Iran issues oil warning as UAE says production can rise

Global Stock Markets

Iran issued a new warning over Mideast oil supplies as the United Arab Emirates said on Tuesday it could increase its own production, the latest remarks to follow President Donald Trump's demand for lower global energy prices. 

The comments by Iranian President Hassan Rouhani and the unexpected announcement by the UAE's oil-rich capital Abu Dhabi came as US benchmark crude traded around $75 a barrel.

A recent decision by the Organization of the Petroleum Exporting Countries to increase the cartel's own production by 1 million barrels a day has yet to tamp down prices. That's led to higher prices at gasoline pumps in the United States as it heads toward midterm elections for Congress.

Speaking to Iranian expatriates Monday night in Switzerland, where he was on an official visit, Rouhani took aim at America.

The US pulled out of the Iran nuclear deal in May and initially said it wanted allies to stop buying Iranian crude entirely. The State Department said Monday it would examine waivers on a "case-by-case basis'' as it re-imposes sanctions.

Rouhani did not elaborate, but Iran long has asserted it could shut down the Strait of Hormuz, the narrow body of water that separates the Persian Gulf from the wider world. A third of all oil traded by sea passes through the strait and the US Navy regularly has direct, tense encounters with Iran's paramilitary Revolutionary Guard there.

The US Navy's 5th Fleet, which patrols the region, has said it has not seen any ``unsafe and unprofessional'' actions by Iranian naval forces in the Persian Gulf since August 2017. It did not immediately respond to a request for comment Tuesday over Rouhani's remarks.

Separately, Iran's interior minister Abdolreza Rahmani Fazli warned Tuesday that ``if we close our eyes for 24 hours, 1 million refugees will go toward Europe through our Western borders'' via Turkey. Some 5,000 tons of narcotics also could be smuggled to the West, he added, according to the semi-official .

Iran lies on a major trafficking route between Afghanistan and Europe, as well as the Persian Gulf states. Large drug seizures are common across the region.

Meanwhile, the state-run Abu Dhabi National Oil Co. issued a surprise statement Tuesday saying it has an oil production capacity of 3.3 million barrels per day. It added that it ``remains on track to increase its production capacity to 3.5 million (barrels per day) by the end of 2018.''

The company also said it ``has the ability to increase oil production by several hundred thousand barrels of oil per day, should this be required to help alleviate any potential supply shortage in the market.''

The oil company previously announced in November it had plans to expand its capacity to 3.5 million barrels of oil per day. It produced some 2.8 million barrels of oil per day in May, according to the most recent figures released by OPEC.

Oil prices fall admist increasing Saudi output & Asian economic slowdown

Oil Stock Markets

Oil prices fell by more than 1 percent on Monday as supplies from top exporter Saudi Arabia rose and as signs of an economic slowdown in Asia dented the outlook for demand. 

Brent crude oil futures LCOc1 were at $78.16 per barrel at 0316 GMT, down $1.07, or 1.35 percent, from their last close.

U.S. West Texas Intermediate crude futures CLc1 were down 94 cents, or 1.3 percent, at $73.21 a barrel, after rising more than 8 percent last week.

U.S. President Donald Trump wrote in a tweet on Saturday that Saudi Arabia’s King Salman bin Abdulaziz Al Saud had agreed to produce more oil. The White House later walked back on the president’s comments, saying the king said his country can raise oil production if needed.

Saudi Arabia’s output is up by 700,000 barrels per day (bpd) from May, a Reuters survey found on Friday, and close to its 10.72 million bpd record from November 2016, more than making up for disruptions elsewhere within the Organization of the Petroleum Exporting Countries (OPEC).

Voluntary supply cuts by OPEC and some non-OPEC suppliers like Russia have tightened world oil markets since 2017, and unplanned disruptions from Canada to Venezuela and Libya along with upcoming new U.S. sanctions against major exporter Iran have sparked concerns of supply shortfalls.

Despite the apparent supply relief from Saudi Arabia, oil markets remain tense over escalating trade disputes between the United States and other major economies including China, the European Union, India and Canada.

Asia’s main economic hub around China, Japan and South Korea all reported a slowdown in export orders in June amid an escalating trade dispute with the United States.

Trump warned close U.S. allies in an interview that aired on Sunday with a threat to sanction European companies that do business with Iran.

