non-OPEC producers including Russia have been restraining production by a total 1.8 million barrels per day in a bid to prop up prices under a deal that is to expire at the end of 2018.

The move comes at a time when Asian demand is on the rise. 

India imported a record 4.93 million bpd in January to feed its expanded refining capacity and meet rising demand, data showed. 

Oil won support earlier in the week after Saudi Energy Minister Khalid al-Falih said OPEC hopes to keep limiting crude output to leave the market tight. 

However, surging U.S. production is offsetting OPEC’s efforts to curb supplies. U.S. crude output hit a record 10.27 million barrels per day last week, the Energy Information Administration (EIA) said on Wednesday, making it a bigger producer than Saudi Arabia.

Oil stable on weaker dollar and healthy economic growth

Oil Stock Markets

Oil prices were stable on Wednesday, supported by healthy economic growth and expectations that a weaker dollar could spur fuel demand. 

Despite this, crude prices remain well below recent highs due to signs of lingering oversupply, including rising U.S. inventories and ample physical flows globally.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $59.17 a barrel at 0123 GMT, down 2 cents from their last settlement. WTI was trading above $65 in early February.

Brent crude futures LCOc1 were at $62.77 per barrel, up 5 cents from their last close. Brent was above $70 a barrel earlier this month.

Ongoing weakness in the U.S. dollar, which potentially stokes demand from countries using other currencies at home, as well as healthy economic growth were supporting oil markets, traders said.

The American Petroleum Institute said on Tuesday that U.S. crude inventories rose by 3.9 million barrels in the week to Feb. 9, to 422.4 million.

That was largely due to soaring U.S. crude production C-OUT-T-EIA, which has jumped by over 20 percent since mid-2016 to over 10 million barrels per day (bpd), surpassing output of top exporter Saudi Arabia and coming within reach of Russia, the world’s biggest producer.

U.S. crude is increasingly appearing on global markets.

More is set to come as the Louisiana Offshore Oil Port in the Gulf of Mexico starts testing supertankers for exports.

The surge in U.S. production and exports means oil may be in oversupply again soon, flipping a deficit from 2017 induced by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

The International Energy Agency said on Tuesday oil demand would grow by 1.4 million bpd in 2018, but added output growth could outpace demand.

The physical market is already reacting, with prices for regional crudes from the North Sea, Russia, the United States, and Middle East becoming cheaper as producers struggle to remain competitive amid ample supplies.

Despite the warning lights from within oil markets, economic fundamentals remain healthy.

High consumer spending drove Japan’s economy to eight straight quarters of growth in October-December, its longest continuous expansion since the 1980s bubble economy, Cabinet Office data showed on Wednesday.