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.

Gloves back on, OPEC and U.S. shale producers to deepen ties in Vienna

Only a few years ago, shale CEOs and the Organization of the Petroleum Exporting Countries were in open conflict.

Now, they realise they’re in the same boat and need to row in tandem to keep global crude supply and demand in balance, according to interviews with analysts, executives and investors.

The recent rise in crude prices LCOc1CLc1 - up more than 40 percent in the past year - has lifted profits for producers across the globe, but also threatens to erode demand for fossil fuels at a time when electrification is becoming commonplace.

Harold Hamm, the billionaire founder of U.S. shale pioneer Continental Resources Inc (CLR.N), is due to address OPEC ministers, along with fellow shale executives Hess Corp (HES.N) CEO John Hess and Pioneer Natural Resource Co (PXD.N) Executive Chairman Scott Sheffield.

Lifting that ban ushered in a sea change in global energy, sending nearly 2 million barrels of U.S. crude to India, China and other markets historically dominated by OPEC and forcing the group and its American rivals to be more conciliatory.

Hamm, who called OPEC a “toothless tiger” in 2014, has begun encouraging fellow shale companies to focus more on profitability and less on profligate production. Last month, Hamm addressed a Saudi Aramco board meeting in Houston.

It was a change in tone for Hamm, who in 2011 erected a granite monument on the windswept plains of North Dakota that boasted of the rising clout of U.S. oil production and the nation’s ability to supply its own energy.

Oil prices rise on Venezuelan supply troubles, but U.S. output surges

Oil prices rose on Thursday to shake off some of the previous session’s losses, supported by plunging exports by OPEC-member Venezuela.

Brent crude futures LCOc1 were up 33 cents, or 0.4 percent, to $75.69 a barrel at 0101 GMT.
U.S. West Texas Intermediate (WTI) crude CLc1 was up 38 cents, or 0.6 percent, at $65.11 a barrel. It ended the previous session 1.2 percent lower at $64.73 a barrel.

Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), is nearly a month behind in shipping crude to customers from its main oil export port, according to Reuters data, as chronic delays threaten to breach state-run PDVSA’s crude supply contracts if they are not quickly cleared.

Tankers waiting to load more than 24 million barrels of crude, almost as much as PDVSA shipped in April, are sitting off the country’s main oil port, according to the data.

The backlog is so severe, PDVSA has told some customers it may declare force majeure, allowing it to temporarily halt contracts, if they do not accept new delivery terms.

OPEC-member Iraq said on Wednesday that a production increase was not on the table as the market was stable and prices good.

This comment followed an unofficial request from the United States asking OPEC’s de-facto leader Saudi Arabia to boost output.

Outside OPEC, however, there were ongoing signs of rising output.

U.S. crude oil production C-OUT-T-EIA hit another record last week at 10.8 million barrels per day (bpd). That’s a 28 percent gain in two years, or an average 2.3 percent growth rate per month since mid-2016.

Oil prices dip with possiblity of easing OPEC supply curbs

Oil Stock Markets

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

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

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

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

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

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

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

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

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

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

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

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

Tech sector gains keep world shares near one-week high

Global Stock Markets

Oil prices eased on Tuesday from 3-1/2-year highs they hit on worries the United States may be set to pull out of a key nuclear accord with Iran, but robust tech sector gains in Asia helped support world stocks near one-week highs

U.S. President Donald Trump will announce at 1800 GMT whether Washington will withdraw from a deal that eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program. A decision to leave the accord could give another boost to this year’s 13 percent oil rally, by constraining Iranian crude exports.

Brent futures nevertheless eased one percent after hitting new highs above $75 a barrel and MSCI’s world equity index hovered around flat after two days of gains, having touched one-week highs in the previous session.

 Hudson noted that oil prices had bucked the recent rise in the dollar - usually the two are inversely correlated - suggesting investors remained optimistic about the world economy and hence future demand for crude.

 Wall Street was lifted on Monday by a strong rally in Apple shares to new record highs following forecast-beating results last week and billionaire Warren Buffett’s decision to increase his stake in the firm.

Nearly 80 percent of the S&P 500 companies which have reported first quarter earnings have topped profit estimates, according to Thomson Reuters.