Oil markets are also awaiting the impact of looming U.S. sanctions against major exporter crude Iran.

Oil climbs as market tightens on lost supply

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

Benchmark Brent crude LCOc1 jumped $1.49 to a high of $79.34 a barrel before easing back to around $79.00 by 1030 GMT.

U.S. light crude CLc1 was down 15 cents at $73.30. On Thursday, the contract hit its highest since November 2014 at $74.03 per barrel.

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

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

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

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

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

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

Oil rises on supply losses, U.S. push to isolate Iran

Oil prices rose on Wednesday on a supply disruption in Canada, falling U.S. crude stocks, uncertainty over Libyan exports and after U.S. officials told importers to stop buying Iranian crude from November.

Brent crude LCOc1 was up 30 cents a barrel at $76.61 by 0800 GMT. U.S. light crude CLc1 was 25 cents higher at $70.78.

A supply outage at Syncrude in Canada has locked in 350,000 barrels per day (bpd) of crude, with repairs expected to last at least through July.

The fall in Canadian exports has helped drain supplies of heavy crude across North America and contributed to a major draw in U.S. crude oil inventories, analysts say.

The American Petroleum Institute (API) on Tuesday reported a much-higher-than-expected 9.2 million barrel reduction in U.S. crude inventories in the week to June 22 to 421.4 million barrels.

Analysts polled by Reuters had estimated, on average, that crude stocks fell about 2.6 million barrels last week.

Also keeping markets on edge was the risk of a disruption to oil supplies from the Africa and the Middle East.

The United States has told all countries to stop importing Iranian oil from November, a State Department official said on Tuesday, as the Trump administration ramped up pressure on the Islamic Republic.

Trying to make up for disrupted supply, the Organization of the Petroleum Exporting Countries (OPEC) said late last week it would increase output.

Top exporter and de-facto OPEC leader Saudi Arabia plans to pump a record 11 million bpd in July, up from 10.8 million bpd in June, an industry source familiar with Saudi plans told Reuters on Tuesday.

Oil rises ahead of OPEC, pressured by China tariffs

Oil prices rose on Monday ahead of an OPEC meeting this week that is widely expected to increase global crude supply and as investors assessed the impact of a trade dispute between the United States and China.

U.S. light crude oil CLc1 hit a two-month low of $63.59 a barrel but they recovered to trade at $65.00, down 6 cents, by 1140 GMT.

Benchmark Brent LCOc1, meanwhile, rose more than $1 to a high of $74.45 a barrel and was trading at $74.40, up 96 cents, by 1210 GMT.

Brent hit a 3-1/2-year high above $80 a barrel in May but has since fallen on reports that top suppliers Saudi Arabia and Russia will increase production.

They will meet in Vienna on June 22 to decide forward production policy, with Russia and Saudi Arabia pushing for higher output.

All oil market eyes are now focused on OPEC, Commerzbank commodities analyst Carsten Fritsch said:

U.S. bank Morgan Stanley said in a note to clients that the trade spat meant that economic “downside risks have risen”.

U.S. oil exports have boomed in the last two years as shale oil production has surged, with China becoming one of the biggest buyers.

Global stocks, oil suffer as U.S.-China trade spat heats up

Global stocks slid on Monday and U.S. oil prices slumped after U.S. President Donald Trump announced tariffs on Chinese goods and Beijing responded with similar measures in an escalating trade dispute.

Fears the spat between the world’s two largest economies could intensify added to pressure on oil prices, which extended Friday’s big fall into the start of week, while the dollar retreated from a seven-month high against a basket of currencies.

The MSCI world equity index, which tracks shares in 47 countries, fell 0.3 percent, nearing a seven-day low. Trump announced tariffs on Friday on $50 billion of Chinese imports, including cars, starting on July 6.

China said it would retaliate immediately by slapping duties on American export products, including crude oil, and suspend all previous trade agreements with Trump’s administration.

The exchange of blows between Washington and Beijing has heightened fears of a protracted dispute that could hurt global growth and particularly Europe, given that Trump has signalled he wants to impose tariffs on automotive exports.

Futures on main euro zone benchmarks were trading down 0.2-0.5 percent as investor angst about the outlook for economic growth filtered through to European stocks.

