Royal Dutch Shell profits soar on stronger oil prices

Oil Stock Markets

Royal Dutch Shell on Thursday reported a 42 percent rise in first-quarter profit, its highest in over three years, boosted by higher oil prices and production.

Expectations are high for Shell to continue to generate strong profits and cash flow after the Anglo-Dutch company beat larger rival Exxon Mobil <XOM.N> on both fronts in 2017 thanks to cost cuts and higher efficiencies.

The world's top oil companies are expected to generate more cash in 2018 than at any other time this decade after three years of cuts, but boards remain cautious amid uncertainty over near- and long-term prices.

Shell in the fourth quarter scrapped its scrip dividend in a sign that it is confident of being able to maintain around $15 billion in annual dividend payments without resorting to borrowing after a three-year oil price downturn.

It plans to buy back $25 billion (17.94 billion pounds) of shares by 2020 in order to offset the dilutive effect of the scrip and its $54 billion acquisition of BG Group.

It did not specify a time to start the program on Thursday.

After falling short of expectations in the previous quarter, Shell's cash flow from operations in the first three months of 2018 recovered to $9.43 billion, which was still slightly weaker from $9.5 billion a year earlier.

Free cash flow was little changed from a year earlier at $5.178 billion.

Net income attributable to shareholders, based on a current cost of supplies (CCS) and excluding identified items, rose to $5.322 billion, topping a company-provided analysts' consensus of $5.277 billion.

A year ago, net income was $3.754 billion.

Production grew by 2 percent to 3.839 million barrels of oil equivalent per day. Earnings for the segment almost tripled from a year earlier.

Income from the refining and marketing segment, known as downstream, weakened due to lower refining margins and plant availability.

Gearing, the ratio between debt and Shell's market capitalisation was slightly lower from the end of 2018 at 24.7 percent by the end of March.

Brent crude oil prices in recent months have risen to $75 per barrel, their highest since late 2014.

Prices averaged around $67 a barrel in the first quarter, up nearly 25 percent from a year earlier.

Brent oil hits highest since late 2014 as supplies tighten amid strong demand

Oil Markets

Brent crude oil rose for a sixth day on Tuesday to hit its highest since November, 2014 at over $75 a barrel, buoyed by expectations that supplies will tighten just as demand reaches record levels. 

Brent crude futures LCOc1 marked $75.27 a barrel on Tuesday, their highest since Nov. 27, 2014. Brent was still at $75.07 a barrel at 0708 GMT, up 36 cents, or 0.5 percent, from its last close.

Brent’s six-day rising streak is the longest such string of gains since December, with prices up more than 20 percent from 2018-lows plumbed in February.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.17 a barrel, up 53 cents, or 0.8 percent, from their last settlement. On Thursday, WTI rose to its strongest since Nov. 28, 2014 at $69.56.

Markets have been lifted by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) which were introduced in 2017 with the aim of propping up the market.

The potential of renewed U.S. sanctions against Iran is also pushing prices higher.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA said new sanctions against Tehran “could push oil prices up as much as $5 per barrel”.

The United States has until May 12 to decide whether it will leave the Iran nuclear deal and re-impose sanctions against OPEC’s third-largest producer, which would further tighten global supplies.

“Crude prices are now sitting at the highest levels in three years, reflecting ongoing concerns around geopolitical tensions in the Middle East, which is the source of nearly half of the world’s oil supply,” ANZ bank said.

OPEC’s efforts to tighten markets are being led by top exporter Saudi Arabia, where state-controlled oil firm Saudi Aramco is pushing for higher prices ahead of a partial listing planned for later this year or 2019.

OPEC’s supply curtailments and the threat of new sanctions are occurring just as demand in Asia, the world’s biggest oil consuming region, has risen to a record as new and expanded refineries start up from China to Vietnam.

One of the few factors that has limited oil prices from surging even more is U.S. production, which has shot up by more than a quarter since mid-2016 to over 10.54 million barrels per day (bpd), taking it past Saudi Arabia’s output of around 10 million bpd.

As a result of its rising output, U.S. crude is increasingly appearing on global markets, from Europe to Asia, undermining OPEC’s efforts to tighten the market.

Oil dips as U.S. drilling tempers otherwise bullish sentiment

Oil Markets

Oil prices dipped on Monday as a rising U.S. rig count implied further increases in output, marking one of the few factors tamping back crude in an otherwise bullish environment. 

Brent crude futures LCOc1 were at $73.91 per barrel at 0630 GMT, down 15 cents, or 0.2 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 18 cents, or 0.3 percent, at $68.22 a barrel.

U.S. drillers added five rigs drilling for new production in the week ended April 20, bringing the total to 820, the highest since March 2015, according Baker Hughes energy services firm.

The rising rig numbers point to further increases in U.S. crude production C-OUT-T-EIA, which is already up by a quarter since mid-2016 to a record 10.54 million barrels per day (bpd).

Only Russia produces more, at almost 11 million bpd.