MSCI’s global tech index closed Monday at six-week highs. That helped lift emerging Asian shares by 0.5 percent and Japanese equities by 0.2 percent.

Momentum fizzled in Europe, however, with a pan-European equity benchmark and European tech down 0.2 percent. Futures for S&P500, Dow Jones and Nasdaq also slipped about 0.2 percent, signaling Wall Street weakness.

Italian shares were the day’s worst performers, slipping 1.5 percent as chances grew of new elections following an inconclusive March 4 vote.
Italian 10-year bond yields rose almost nine basis points to end-March highs.
Italy’s fragile economic recovery was at risk, he added.

Countering this was good news from China, where April exports and imports beat forecasts. Trade tensions between China and the United States also seem to have abated slightly, with talks resuming next week.

Mainland Chinese shares rose 1.3 percent.

On currencies, the prospect of solid U.S. growth propelled the dollar to a new 2018 high
Expectations of further rises in U.S. interest rates are forcing investors to buy back dollars they sold earlier this year on worries about Trump’s protectionist policies.
 The euro fell 0.3 percent against the dollar to $1.1977, the lowest since end-December.
Dollar gains have rippled through forex markets in recent days, forcing investors to unwind some of this year’s best performing trades - emerging markets.

A sovereign emerging dollar debt index saw spreads over Treasuries at the widest since early-2017, while many currencies touched multi-month lows.

The Turkish lira has plumbed successive record lows, while Argentina was forced last week to raise interest rates to 40 percent to stem peso bleeding

Tech-heavy emerging stocks rose on the day but are down 2 percent this month

Oil gains ease as investors await Trump's decison on Iran

Oil Stock Markets

Oil prices eased slightly on Tuesday, a day after hitting 3-1/2 year highs, as investors braced for President Donald Trump’s decision on whether to withdraw the United States from the Iran nuclear deal, a move that could disrupt global oil supply. 

Asian shares picked up, helped by technology stocks as generally upbeat earnings overcame weakness in the global smartphone market and concerns about more regulation.

U.S. West Texas Intermediate (WTI) crude futures CLc1 on Monday rose above $70 for the first time since November 2014, putting it more than 18 percent above this year’s low touched in February.

On Tuesday, some of those oil-price gains were pared as traders took profit after Trump said in a tweet he would announce his decision on the nuclear deal at 1800 GMT Tuesday.

“The oil market has priced in the high likelihood of Trump withdrawing from the nuclear deal with Iran. If he is going to impose sanctions similar to those the U.S. had in 2012, that would likely cause a shortage in oil,” said Tatsufumi Okoshi, senior commodity economist at Nomura Securities.

Adding to market pressures, falls in Venezuelan oil production due to problems at the country’s oil company PDVSA also added to the rally.

U.S. crude futures last traded at $69.97 per barrel, down 1.1 percent from Monday’s settlement price.
Global benchmark Brent crude futures LCOc1 stood at $75.54 per barrel, down 0.8 percent, having risen as high as $76.34 on Monday.

While caution on Trump’s statement kept investors edgy in early trade, technology firms helped to generate gains for Asian equities.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.6 percent, with information technology shares .MIAPJIT00PUS rising 1.2 percent. Japan's Nikkei .N225 was 0.3 percent higher.

Tech shares also lifted South Korea's Kospi index .KS11, which rose 0.4 percent.

U.S. oil breaks through $70, dollar hits fresh 2018 high

Oil prices hit their highest since late 2014 on Monday, driven by a deepening economic crisis in Venezuela and worries that the Unites States could re-impose sanctions on Iran, while stocks firmed and the dollar surged to another 2018 high.

With trading thinned by a holiday closure in London, European shares opened higher, boosted by energy stocks as well as encouraging earnings updates.

Nestle shares also gained after the Swiss-based food firm agreed to pay Starbucks $7.15 billion in cash for the rights to sell the U.S. coffee chain’s products around the world.

Most Asian markets also rose after Friday’s tame reading on U.S. wage growth lessened the chances of a pick-up in the pace of interest rate hikes by the Federal Reserve. Gains were capped by Sino-U.S. trade tensions.

U.S. crude oil prices rose more than 70 cents, or 1.1 percent, pushing above $70 a barrel for the first time since November 2014 as the crisis in OPEC member state Venezuela threatened to further crimp its production and exports.