The pan-regional STOXX 600 was on track to relinquish gains recorded on Thursday when a dovish European Central Bank pushed back expectations for an interest rate hike.

Germany’s DAX was down 1.36 percent while France’s CAC 40 declined 1.23 percent.

U.S. light crude oil hit a two-month low of $63.59 a barrel before recovering somewhat to trade at $64.72, down 30 cents, by 1100 GMT.

The producer cartel of the Organisation of the Petroleum Exporting Countries (OPEC), which is de facto led by Saudi Arabia, and some allies including Russia have been restricting output since the start of 2017.

Oil slumps 3 percent on OPEC supply, China's tariffs

Oil prices fell more than $2 a barrel Friday after two of the world’s biggest producers indicated they might increase output at next week’s OPEC meeting, while U.S. exports were threatened by potential Chinese tariffs on crude oil and refined products.

Oil investors have been nervous ahead of the coming OPEC summit in Vienna. Saudi Arabia and Russia have already boosted production modestly, and have indicated they were prepared to increase output at that meeting.

Brent crude oil LCOc1 fell $2.50, or 3.29 percent to settle at $73.44 a barrel. U.S. crude CLc1 settled $1.83 lower at $65.06 a barrel. In post-settlement trading, U.S. crude retreated further, falling 2.25, or 3.4 percent, to $64.64 a barrel.

Brent crude was on track to end the week down more than 4 percent, while U.S. crude was heading to fall 1.7 percent.

After settlement, China announced $50 billion in retaliatory tariffs, in response to a series of levies by U.S. President Donald Trump earlier.

Some investors were surprised when crude oil and other energy products were included for tariffs at a later date, the official Xinhua news agency reported, citing the Tariff Commission of the State Council.

U.S. crude’s discount to Brent widened in post-settlement trade after China announced the planned tariffs. WTCLc1-LCOc1

TRADE TENSIONS

In Asia, surprisingly soft Chinese retail sales and investment data had also hit sentiment. China’s central bank then left its interest rates on hold, rather than follow the Fed as it sometimes does..

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 1 percent.

Shares in South Korea .KS11 and Taiwan .TWII fell over 1.8 and 1.4 percent [.T], Japan's Nikkei .N225 dropped 1 percent while mainland China's Shanghai composite index .SSEC hit a 20-month closing low.

Another event markets were gearing up for was the start of soccer’s World Cup in Russia. Russia’s timezones mean there will be more matches during European or U.S. and Latin American trading hours than any previous tournament.

A study done during the last one with similarly timed games, the 2010 finals in South Africa, showed trading volumes on share markets dropped by a third on average when matches were on and 55 percent when a market’s own team played .

U.S. retail sales figures were also due too. S&P 500 .SPX and Dow Jones .DJI and Nasdaq .NDX futures were lifted by the ECB's signals and all pointed to slightly higher restart having been lower earlier.

It saw the dollar kick up a full cent against the euro to $1.1721 and a more modest few pips to 110.13 yen JPY= after earlier falling from a post-Fed three-week high of 110.85.

The dollar index, which tracks it again six top currencies, was swung round to stand 0.3 percent high having been down 0.4 percent .DXY.

Among commodities, China-sensitive industrial metals sagged but gold and other precious metals made ground.

oil prices were little changed, underpinned by a bigger-than-expected decline in U.S. crude inventories and surprise drawdowns in gasoline and distillates, which indicated strong demand in the world’s top oil consumer.

Brent and U.S. crude futures LCOc1CLc1 traded at $76.63 and $66.89 a barrel respectively, to extend their recovery from eight-week lows touched last week.

Oil edges up, but bulls remain wary ahead of OPEC meeting

Oil prices rose for a second day on Tuesday and volatility subsided to its lowest in three weeks, as investors prepared for a key meeting of the OPEC producer group next week.

Crude remained in a tight trading range, in line with the broader financial markets, which were largely unruffled by a U.S.-North Korea summit aimed at denuclearisation of the Korean peninsula. [MKTS/GLOB]

Brent crude futures LCOc1 were up 17 cents at $76.63 a barrel by 0855 GMT, while U.S. West Texas Intermediate crude futures CLc1 rose 11 cents to $66.21.