Despite slipping on Monday, overall the oil market remains well supported, especially by strong demand in Asia.

Brent is up by 20 percent from its 2018 low in February.

Prices are also being supported by supply cuts led by the Organization of the Petroleum Exporting
Countries (OPEC) that were introduced in 2017 to prop up the market.

The United States has until May 12 to decide whether it will leave the Iran nuclear deal and instead impose new sanctions against Tehran, including potentially on its oil exports, which would further tighten global supplies.

The U.S. trade action against Russia and, potentially, against Iran has resulted in a slump in Russia's ruble RUB= and Iran's rial IRR=.

This means costs for any imported goods become more expensive for its citizens or companies, but it has also pushed up the value of Russia’s and Iran’s oil sales as all of their production costs are in the local currencies, while foreign sales are largely made in the U.S. dollar.

The generally elevated oil prices have also sparked a spat between U.S. President Donald Trump and producer cartel OPEC.

Trump on Friday accused OPEC of “artificially” boosting oil prices, threatening on Twitter that this “will not be accepted”, drawing rebukes from several of the world’s top oil exporters within OPEC.

Daily Briefing: Lords ready Brexit challenge to May

European Stock Markets

Britain's House of Lords is expected to inflict an embarrassing defeat on Theresa May's government today as it challenges her refusal to remain in a customs union with the European Union after Brexit. 

The bigger question is whether that act of defiance encourages more pro-EU rebels in her own party to make a stand when the proposed amendment comes down to the lower house, where she has a slender majority. That is by no means a given, despite the fact it would require only about seven Conservative MPs to back the amendment.

Still, hopes in financial markets for a softer landing on Brexit than once feared are among the factors that have been boosting sterling against the dollar in recent months.

German unions and employers meeting well into the night yesterday secured a deal to boost the pay of more 2 million public sector workers by some 7.5 percent over two-and-a-half years. That breaks down to an initial 3.19 percent raise this year followed by a 3.09 percent increase from next April and the rest in 2020.

Along with the package already offered to steel and carworkers, these are some of the biggest wage increases for German workers in years and could start to boost spending in Germany’s increasingly consumer-led economy. That in turn would encourage the ECB it is on the right track to start tightening its policy this year as planned.

French railworkers embark on the latest round of strikes today, a day after parliament backed in first reading the government's plans to end the SNCF rail company's monopoly and curtail the special status of its employees. Finance Minister Bruno Le Maire said on Monday the strikes and other industrial actions were starting to take a toll in sectors such as hotels and tourism but that it was too early to assess the overall impact on the economy.

This is the fourth set of strikes since they were called - Emmanuel Macron will be watching closely for signs the participation is ebbing.

After weeks of sound and fury on trade and politics, world markets returned to brass tacks and are again focusing squarely on incoming economic numbers and corporate earnings. Flattered in part by U.S. tax cuts, the corporate numbers at least are pretty impressive.

Goldman Sachs hailed its financial trading division as the return of market volatility marked a blowout first quarter for the lender, while recent anxiety about the giant tech and internet firms eased somewhat as Netflix's impressive results sent its stock surging almost 10 percent to record highs. 
With 10 percent of the S&P500 already reported, the already punchy aggregate annual growth estimate for the whole 500 is creeping higher toward 20 percent.

Morgan Stanley and American Express are among those reporting later on Wednesday. U.S.
 economic numbers are also injecting a little more optimism, with both industrial output and housing starts for March beating forecasts and prompting a rebound in the recently-ebbing U.S. economic surprise index.

The S&P500 ended up more than 10 percent on Tuesday, with the tech-heavy Nasdaq up almost 2 percent. The Vix volatility gauge slipped back  below 15 percent to its lowest level in more than a month.

Asia’s main bourses all advanced in the slipstream, with benchmark indices in Japan, South Korea and Hong Kong all adding 1 percent or more. Even Shanghai stocks rallied after four straight days of losses as the People’s Bank of China’s surprise cut in bank reserve requirements on Tuesday helped offset ongoing U.S. trade war concerns and related problems for firms such as telecoms equipment make ZTE.

MSCI’s all-country index of world stocks is now firmly back in the black for 2018 so far with the International Monetary Fund on Tuesday reaffirming is robust 3.9 percent world economic growth forecast for this year and next.

While European economic numbers continue to underwhelm relative to consensus forecasts, there have been other positive twists this week to underpin equity markets there – not least a deal by Italy’s Intesa Sanpaolo to sell some $13 billion of non-performing loans for almost 30 cents in the dollar, seen by many as a turning point in the long running saga of ridding Italian banks of deadweight bad debts.

The gap between U.S. and German government borrowing rates, meanwhile, widened further. The 2-year gap is at its widest since 1989, while the 10-year gap is its highest since late 2016 at 234 basis points.