Brent crude oil futures gained to $75.64 per barrel at 1210 GMT, up 1.14 percent and having also touched their highest since November 2014.

Oil markets on edge

Oil prices held steady on Friday after shedding earlier gains, as market jitters kicked in over the prospect of geopolitical risks from possible new US sanctions against Iran. 

Brent crude oil futures were at $73.64 per barrel, up 2 cents, from their last close after touching a intraday high of $73.80 per barrel earlier in the session.

The fluctuations came as investors sifted through the upcoming Iran sanction decision and an increasing US crude inventory build for clues as to the likely direction of oil prices.

The Asian stockmarkets that were open on Friday traded warily as trade talks continued and ahead of the US jobs data. Hong Kong's Hang Seng Index fell 1 per cent, South Korea's Kospi dropped 0.8 per cent and China's Shanghai Composite index lost 0.2 per cent.

Asia markets were trading without Japanese investors on Friday, with markets in Tokyo closed for a public holiday.

Trade talks aimed at easing tensions that have taken the US and China closer to a trade were ongoing on Friday, with US Treasury Secretary Steven Mnuchin sounding a positive note about progress.

Market watch

SPI futures down 15 points or 0.3% to 5833

AUD flat at 76.70 US cents

On Wall St: Dow -0.8%, S&P 500 -0.9%, Nasdaq -1.3%

In New York, BHP -0.1% Rio +0.1%

In Europe: Stoxx 50 +0.2%, FTSE +0.5%, CAC +0.4%, DAX -0.2%

Spot gold -0.7% to $US1336.36 an ounce

Brent crude +0.4% to $US74.06 a barrel

US oil -0.4% to $US68.06 a barrel

Iron ore -2% to $US67.09 a tonne

Dalian iron ore -0.6% to 464 yuan

LME aluminium -0.6% to $US2469 a tonne.

LME copper -0.1% to $US6992 a tonne

10-year bond yield: US 2.96%, Germany 0.59%, Australia 2.80%

Santos hits three-year share price high

Santos has punched through to a three-year trading high on the back of steady first quarter results and a recent takeover offer from Harbour Energy.

The oil and gas company reached $5.99 a share on Thursday, marking the first time it has hit this trading point since mid-2015.  The company was trading at $2.90 last July.

Santos has focused heavily on reducing its debt, cutting it by around 8 per cent since the start of the 2018 and nearly half since the start of 2016.

Net debt currently sits at around $2.5 billion.

RBC Capital Markets analyst Ben Wilson said the reduction in output is still at the higher end of guidance and "are in line with our expectations due to the outage at PNG LNG".

Despite this lower production level, an average realised oil price that is six per cent higher quarter on quarter, and nearly 25 per cent higher compared to this time last year, has ensured sales revenues remain buoyant.

Santos saw an average oil price of $US71.6 ($91.93) per barrel with a break-even price of around $US36 per barrel.

The renewed $6.50 a share bid by Harbour Energy for Santos, a 42 per cent increase on its previous $4.55 bid, continues to hang over the company as it advises shareholders to take no action until a board decision.

Oil could hit $US80 on back of Syrian air strikes

Oil prices have hit their highest since late 2014 and JP Morgan says Brent crude could go to $US80 a barrel as US-led strikes on Syria threaten a new period of heightened Middle East conflict and raise the spectre of renewed US sanctions on Iran.

The United States, Britain and France on Saturday morning launched military strikes against "chemical weapons-type targets" in Syria, in retaliation for a suspected poison gas attack in the town of Douma which killed at least 60 people on April 7.

Talk of the US-led strikes helped ramp up tension in oil markets leading into the weekend, where geopolitical tensions had already pushed prices higher. In the middle of last week Saudi Arabia intercepted three missiles over Riyadh, reportedly fired by Iranian-backed Houthis in Yemen and targeting national oil company Saudi Aramco's assets.

In response, the international benchmark Brent crude oil price lifted 8.6 per cent last week to hit $US72.58 a barrel on Friday night, the highest since November 2014. Asian trade on Monday morning will offer the first glimpse of whether prices will be even higher.