The Organisation of the Petroleum Exporting Countries, together with partners including Russia, has cut oil output by 1.8 million barrels per day (bpd) since January 2017 in an effort to boost the market.

Volatility in oil prices has subsided due to caution around the group’s meetings LCOATMIV scheduled for June 22/23, at which it will decide on future supply policy.

With U.S. sanctions threatening to cut Iranian exports and the potential for more declines in Venezuelan production, OPEC kingpin Saudi Arabia and Russia have indicated they would be willing to raise output to make up for any supply shortfall.

In physical oil markets, Middle East light crude grades are set to trade at discounts against their respective official selling prices amid ample supplies to Asia, including from the United States, four trade sources said.

Saudi Arabia has told OPEC that the country increased oil output to a little more than 10 million bpd in May, from 9.9 million bpd in April.

Oil down as U.S. supply grows, OPEC considers higher output

Oil prices fell on Monday as U.S. production hit a record high and OPEC members considered boosting supply.

Benchmark Brent crude oil LCOc1 lost $1.26 a barrel, or 1.6 percent, to a low of $75.53 before recovering to $75.89, down 90 cents, by 1125 GMT.

U.S. light crude CLc1 was 40 cents down at 65.41 a barrel. The U.S. contract lost about 3 percent last week after a decline of nearly 5 percent the previous week.

U.S. crude production climbed in March to 10.47 million barrels per day (bpd), a monthly record, data from the Energy Information Administration showed last week.

U.S. drillers added two oil rigs in the week to June 1, bringing the total to 861, the most since March 2015, energy services company Baker Hughes said on Friday. That was the eighth time drillers have added rigs in the past nine weeks.

Arab oil ministers agreed over the weekend on the need for continued cooperation between members of the Organization of the Petroleum Exporting Countries (OPEC) and other big producers to balance global supply, Kuwait’s state news agency KUNA reported on Sunday.

OPEC ministers from Saudi Arabia, the United Arab Emirates, Kuwait and Algeria, along with their counterpart from non-OPEC Oman, met unofficially in Kuwait on Saturday. 

Saudi Arabia, the effective OPEC leader, and Russia have discussed boosting output to compensate for supply losses from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.

Oil prices inches down amidst worries Saudi & Russia pumping more crude

Oil prices edged down on Wednesday amid concerns that Saudi Arabia and Russia will pump more crude in the second half of the year in response to falling global crude inventories and rising consumer prices.

Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by 1 million barrels per day (bpd) to counter potential supply shortfalls from Venezuela and Iran.

Brent crude LCOc1 was down 45 cent, or 0.6 percent, at $74.94 a barrel at 0325 GMT, after settling up 9 cents on Tuesday.

U.S. West Texas Intermediate crude CLc1 was down 24 cents, or 0.34 percent, at $66.49 a barrel. It had settled down $1.15.

OPEC-led supply curbs have largely cleared an inventory surplus in industrialized countries, and stocks continue to decline. The Organization of the Petroleum Exporting Countries is due to meet in Vienna on June 22.

Credit Suisse analysts on Tuesday said even if Russia and OPEC producers raise output, they would likely only add an additional 500,000 bpd, which would leave inventories in the most developed countries short of the five-year average by the end of 2018.

Falling share prices and a stronger U.S. dollar index also weighed on oil prices. U.S. stock markets sank more than 1 percent, while the dollar wobbled at a 10-month high against the euro. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies.

U.S. oil got some support as U.S. crude inventories likely fell by 1.8 million barrels last week, a preliminary Reuters poll showed on Tuesday. [EIA/S]

Industry group American Petroleum Institute (API) releases its weekly oil data at 2030 GMT, followed by the report by U.S. Energy Department’s Energy Information Administration on Thursday, both delayed a day because of the federal Memorial Day holiday on Monday.

Oil prices mixed with expected pressure from increased output & U.S. record oil exports

Oil Stock Markets

Oil prices were mixed in Asian trading on Tuesday, but remained under pressure from expectations that Saudi Arabia and Russia would pump more crude to ease a potential shortfall in supply. 

Brent crude futures LCOc1 were up 31 cents, or 0.41 percent, at $75.61 a barrel at 0213 GMT, after settling at their lowest since May 8 at $75.30.