Elsewhere, the dollar steadied after early week losses. Sterling’s surge to its highest level since the month of the Brexit referendum was tempered as strong UK jobs and wage figures on Wednesday were still short of some expectations and traders await today’s release of UK March inflation report for more clues about the now widely expected Bank of England interest rate rise next month.
Brent crude oil was firmer above $72.

Oil prices rise on fall in U.S. crude inventories, global supply risks

Oil Stock Markets

Oil prices rose on Wednesday, lifted by a reported decline in U.S. crude inventories and by the ongoing risk of supply disruptions. 

Brent crude oil futures LCOc1 were at $72.07 per barrel at 0659 GMT, up 49 cents, or 0.7 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 49 cents, or 0.7 percent, at $67.01 a barrel.

In the United States, crude inventories fell by 1 million barrels last week, to 428 million barrels, according to a weekly report by the American Petroleum Institute (API) on Tuesday.

Official weekly U.S. data will be published by the Energy Information Administration (EIA) on Wednesday.

Outside the United States, oil markets have been receiving general support due to a sense that there are high risks of supply disruptions, including a potentially spreading conflict in the Middle East, renewed U.S. sanctions against Iran and falling output as a result of political and economic crisis in Venezuela.

Beyond voluntary supply restrictions aimed at propping up prices led by the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) since 2017, falling output in Venezuela due to its political and economic turmoil was supporting prices.

“OPEC production is currently lower than expected as a result of large declines in Venezuelan output caused by a deterioration in the economic situation there,

The lower OPEC supplies come as demand is healthy, with China’s refineries processing a record 12.1 million barrels per day (bpd) of crude oil in March.

Dutch bank ING said in a note to clients that Brent had risen back above $70 per barrel in April “due to geopolitical risks along with some fundamentally bullish developments in the market”.

It raised its average 2018 price forecast for Brent to $66.50 a barrel from $60.25, and its 2018 WTI forecast to $62.50 per barrel from $57.75.

For next year, however, ING expects lower prices due to rising U.S. crude output, which has jumped by a quarter since mid-2016 to over 10.5 million bpd.

The structure of the Brent and WTI forward price curve also points to a tighter market this year than in 2019.

The premium for June 2018 over June 2019 prices for Brent and WTI is $5.50 and $6 per barrel respectively, creating a market structure known as backwardation in which it is attractive to sell crude immediately instead of keeping it in storage for later sale.

Oil markets tense after western strikes on Syria, rising U.S. drilling weighs

Oil Markets

Oil fell more than 1 percent on Monday as markets opened following western air strikes in Syria over the weekend, while a rise in U.S. drilling for new production also dragged on prices. 

The United States, France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack in Douma on April 7.

Brent crude oil futures were at $71.78 per barrel at 0643 GMT, down 80 cents, or 1.10 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down 68 cents, or 1.01 percent, at $66.71 a barrel.

Traders said markets in Asia began cautiously after the weekend strikes, with some relief that the move looked unlikely to escalate.

Oil markets also came under pressure from a rise in U.S. oil drilling activity.

U.S. energy companies added seven oil rigs drilling for new production in the week to April 13, bringing the total to 815, the highest since March 2015, energy services firm Baker Hughes said on Friday.

Despite this, Brent is still up more than 16 percent from its 2018 low in February, due to healthy demand and also because of conflict and tension in the Middle East.

Although Syria itself is not a significant oil producer, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.

GLOBAL MARKETS-Simmering Middle East tensions keep stocks under pressure

Global Markets

The main U.S. indexes opened more than 0.5 percent higher on Thursday as expectations that lower U.S. taxes would fuel corporate earnings added to a slight easing of nerves over Syria conflict.

* World stocks fall 0.2 percent
* Crude and gold prices ease from highs
* European investors await ECB meeting

 - World stocks edged down further on Thursday as anxious investors stayed wary of risky assets, seeking protection against a threatened clash between Western powers and Russia in Syria.

The ratcheting up of geopolitical tensions over an alleged chemical attack by Syrian government forces weighed on equities and kept bond yields low, while oil prices eased back slightly, having surged to 2014 highs as a result of the tensions in the Middle East.

MSCI’s world equity index fell for the second day, while European shares declined 0.1 percent in early deals.

Aside from the political developments, European investors also awaited a European Central Bank meeting later in the day, hoping for greater clarity on the bank’s timing for the unwinding of quantitative easing.

Losses were limited by strong oil and gas stocks, boosted by this week’s jump in crude prices.

U.S. President Trump declared that missiles “will be coming” in Syria, taunting Russia for supporting Syrian President Bashar al-Assad after the suspected chemical attack in Douma. Damascus and Moscow have denied any responsibility.

His comments raised the prospect of direct conflict over Syria for the first time between the two world powers backing opposing sides in the seven-year-old civil war.

Heightened geopolitical tensions have piled pressure on investors already rattled by a trade spat between the U.S. and China and a generally more volatile market environment.

Villamin expects the VIX gauge of S&P 500 volatility to stay around the 20 mark - roughly twice its average level last year.

