Oil prices firm as Brent creeping close to $80 per barrel

Oil Stock Markets

Oil prices firmed on Thursday, with Brent crude creeping ever closer to $80 per barrel, a level it has not seen since November 2014, as supplies tighten while demand remains strong. 

Brent crude futures were at $79.32 per barrel at 0027 GMT, up 4 cents from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $71.68 a barrel, up 19 cents, or 0.3 percent, from their last settlement.


U.S. crude inventories dropped by 1.4 million barrels in the week to May 11, to 432.34 million barrels.

ANZ said the falling U.S. inventories were “raising concerns of tight markets heading into the U.S. driving season,” during which demand typically rises.

Looking beyond seasonal changes, U.S. bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020, due to a steady increase in demand.

Not all pointed to a tighter market, however.

The International Energy Agency (IEA) said on Wednesday that it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.

The IEA said global oil demand would average 99.2 million bpd in 2018.

And although supplies currently only stand at 98 million bpd due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), the IEA said that “strong non-OPEC growth ... will grow by 1.87 million bpd in 2018.”

Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd.

That puts the United States within reach of top producer Russia, which pumps around 11 million bpd.
As a result of its surging production, U.S. crude is increasingly appearing on global markets as exports.

Commodity brokerage Marex Spectron said that the surge in U.S. supplies was a “strongly price-bearish development.”

It said the economic outlook was also “firmly bearish” as “short-term credit conditions have worsened which ... hasn’t been priced correctly by the market”.

The brokerage also said that U.S. energy intensity “continues to decrease which is never good news for the future consumption of oil”.

Oil prices gain on Middle east troubles, but capped by soaring US output

Oil Stock Markets

Oil prices edged up on Tuesday, lifted by tensions in the Middle East, although rising output in the United States and shaky stock markets put a lid on further gains. 

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $62.31 a barrel at 0128 GMT, up 25 cents, or 0.4 percent, from their previous close. 

Brent crude futures LCOc1 were at $66.26 per barrel, up 21 cents, or 0.3 percent. 

Traders pointed to concerns in the Middle East, where the United States may reimpose sanctions on Iran, as well as tensions between Saudi Arabia and Iran. 

Worries about Venezuela’s tumbling crude production also supported oil markets. 

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 PRODN-VE, was “clearly vulnerable to an accelerated decline”, and that such a disruption could tip global markets into deficit. 

Falls on global share markets helped cap gains. Markets are under pressure from concerns over a possible trade war between the United States and other major economies, as well as from fears of stiffer regulation as Facebook came under fire following reports it allowed improper access to user data. 

Also looming over oil markets has been surging U.S. crude oil production C-OUT-T-EIA, which 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.

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.

Global oil demand picks up but still lags rising supply: IEA

Global Stock Markets

Global oil demand is expected to pick up this year but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018, the International Energy Agency (IEA) said on Thursday. 

The IEA raised its forecast for oil demand this year to 99.3 million barrels per day (bpd) from 97.8 million bpd in 2017. 

Commercial oil inventories in industrialized OECD nations rose in January for the first time in seven months to 2.871 billion barrels, 53 million barrels above their five-year average, the Paris-based IEA said. 

The January increase of 18 million barrels over the December inventory level was roughly half the size of rises normally seen at this time of year, according to the agency, which advises Western governments on energy policy. 

But it said Venezuela, where an economic crisis has cut oil production by 50 percent in two years to lows not seen in more than a decade, could still trigger a renewed drawdown in stocks.

In a bid to drain inventories, the Organization of the Petroleum Exporting Countries, Russia and several other producers have been implementing a deal to cut output by about 1.8 million bpd from January 2017 until the end of 2018. 

Assuming no change in OPEC output for the rest of the year, the IEA said it expected a small increase in OECD inventories in the first quarter of 2018 with declines after that. 

The agency said it expected supply from non-OPEC nations to grow by 1.8 million bpd in 2018 to 97.9 million bpd, led by the United States, where crude output was forecast to rise by 1.3 million bpd during 2018 to more than 11 million bpd by the end of the year. 

OPEC crude output fell in February to 32.1 million bpd, led by Venezuela and the United Arab Emirates. 

The IEA raised its estimate for demand for OPEC oil to 32.4 million bpd for 2018 from last month’s forecast of 32.3 million bpd. 

The agency said the decision by U.S. President Donald Trump decision to impose tariffs on imports of steel and aluminum, which has prompted threats of retaliation from major trading partners, posed a risk to global economic growth forecasts. 

It said growth in world trade had been strong, accelerating from 2.5 percent in 2016 to 4.7 percent in 2017, citing this as the likely reason behind a sturdy 1.8 percent rise in 2017 in global gasoil demand.

Oil prices fall on relentless rise in U.S. crude output

Oil Stock Markets

Oil prices fell on Tuesday, extending losses from the previous session, as the inexorable rise in U.S. crude output weighed on markets. 

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $61.25 a barrel at 0414 GMT, down 11 cents, or 0.2 percent, from their previous close. 

Brent crude futures LCOc1 were at $64.85 per barrel, down 10 cents, or 0.2 percent. 

Both crude benchmarks dropped by around 1 percent in their Monday sessions. 

“Oil prices fell on the back of concerns that surging U.S. production ... could push inventories in the U.S. higher,” ANZ bank said on Tuesday. 

U.S. crude oil production C-OUT-T-EIA soared past 10 million barrels per day (bpd) in late 2017, 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). 

The rising U.S. output comes largely on the back of onshore shale oil production. 