U.S. West Texas Intermediate (WTI) crude CLc1 was down $1.05, or 1.55 percent, at $66.83 a barrel, sitting around its lowest since April 17.

Concerns that Saudi Arabia and Russia could boost output have put downward pressures on oil prices, along with rising oil production in the United States.

Record crude oil volumes exported from the United States will be heading to Asia in the next couple of months to take another piece of the market away from Russia and producers in the Organization of the Petroleum Exporting Countries (OPEC). 

The United States is set to export 2.3 million barrels per day (bpd) in June, of which 1.3 million bpd will head to Asia, estimated a senior executive with a key U.S. oil exporters.

Data from the Energy Information Administration shows U.S. oil exports peaked at 2.6 million bpd two weeks ago. [EIA/S]

The record outbound volumes come as U.S. crude production hit all-time highs, depressing U.S. prices to discounts of more than $9 a barrel below Brent crude futures on Monday, the widest in more than three years and opening an arbitrage for excess supplies to other markets. WTCLc1-LCOc1

The difference in the key benchmarks was a chance for Asian refiners to reduce light crude imports from the Middle East and Russia after Brent and Gulf prices touched multi-year highs, traders in Asia said.

n Asia, China - led by Sinopec (600028.SS), the region’s largest refiner - is the biggest lifter of U.S. crude. The company, after cutting Saudi imports, has bought a record 16 million barrels (533,000 bpd) of U.S. crude, to load in June, two sources with knowledge of the matter said.

India and South Korea are the next biggest buyers in Asia, each lifting 6 million to 7 million barrels in June, sources tracking U.S. crude sales to Asia said. Indian Oil Corp (IOC.NS) bought 3 million barrels earlier this month via a tender, while Reliance Industries (RELI.NS) purchased up to 8 million barrels, the sources said, although it wasn’t clear if Reliance’s cargoes would all load in June.

U.S. exports to Thailand will increase to at least 2 million barrels. State oil company PTT PCL (PTT.BK) is 1 million barrels of WTI Midland, while Thai Oil (TOP.BK) and Esso Thailand (ESSO.BK) bought at least 500,000 barrels of Bakken crude each, said traders with knowledge of the country’s crude deals. 

But even if Asia and Europe are keen to take more U.S. crude, the record volumes are straining export infrastructure in the United States, limiting its ability to pump and ship more oil.

Oil prices dip with top three producers looking to increase supplies

Oil Stock Markets

Oil prices fell on Monday, extending a steep decline in the previous session, as the market eyed an increase in output from the world’s three top crude producers, Russia, the United States and Saudi Arabia.

Brent crude futures LCOc1 were at $75.34 per barrel at 0124 GMT, down $1.10, or 1.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $66.31 a barrel, down $1.57, or 2.3 percent.

Brent and WTI have fallen by 6.4 percent and nearly 9 percent respectively from peaks reached earlier in May.

In China, Shanghai crude oil futures ISCc1 tumbled by 4.5 percent to 459 yuan ($71.83) per barrel.

The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to a more than a decade low of under $30 per barrel.

But prices have soared since the start of the cuts, with Brent breaking through $80 per barrel earlier in May, triggering consumer concerns that high prices would crimp economic growth and stoke inflation.
To address potential supply shortfalls, Saudi Arabia, de-facto leader of producer cartel OPEC, as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.

Meanwhile, surging U.S. crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.

U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise.

U.S. crude production C-OUT-T-EIA has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to that of Russia, which pumps around 11 million bpd.

Oil prices drop on potential increase in OPEC output

Oil Stock Markets

Oil prices fell on Thursday on expectations that OPEC members will step up production in the face of worries over supply from both Venezuela and Iran. 

A surprise build up in crude oil inventories in the United States also weighed on prices, driving the spread between Brent crude and U.S. West Texas Intermediate (WTI) close to its widest in three years. CL-LCO1=R

International benchmark Brent LCOc1 futures were down 27 cents, or 0.34 percent, at $79.53 per barrel at 0300 GMT.

U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 17 cents, or 0.24 percent, at $71.67 a barrel.

The Organization of Petroleum Exporting Countries (OPEC) may decide to increase oil output to make up reduced supply from Iran and Venezuela in response to concerns from Washington over a rally in oil prices, OPEC and oil industry sources told Reuters.