Crude prices eased back slightly after three sessions of strong gains took them to the highest levels since late 2014.

U.S. crude futures last traded down 0.3 percent at $66.66 a barrel, having risen 7.4 percent so far this week. They traded as high as $67.45 on Wednesday.

Brent declined 0.4 percent to $71.77 a barrel, having touched a high of $73.09 on Wednesday.
European government bond yields remained low as caution dominated ahead of the ECB meeting. Germany’s 10-year Bund yield slipped to 0.493 in early trades.

He started adding to government bonds last month for the first time since 2016, hoping to benefit from bonds’ relatively low volatility.

Safe-haven gold edged down slightly after minutes from the Federal Reserve’s policy meeting on Wednesday raised expectations the U.S. could raise rates at a faster pace.

Gold eased 0.3 percent to trade at $1,348.75 per ounce, having hit an 11-week high at $1,365.30 on Wednesday.

Currency markets drifted after some strong risk-averse moves.

The dollar index inched higher, though it was still 0.5 percent down on the week. The safe-haven yen edged lower, having been bid up strongly on Wednesday.

The euro was little moved, at $1.2369 ahead of the ECB meeting.

Russia’s rouble edged up for a second day after heavy selling due to new punitive sanctions by the United States.

It traded around 62.29 to the dollar, still down more than 7 percent this week.

The Turkish lira, which has been highly sensitive to developments in neighbouring Syria, traded at 4.1345 per dollar after hitting a record low of 4.1920 on Wednesday.

The lira is down 2.5 percent so far this week, also hit by concern about inflation and the central bank’s reluctance to tighten its policy.

Concerns on the Middle East have overshadowed budding optimism that Washington and Beijing will work out a compromise to avert a trade war following Chinese President Xi Jinping’s speech on Tuesday.

Oil dips on rising U.S. supplies, market still tense on conflict in Syria

Oil Markets

Oil prices on Wednesday eased away from 2014 highs reached the previous session as escalating Middle East tensions were offset by increasing inventories and production in the United States.
FILE PHOTO: Pump jacks pump oil at an oil field on the shores of the United States.

Brent crude futures LCOc1 rose to $70.78 per barrel at 0154 GMT, down 26 cents, or 0.4 percent, from their last close. Brent surged more than 3 percent on Tuesday to hit its highest level since late 2014, at $71.34 a barrel.

U.S. WTI crude futures CLc1 were at $65.38 a barrel, down 13 cents, or 0.2 percent from their last settlement.

Markets have been tense on escalating tensions in the Middle East.

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

Pan-European air traffic control agency Eurocontrol said late on Tuesday that air-to-ground and/or cruise missiles could be used within the next 72 hours, warning of intermittent disruption of radio navigation equipment.

Though Syria is not a significant oil producer itself, the wider Middle East is the world’s most important crude exporter and tension in the region tends to put oil markets on edge.

There are also concerns that the United States could renew sanctions against Iran, a major Middle East oil producer.


Not all oil market indicators pointed to ongoing price rises, however.

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

OANDA’s Innes said the API report had “temporarily taken a bit of wind out of the market”.
Adding to rising storage levels, 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.

In its monthly short-term energy outlook, the agency forecast that U.S. crude oil output will rise by 750,000 barrels per day (bpd) to 11.44 million bpd next year. Last month, it expected a 570,000 bpd year-over-year increase to 11.27 million bpd.

That will likely make the United states the world’s biggest oil producer by 2019, surpassing Russia which currently pumps out almost 11 million bpd.

Oil prices rise on hopes U.S. trade spat with China may ease

Oil Stock Markets

Oil markets rose for a second day on Tuesday, with Brent rising above $69 per barrel on hopes a trade dispute between the United States and China, the world’s two biggest crude consumers, may be resolved without greater damage to the global economy. 

Yet prices remain within recent ranges as oil markets still face an abundance of supply that puts pressure on producers to keep their prices competitive in order not to lose market share.

Brent crude futures LCOc1 were at $69.04 per barrel at 0523 GMT, up 39 cents, or 0.6 percent, from their last close.

U.S. West Texas Intermediate crude futures CLc1 were at $63.81 a barrel, up 39 cents, or 0.6 percent.
The gains followed a more than 2 percent rally on Monday during European and American trade hours, but that was a rebound from a 2 percent decline on Friday.

Chinese President Xi Jinping on Tuesday promised to open the country’s economy further and lower import tariffs, in a speech that struck a conciliatory tone on the rising trade tensions between China and the United States.

Concerns of a prolonged trade dispute between the world’s two biggest economies and uncertainty over the supply and demand balance of global oil markets have resulted in volatile recent trading.

Beyond the trade dispute, oil markets are also concerned about the potential of renewed U.S. sanctions against some significant oil producers.

Traders said weekly U.S. fuel inventory data would provide further market guidance.

The American Petroleum Institute will publish storage data later on Tuesday while official data from the U.S. Energy Information Administration is due on Wednesday.