U.S. crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to a record 6.95 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Monday. 

That expected increase would top the 105,000 bpd climb in March from the previous month, to what was then expected to be a record high of 6.82 million bpd, the EIA said. 

The EIA is due to publish its latest weekly U.S. production data on Wednesday.

Oil climbs up: U.S. drilling activity reduced, booming job market

Oil Stock Markets

Oil markets edged up on Monday on the back of a drop in the number of U.S. rigs drilling for more production and as the U.S. economy continued to create jobs, which industry hopes will drive higher fuel demand.  

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $62.10 a barrel at 0407 GMT, up 6 cents, or 0.1 percent. 

Brent crude futures LCOc1 were at $65.58 per barrel, up 9 cents, or 0.1 percent, from their previous close.

The U.S. economy added the biggest number of jobs in more than 1-1/2 years in February, with non-farm payrolls jumping by 313,000 jobs last month, the Labor Department said on Friday.

In oil markets, U.S. energy companies last week cut oil rigs for the first time in almost two months RIG-OL-USA-BHI, with drillers cutting back four rigs, to 796, Baker Hughes (GE.N) energy services firm said on Friday.

Despite the lower rig count, which is an early indicator of future output, activity remains much higher than a year ago when, when just 617 rigs were active, and most analysts expect U.S. crude oil production C-OUT-T-EIA, which has already risen by over a fifth since mid-2016, to 10.37 million barrels per day (bpd), to rise further. 

That’s more than top exporter Saudi Arabia producers and almost as much as Russia pumps out, at nearly 11 million bpd.

Singapore-based brokerage Phillip Futures said that the oil market will focus on OPEC and IEA (monthly) reports this week for a sensing on global demand/supply levels for crude oil and that items in focus will include OECD commercial stock levels, revision in global demand and supply for crude oil and OPEC’s compliance on production levels.

The Organization of the Petroleum Exporting Countries (OPEC), together with a group of other producers led by Russia, has been withholding production since the start of 2017 to prop up prices.

Oil steady; OPEC-led cuts lend support

Global Stock Markets

Oil was broadly unchanged on Tuesday, as a recovery from last week’s lows fizzled out, although ongoing production restrictions by the world’s largest exporters prevented prices from falling back. 

The prospect of OPEC and other producers, including Russia, maintaining their crude output cuts in the face of a boom in U.S. shale production has helped to push the oil price back above $65 a barrel this week, even though the U.S. dollar is not far off two-month highs, often a dampener for the broader commodity markets. 

Brent crude futures LCOc1 were down 5 cents at $65.49 a barrel by 1031 GMT, while U.S. West Texas Intermediate futures CLc1 were up 4 cents at $62.61 a barrel. 

The International Energy Agency (IEA) said on Monday global oil demand was expected to grow over the next five years, while output from producers in the Organization of the Petroleum Exporting Countries (OPEC) would rise at a much slower pace. 

This initially gave the oil price a boost on Monday, but the IEA’s caveat that the United States would make up for much of the shortfall in output by OPEC has since acted as a drag. 

U.S. crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia. Output hit a record 10.057 million bpd in November, according to the U.S. Department of Energy. 

Weekly U.S. crude inventory data is expected to show a second consecutive weekly rise in the week to March 2, according to a Reuters poll. 

The American Petroleum Institute (API) will release its weekly inventory data at 4:30 p.m. EST (2130 GMT) on Tuesday, and the U.S. Energy Department’s Energy Information Administration (EIA) reports its data

Oil prices rise for a third straight session; IEA growth forecast

Oil Stock Markets

Oil prices rose on Tuesday for a third straight session, underpinned by robust demand forecasts and as ministers from OPEC touted the strength of its agreement with global producers to cut output in order to bolster the market. 

International benchmark Brent crude futures were at$65.61 per barrel at 0428 GMT, up 7 cents, or 0.11 percent. 

U.S. West Texas Intermediate (WTI) crude futures were at $62.67 a barrel, up 10 cents, or 0.16 percent. 

The International Energy Agency (IEA) said on Monday global oil demand was expected to grow over the next five years, while output from producers in the Organization of the Petroleum Exporting Countries (OPEC) would rise at a much slower pace. 

The IEA’s comments on increased demand, made during the CERAWeek conference in Houston on Monday, preceded statements from OPEC Secretary General Mohammed Barkindo that called the supply cut agreement with global producers “as solid as the Rock of Gibraltar.” 

Barkindo’s statements supporting the agreement and the benefits of keeping supply restrained, along with the IEA demand outlook, was supportive for prices. 

“Oil was higher, however, as the prospects for increased demand and a little bit of jawboning at the CERAWeek conference helped,” said Greg Mckenna, chief market strategist at AxiTrader in a note. 

To fill the gap between OPEC and global demand, the IEA said the United States would supply much of the oil demand as its shale oil production was set to surge. 

U.S. crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia. Output hit a record 10.057 million bpd in November, according to the U.S. Energy Department. 

BMI Research said in a note to clients on Tuesday that it has revised its 2018 Brent crude price forecast upward to $67 a barrel due to “accelerated market rebalancing and strong sentiment-driven support.” 

“We maintain that firming global demand and weaker supply growth will support crude prices over 2018,” the note added. 

Elsewhere, Libya’s El Sharara oil field resumed operations on Monday. The field, operated by Libya’s National Oil Corporation (NOC), was shut down on Sunday after a landowner closed a valve on a pipeline crossing his land.