Supply concerns in Iran and Venezuela following new U.S. sanctions had pushed both Brent and WTI to multi-year highs, with Brent breaking through an $80 threshold last week for the first time since November 2014.

OPEC and some non-OPEC major oil producers are scheduled to meet in Vienna on June 22. The group previously agreed to curb their output by about 1.8 million barrels per day to boost oil prices and clear a supply glut.

Meanwhile, commercial U.S. crude inventories rose C-STK-T-EIA by 5.8 million barrels in the week to May 18, beating analyst expectations for a decrease of 1.6 million barrels, the Energy Information Administration (EIA) said on Wednesday.

Elsewhere, Libya, which is an OPEC member, cut its oil production by about 120,000 barrels per day as unusually hot weather prompted power problems, an official from the National Oil Corp said on Wednesday.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore, said that prices were getting some support from talk that Sinopec, Asia’s largest refiner, would increase U.S. crude oil imports to a record high.

Oil prices climb up amidst Venezuela & Iran supply worries

Oil Stock Markets

Oil prices rose on Tuesday on concerns that Venezuela’s crude output could drop further following a disputed presidential election and potential U.S. sanctions on the OPEC-member. 

The United States also toughened its stance on Iran and made a list of sweeping demands, which could further curb the country’s crude oil exports and boost oil prices.

Brent crude futures LCOc1 were at $79.39 per barrel at 0226 GMT, up 17 cents, or 0.2 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.

U.S. West Texas Intermediate (WTI) crude futures were at $72.47 a barrel, up 23 cents, or 0.3 percent.

Venezuela’s socialist President Nicolas Maduro faced widespread international condemnation on Monday after his re-election in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.

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.

Concerns that looming U.S. sanctions on Iran will curb that country’s crude exports have also been boosting oil prices in recent weeks.

The United States on Monday demanded Iran make sweeping changes - from dropping its nuclear programme to pulling out of the Syrian civil war - or face severe economic sanctions as the Trump administration hardened its approach to Tehran.


Elsewhere, Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.

Growing production of shale oil could curb oil prices eventually and widen the price spread between WTI and Brent crude oil, said Nunan.

Oil prices rose as China and U.S. put trade war 'on hold'

Oil Stock Markets

Oil prices rose on Monday as markets reacted to news that China and the United States have put a looming trade war between the world’s two biggest economies “on hold”. 

Brent crude futures LCOc1 were at $79.13 per barrel at 0121 GMT, up 62 cents, or 0.8 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.

U.S. West Texas Intermediate (WTI) crude futures were at $71.83 a barrel, up 55 cents, or 0.8 percent, from their last settlement.

The U.S. trade war with China is “on hold” after the world’s largest economies agreed to drop their tariff threats while they work on a wider trade agreement, U.S. Treasury Secretary Steven Mnuchin said on Sunday, giving global markets a lift in early trading on Monday.

Still, crude prices were some way off the November 2014 highs reached last week as many traders and analysts say there is enough supply to meet demand despite ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC), plunging output in crisis-struck Venezuela and looming U.S. sanctions against major oil producer Iran.
BP’s Chief Executive Bob Dudley said he expected a flood of U.S. shale and a possible reopening of OPEC taps to cool oil markets after crude rose above $80 a barrel last week.

Dudley said he saw oil prices falling to between $50 and $65 a barrel due to surging shale output and OPEC’s capacity to boost production to replace potential falls in Iranian supplies due to sanctions.

The U.S. oil rig count, an early indicator of future output, was at 844, according to energy services firm Baker Hughes. That was the same count as the week before, which marked the highest level since March 2015.

Stock futures creeps higher with trade talks in focus

Global Stock Markets

U.S. stock index futures rose slightly in choppy trading on Friday as oil prices climbed, while investors kept a close watch on Sino-U.S. trade talks.

China denied it had offered to cut its trade surplus with the United States by up to $200 billion, hours after it dropped an anti-dumping probe into U.S. sorghum imports, but added that talks were constructive.

The world’s two biggest economies are seeking to bridge a divide on trade issues during the two-day talks in Washington that began on Thursday.