Oil markets have been supported by healthy demand and supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

However, soaring U.S. crude production C-OUT-T-EIA, which has jumped by a quarter since mid-2016 to 10.46 million barrels per day (bpd), is threatening to undermine OPEC’s efforts to tighten the market and prop up prices.

The United States late last year overtook Saudi Arabia as the world’s second-biggest crude producer. Only Russia pumps more crude, at almost 11 million bpd.

In a sign that oil supplies remain ample, China’s Sinopec (600028.SS) and several other Asian refiners plan to cut Saudi crude imports in May, instead buying from alternative sources, after Saudi Aramco set higher-than-expected official prices, a company official said on Monday.

JPMorgan said it expects Brent and WTI prices to average $69.50 and $65.20 per barrel in 2018, respectively, while it forecasts $64 per barrel for Brent and $58.50 per barrel for WTI in 2019.

Oil prices firm, but trade dispute and Syria keep market on edge

Oil Markets

Oil markets stabilised on Monday after slumping around 2 percent last Friday on concerns over an intensifying trade dispute between the United States and China, as well as increased U.S. drilling activity. 

Markets on Monday were also eying the situation in Syria after reports - denied by the Pentagon - that U.S. forces had struck a major air base there.

U.S. WTI crude futures CLc1 were at $62.34 a barrel at 0355 GMT, up 28 cents, or 0.45 percent, from their previous settlement.
 
Brent crude futures LCOc1 were at $67.43 per barrel, up 32 cents, or 0.5 percent.

Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China, reigniting fears of a trade war between the world’s two largest economies that could hurt global growth.

With Chinese markets closed last Thursday and Friday, Shanghai crude futures ISCc1 played catch-up on Monday, dropping 0.6 percent to around 400 yuan ($63.43) per barrel.

Oil prices have generally been supported by healthy demand as well as by supply restraint led by the Organization of the Petroleum Exporting Countries (OPEC), which started in 2017 in order to rein in oversupply and prop up prices.

In physical oil markets, OPEC’s number two producer Iraq said on Monday that it is keeping prices for its crude supplies in May steady.

In the United States, drillers added 11 rigs looking for new production in the week to April 6, bringing the total count to 808, the highest level since March 2015.

Oil drops after U.S. President Trump threatens new China trade tariffs

Oil Markets

Oil prices fell on Friday after U.S. President Donald Trump’s threat of new tariffs on China reignited fears of a trade war between the world’s two biggest economies. 

President Trump said on Thursday he had ordered U.S. trade officials to consider tariffs on $100 billion more of imports from China, escalating tensions with Beijing.

Brent crude for June delivery was down 32 cents, or 0.5 percent, at $68.01 per barrel at 0410 GMT.
U.S. West Texas Intermediate crude for May delivery was down 35 cents, or 0.6 percent, at 63.19 a barrel.

Shanghai September crude futures were untraded due to public holidays in China, after falling 0.8 percent on Wednesday. Shanghai trading will resume on Monday.

While oil market watchers were wary of the brewing trade war between the United States and China, they did not expect to see steep falls amid signs of tightening supplies.

“As the escalating trade tensions continue to weigh on the commodity sector, we view the oil market as the best sector in which to wait out the volatility,” analysts at ANZ bank said in a note. “Supply-side issues amid a backdrop of falling inventories should override any concern over weaker economic growth.”

The Energy Information Administration (EIA) reported a 4.6 million-barrel draw in U.S. crude inventories last week, compared with analysts’ expectations for an increase of 246,000 barrels. [EIA/S]

Meanwhile, Saudi Arabia said on Thursday it would raise its official selling price for May crude for Asian customers.

The Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia are committed to cutting output by around 1.8 million barrels per day through the end of 2018 in a bid to clear a global overhang and support prices.

Saudi Arabia, the de facto leader of the oil cartel, has said production cuts could be extended in one form or another.

OPEC and its allies should keep the cuts to ensure healthy price levels as a way to boost investment in the industry and avoid a supply and price shock in the long run, Qatar’s Energy Minister Mohammed al-Sada

Oil gains on U.S. crude drawdown, easing of tension in U.S.-China spat

Oil Stock Markets

Oil prices rose on Thursday, buoyed by the U.S. government data showing a surprise drawdown in crude stockpiles and an easing of tensions over a trade row between the United States and China.

U.S. West Texas Intermediate crude for May delivery CLc1 was up 27 cents, or 0.4 percent, at $63.64 a barrel by 0445 GMT after settling down 14 cents.

Front-month London Brent crude LCOc1 for June delivery was up 30 cents, or 0.4 percent, at $68.32, having ended down 10 cents.

Oil also got support from firm global equities, as the United States expressed willingness to negotiate a resolution on trade after proposed U.S. tariffs on $50 billion in Chinese goods prompted a quick response from Beijing that it would retaliate by targeting key American imports.

Oil prices have recently closely tracked equities.

Before the rebound late on Wednesday, after the release of the Energy Information Administration (EIA) inventory data, WTI and Brent had hit two-week lows after China proposed a broad range of tariffs on U.S. exports, feeding fears of a trade war.

U.S. crude inventories fell by 4.6 million barrels last week, compared with analysts’ expectations for an increase of 246,000 barrels, EIA data showed on Wednesday.

Oil has also received support after a Reuters survey showed on Wednesday that OPEC oil output fell in March to an 11-month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan output.

Shanghai crude futures trading was closed on Thursday due to a public holiday in China. Trading will resume on Monday.

Oil giants stay in their own backyards in U.S. auction

Oil Stock Markets

The Trump administration heralded the government’s sale last month of U.S. drilling leases in the Gulf of Mexico as a bellwether. 

The sale brought in $124.8 million, as just 1 percent of the 77 million acres (31.2 million hectares) offered found bidders. Reuters examined the acreage offered and leased, and nearly all the purchases show big drillers stuck closest to existing infrastructure, shunning the most far-flung areas.

While U.S. crude oil production reached a record last year at more than 10 million barrels a day, most new development is in onshore shale regions. The U.S. Interior Department has said it wants to open all U.S. coasts for drilling, including the Atlantic and Pacific. But the Gulf result indicates limited interest even in already-developed areas, never mind unexplored coasts.

The March auction included 9,088 deepwater blocks, each comprising roughly nine square miles. Only 105 of these blocks received bids and all but three of these were close to existing infrastructure and leases.
 
However, money for exploration is increasingly flocking to other regions, particularly Latin America, where energy reforms have attracted billions of dollars in investment from companies historically known as Gulf heavyweights. A January auction by Mexico brought in more than four times the bids as the U.S. sale.

Of the 105 new U.S. leases in water depths of more than 656 feet (200 meters), 85 were immediately contiguous with existing leased acreage or production platforms, and another 17 were within about two miles of existing leases or infrastructure, according to the Reuters analysis.

Among the areas where companies submitted bids were Mississippi Canyon and Green Canyon, two of the most densely leased plays in the Gulf, about 100 miles (160 km) off the Louisiana coast. Royal Dutch Shell Plc was the high bidder on two Mississippi Canyon blocks.

Overall, Shell picked up 16 Gulf blocks including 6 adjacent to its deepwater developments known as Kakias and Stones, and 10 clustered around other actively leased areas. It told Reuters that it wanted to “acquire blocks that could potentially support future development using our existing hubs.”

BP Plc’s most notable bids were 19 blocks in DeSoto Canyon, contiguous to a known gas field, about 100 miles from the Louisiana coast. “BP is strategic with its bids, and we use the opportunity to expand and strengthen our plays,” a company spokesman told Reuters.

Only three blocks leased were more than a few miles from existing acreage. Those blocks were snapped up by Chevron, which declined comment.

Bidding on parcels close to known assets increases the likelihood of finds that can be produced affordably, cutting infrastructure and supply costs.

Major oil companies remain lukewarm about pushing the boundaries of available frontiers, desiring longer leases and lower royalty rates.

Deepwater offshore blocks currently require an 18.75 percent payment to the U.S. government, compared with 12.5 percent for shallower areas and onshore drilling. An Interior Department panel in February recommended lowering those rates.

Companies have also expressed a desire for longer leases to more effectively drill in unexplored areas further from the coasts. Six deepwater regions more than 200 miles off the Louisiana coast received no bids at all. The water here is generally about two miles deep. The locale makes both drilling and transporting oil to shore especially costly.

The high cost of building underwater pipelines is another deterrent. Deepwater projects like Chevron’s Jack and St. Malo fields, more than 200 miles from the coast, required a pipeline connecting them to existing Gulf infrastructure closer to shore, approved in 2010, during a boom when U.S. crude traded at about $90 a barrel.

Oil prices steady, Investors shied away from riskier assets

Oil Stock Markets

Oil prices were little changed on Thursday after falling in the previous two sessions as investors shied away from riskier assets amid volatile equity markets and the U.S. dollar gained, limiting overall interest in commodities. 

Both global benchmark oil futures fell sharply on Wednesday after crude and gasoline inventories in the United States rose unexpectedly. 

U.S. West Texas Intermediate crude for April delivery CLc1 was up 8 cents at $61.72 a barrel by 0403 GMT after settling down 2.2 percent in the previous session. 

Brent crude LCOc1 for May delivery, the new front-month contract, was down 3 cents at $64.70. The April contract expired on Wednesday down 1.3 percent. 

Both benchmark contracts fell nearly 5 percent in February, the first monthly decline in six months. 

Some industry sources said Wednesday’s decline was also due to profit-taking by market participants at the end of the month after oil hit a three-week high earlier this week. 

The U.S. dollar index .DXY, which measures the greenback against six major currencies, increased for a second day on Wednesday and was slightly higher on Thursday. 