Oil prices continued their surge, with Brent crude LCOc1 on track for the sixth straight week of gains, boosted by strong demand, looming sanctions on Iran, plummeting Venezuelan production and Nigerian disruptions. [O/R]

At 7:19 a.m. ET, Dow e-minis 1YMc1 were up 58 points, or 0.23 percent. S&P 500 e-minis ESc1 were up 3 points, or 0.11 percent and Nasdaq 100 e-minis NQc1 were up 9.75 points, or 0.14 percent.

Investors have been fretting over rising interest rates, with the 10-year Treasury yield, the benchmark for global borrowing costs, holding above the key 3 percent level for the fourth day.

However, Bank of America Merrill Lynch said on Friday investors pumped $11.9 billion into global equities in the past week and also put money into bank loans, likely viewing the rise in U.S. bond yields as reflecting a robustly growing economy.

Among stocks, Applied Materials (AMAT.O) fell 4.9 percent after the chip gear maker’s disappointing forecast renewed concerns over slowing smartphone demand, while AMD (AMD.O) rose 2.6 percent after Cowen started coverage with an “outperform” rating.

Mattel shares gained 3.7 percent on a Wall Street Journal report that the company rejected Bratz dolls inventor Isaac Larian’s offer to merge his MGA Entertainment Inc with the Barbie doll maker.

Oil poised to break through $80 per barrel as Asia's oil thirst tabs $1 trillion a year

Asian Stock Markets

Oil prices are poised to break through $80 per barrel and Asia’s demand is at a record, pushing the cost of the region’s thirst for crude to $1 trillion this year, about twice what it was during the market lull of 2015/2016. 

Oil prices have gained 20 percent since January to just shy of $80 per barrel LCOc1, a level not seen since 2014. [O/R]

With the U.S. dollar .DXY - in which virtually all oil is traded - also growing stronger, concerns are rising that economies will take a hit, especially in import-reliant Asia. Surging costs could have an inflationary effect that will hurt both consumers and companies.


Asia-Pacific consumes more than 35 percent of the 100 million barrels of oil the world uses each day, according to industry data, with the region’s global share steadily rising.

Asia is also the world’s smallest oil producing region, accounting for less than 10 percent of output.

U.S. bank Morgan Stanley said this week that diesel use contributes 10-20 percent to cash costs for miners, while oil contributes from 4 percent to 50 percent to the cost of power generation, depending on a company’s or country’s fuel mix. 

China is by far Asia’s - and the world’s - biggest importer of oil, ordering 9.6 million barrels per day in April. That’s almost 10 percent of global consumption.

At current prices, this amounts to a Chinese oil import bill of $768 million per day, $23 billion per month - a whopping $280 billion a year.

Other Asian countries are even more exposed to rising oil prices. Most damage will be done to countries like India and Vietnam, which not only rely heavily on imports, but also where national wealth is not yet large enough to absorb sudden increases in fuel costs.


Unless fuel is heavily subsidized, households and businesses in poorer countries are also more vulnerable to rising oil prices than they are in wealthier nations.

In developing economies like India, Vietnam or the Philippines, fuel costs eat up around 8-9 percent of an average person’s salary, according to Reuters research and figures from statistics portal Numbeo. That compares to just 1-2 percent in wealthy countries like Japan or Australia. 

Some companies say they will pass on any higher costs to consumers.

Given the economic costs and its reliance on imports, economists say it is time for Asia to limit its exposure to oil.

Oil prices slid down amid oil market tightening due to strong demand

Oil Stock Markets

Oil prices dipped on Friday, easing from multi-year highs in the previous session on hopes that alternative supplies could replace a looming drop in Iranian exports from U.S. sanctions. 

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

The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.

Brent crude futures were at $77.34 per barrel at 0451 GMT, down 13 cents, or 0.2 percent, from their last close. Brent the previous day hit its highest since November 2014 at $78 a barrel.

U.S. West Texas Intermediate (WTI) crude futures were down 7 cents at $71.29 a barrel, still not far off Thursday’s November 2014 high of $71.89 per barrel.

Many analysts expect oil prices to rise significantly, as the market adjusts to looming U.S. sanctions and Iran’s exports sink amid strong demand.

There are, however, signs that other suppliers from within the Organization of the Petroleum

Exporting Countries (OPEC) will step up output to counter the Iran disruption.

Outside OPEC, soaring U.S. crude oil production may help fill Iran’s supply gap, hitting another record last week by 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 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.