A stronger U.S. dollar limits demand for dollar-denominated commodities such as oil since investors paying in other currencies must pay a higher price. 

U.S. crude inventories rose by 3 million barrels last week, compared with analyst expectations for a build of 2.1 million barrels, weekly data by the Energy Information Administration (EIA) showed. 

Gasoline stocks also rose by 2.5 million barrels against expectations for a 190,000-barrel drop, which pushed gasoline futures sharply lower. 

Distillate stockpiles, which include diesel and heating oil, fell by 1 million barrels, versus expectations for a 709,000-barrel drop. 

Soaring U.S. crude production has also kept a lid on oil prices this year, even though producers, led by the Organization of the Petroleum Exporting Countries and Russia, have reduced output. 

U.S. crude oil production rose to a record 10.057 million barrels per day (bpd) in November and retreated slightly in December to 9.949 million bpd, the EIA said on Wednesday. 

OPEC, meanwhile, is doing its part to keep a lid on prices. 

The group’s oil output fell in February to a 10-month low as the United Arab Emirates joined other Gulf members in over-delivering on the reduction pact, a Reuters survey found on Wednesday. 

Oil prices may find some support as the U.S. is considering oil-related sanctions on OPEC member Venezuela to pressure its socialist President Nicolas Maduro, a U.S. official said on Wednesday. 

The sanctions could target a military-run oil services company and restrict insurance coverage for Venezuelan oil shipments ahead of the country’s elections on April 22.

Oil hits highest in nearly two weeks on Asian equity recovery

Oil Stock Markets

Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed as Asian shares joined a global recovery in equity markets and as worries grew over tensions in the Middle East. 

Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation. 

U.S. West Texas Intermediate crude for March delivery CLc1 was up 73 cents, or 1.2 percent, at $62.41 a barrel by 0600 GMT, after earlier touching its highest since Feb. 7. 

London Brent crude LCOc1 was up 52 cents, or 0.8 percent, at $65.36, after rising more than 3 percent last week. 

“Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in U.S. rig count and a slight recovery in the dollar.” 

Trading is expected to be slower than usual due market holidays in the United States as well as Greater China. 

The U.S. oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit. 

That marked the first time since June that drillers added rigs for four consecutive weeks, and the figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a two-year crash. 

Surging U.S. production is offsetting efforts by the Organization of the Petroleum Exporting Countries (OPEC) and some other producers including Russia to curb production by 1.8 million barrels per day (bpd) until the end of 2018. 

Money managers slashed their bullish wagers on ICE Brent crude oil futures by the most in nearly eight months in the week to Feb. 13, data showed, as prices plunged amid concerns of oversupply.

Speculators also cut net long U.S. crude futures and options positions in the week to Feb. 13 by the most since late August, the U.S. Commodity Futures Trading Commission (CFTC) said.

Oil prices extend declines on stronger dollar, rising U.S. output

Oil Stock Markets

Oil prices fell on Tuesday for a second day as rising U.S. output and a strengthening dollar sapped demand for crude, pushing Brent below $69 a barrel for the first time in six days. 

Brent crude futures, the global benchmark, had declined 49 cents, or 0.7 percent, to $68.97 a barrel by 0522 GMT, after earlier dropping as low as $68.91. The contract for March delivery settled down $1.06, or 1.5 percent, at $69.46 a barrel on Monday.

U.S. West Texas Intermediate crude futures dropped 70 cents, or 1.1 percent, to $64.86 a barrel. On Monday, they fell 58 cents, or 0.9 percent, to $65.56. Prices are still heading for a fifth straight monthly gain.

U.S. production is already on par with Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries (OPEC). Only Russia produces more, averaging 10.98 million barrels per day (bpd) in 2017.

U.S. output has jumped more than 17 percent since mid-2016 and is expected to exceed 10 million bpd soon.

Drillers in the U.S. added 12 oil rigs for new production in the week to Jan. 26, Baker Hughes reported on Friday.

The recent rally in oil prices had been fueled by the U.S. dollar’s six straight weekly slides. The greenback is down 3 percent so far this month.

Oil is priced in the greenback, so a falling dollar can boost demand for crude from buyers using other currencies.

The dollar index had been below $90 since Jan. 24, falling below $89 on Friday. But the currency has rebounded since then to around $89.37, which has weighed on crude prices.

Crude prices may also be under pressure on expectations for U.S. inventories to rise for the first time in 11 weeks.

Rising U.S. Oil output undermines OPEC/Russia supply cuts

Oil Stock Markets

Oil prices fell on Friday as market fundamentals are expected to weaken with the upcoming end of the peak demand period during the Northern Hemisphere winter.

Brent crude futures were at $70.18 per barrel at 0504 GMT, down 24 cents, or 0.3 percent, from their last close. Brent the previous day rose its highest since December 2014 at $71.28.

U.S. West Texas Intermediate (WTI) crude futures were at $65.32 a barrel, down 19 cents, or 0.3 percent from their last close. WTI also marked its highest since December 2014 in during the previous session at $66.66.

Georgi Slavov, head of research at commodities brokerage Marex Spectron, said despite a generally healthy outlook for oil demand, there were short-term headwinds due to the upcoming end of the peak demand period during the Northern Hemisphere winter season.


On the supply side, U.S. oil production is expected to hit 10 million barrels per day (bpd) soon, after reaching 9.88 million bpd last week.

Output has grown by more than 17 percent since mid-2016, and is now on par with top exporter Saudi Arabia's.

Only Russia produces more, averaging 10.98 million bpd in 2017.

Rising U.S. output is threatening to undermine the supply restraint led by the Organization of the
Petroleum Exporting Countries (OPEC) and Russia aimed at propping up prices.

These cuts, coupled with demand growth, have contributed to a near 60 percent rise in oil prices since mid-2017 as excess crude inventories around the world have been drawn down.

Crude oil futures have also received support from a weakening dollar.

The U.S. currency has lost almost 13 percent in value against a basket of other leading currencies since the start of 2017.

As oil is traded in dollars, swings in the greenback can also impact oil demand as it affects the price of fuel purchases for countries using other currencies.

Oil dips on higher US fuel stocks, but overall market remains supported

Oil Stock Markets

Oil prices fell on Wednesday, weighed down by data that showed an increase in U.S. crude oil and gasoline inventories.

Brent crude oil futures LCOc1 were at $69.83 a barrel at 0444 GMT, down 13 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.43 a barrel, down 4 cents from their last settlement.

Traders said prices had been pressured by U.S. data showing an increase in crude and gasoline stocks.
The American Petroleum Institute said on Tuesday that crude inventories rose by 4.8 million barrels in the week to Jan. 19 to 416.2 million, after nine weeks of drawdowns.

Gasoline stocks climbed by 4.1 million barrels, while refinery crude runs fell by 420,000 barrels per day.

In Asia, oversupply of gasoline has pulled down refinery profits for the product to their lowest level since 2015.

Amid these weakening indicators, traders are taking measures to protect themselves from a potential fall in crude prices.

Trading data shows open interest for Brent put options LCO6700O8 to sell at $70, $69 and $68 per barrel has surged since the middle of last week on the Intercontinental Exchange (ICE).

Overall, there is now far more demand for options to sell Brent than there is for call options, which are the right to buy Brent at a certain price.

Despite this, traders said oil prices were unlikely to tumble far as markets remain supported by healthy economic growth, as well as from supply restrictions led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

In the latest sign of robust global economic growth, Japanese manufacturing activity expanded at the fastest pace in almost four years in January, a survey showed on Wednesday.

Economic growth is translating into healthy oil demand growth, which comes at a time that OPEC and Russia lead production cuts aimed at tightening the market and propping up prices. The deal to withhold output started in January last year and is currently set to last through 2018.

Brent crude oil rises to $70 on output cuts, ignores North America rig gains

Brent crude oil prices rose to $70 a barrel on Monday, supported by ongoing output cuts led by OPEC and Russia, and ignoring a rise in U.S. and Canadian drilling activity that points to higher future output in North America. 

Brent crude futures LCOc1, the international benchmark for oil prices, were at $70 per barrel at 0558 GMT, up 13 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $64.53 a barrel, up 23 cents.

Both benchmarks last week reached levels not seen since December 2014, with Brent touching $70.05 a barrel and WTI reaching as high as $64.77.

ANZ bank said on Monday oil prices had recently risen on data that continued to show the market is tightening.

Oil markets have been well supported by production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia which are aimed at propping up crude prices.

The cuts started in January last year and are set to last through 2018, and they have coincided with healthy demand growth, pushing up crude prices by more than 13 percent since early December.
But other factors, including political risk, have also supported crude.

Oil hits $70 a barrel for the first time in three years

Oil Stock Markets

Prices edged higher as Opec nations and their allies cleared the glut caused by the growth of US shale 

Oil topped $70 a barrel in London for the first time in three years as production cuts by Opec and rising demand whittle away a global surplus.

Brent crude futures, used in the pricing of more than half the world’s oil, rose as much as 1.2 per cent to the highest since December 4, 2014.

Prices rallied after the longest stretch of declines in US inventories during winter in a decade.

Oil’s rally shows that the Organisation of Petroleum Exporting Countries and its allies are succeeding in clearing the glut triggered by the growth of US shale oil.

Prices have also been supported by concerns that supply disruptions could stem from rising political tensions in Opec members Iran and Venezuela.

Brent for March settlement advanced to $69.90 a barrel on the London-based ICE Futures Europe exchange at 11:28 Eastern time.

With the climb in crude, there are growing signs that Opec could be falling into a trap it had sought to avoid.

Rising prices are putting US production on track to rival both Saudi Arabia and Russia, with output likely to exceed 10 million barrels a day as soon as next month and top 11 million before the end of 2019, according to Energy Information Administration forecasts.