Global Stock Market News

Japan's Nikkei share average dropped to a six-month low on Monday while the yen rose to near a 16-month peak, on persistent worries about a global trade war.

The Nikkei fell 0.9 per cent to 20,439.98 in midmorning trade after hitting a low of 20,347.49, the weakest since late September.

The dollar traded at 104.835 yen after falling to 104.560, its lowest since November 2016.

US President Donald Trump signed a memorandum last week that could impose tariffs on up to $60 billion of imports from China, although the measures have a 30-day consultation period before they take effect.

Tokyo stocks also continue to be pressured by a cronyism scandal that has gripped the country and sparked a political crisis for Prime Minister Shinzo Abe.

Oil and gas developer Australis Oil and Gas, is advancing its investment strategy by moving to a meaningful test production program in the Tuscaloosa Marine Shale, Bell Potter analysts noted.

The analysts said that they have lifted their price target for the stock by 92 per cent to 75¢, up from 39¢, with the company set to begin further TMS drilling in the third quarter of 2018.

They also pencilled in 333 per cent growth in earnings per share by the end of 2019 and expect the company's sales to reach US$166m by the end of 2020, up from US$23m in 2017.

Oil price hits three-week high as glut drops

Oil Stock Markets

Global oil benchmark, Brent crude, rose to its highest level so far this month on Tuesday, as tension in the Middle East and the possibility of further falls in Venezuelan output helped offset the negative impact of growing United States’ crude production.

Brent, against which Nigeria’s crude oil is priced, increased by $1.75 to $67.80 per barrel as of 5:40pm Nigerian time, while the United States’ West Texas Intermediate stood at $63.78 per barrel.

The rise in oil prices means accretion to the Excess Crude Account, into which the country saves the difference between the market price of oil and the budget benchmark to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure.

Saudi Arabia called the 2015 nuclear deal between Iran and world powers a “flawed agreement” on Monday, on the eve of a meeting between the Saudi crown prince and US President Donald Trump. Both are highly critical of Iran.

Trump has threatened to withdraw the US from the accord between Tehran and six world powers, raising the prospect of new sanctions that could hurt Iran’s oil industry.

Worries about falling production in Venezuela, whose output has been halved since 2005 to below two million barrels per day due to an economic crisis, also supported oil markets.

The International Energy Agency said last week that Venezuela was “vulnerable to an accelerated decline” and said such a disruption could tip global markets into deficit.

PVM’s Varga said Venezuela was a potential source of supply disruption, adding that the bigger challenge for the Organisation of Petroleum Exporting Countries and its allies was ensuring that their efforts to balance the market through output curbs was not undermined by rising production elsewhere.

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

Oil Stock Markets

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Oil extends gains on Saudi commitment to cutting output, weak dollar

Oil Stock Markets

Oil prices rose more than 1 percent on Thursday to extend gains from the previous session, lifted by a weak dollar 

And Saudi comments that it would rather see an undersupplied market than end a deal with OPEC and Russia to withhold production.

U.S. West Texas Intermediate (WTI) crude futures were up 84 cents, or 1.4 percent, from their last settlement at $61.44 a barrel at 0604 GMT, adding to a 2.4-percent gain from the day before. 

Brent crude futures were at $65.05 per barrel, up 69 cents, or 1.1 percent, extending Wednesday’s 2.6-percent climb. 

Prices rose on the back of ongoing weakness in the U.S. dollar against other leading currencies, further supported by rising stock markets, traders said. 

A weaker greenback potentially stokes consumption of dollar-denominated commodities as it makes fuel and raw materials cheaper for countries using other currencies. 

More fundamentally, oil markets got a push from comments by Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), voicing support for output cuts backed by OPEC and other producers including Russia since 2017 in an effort to tighten the market and prop up prices. 

Threatening to undermine the OPEC-led effort to tighten markets is soaring production in the United States, which is not participating in the pact to cut. 

U.S. crude oil production rose to a fresh record of 10.27 million barrels per day (bpd), more than top exporter Saudi Arabia pumps and within reach of No.1 producer Russia. 

Consequently, U.S. crude inventories rose by 1.8 million barrels in the week to Feb. 9, to 422.1 million barrels, the Energy Information Administration said on Wednesday. 

“Although we remain positive on crude oil prices until year-end, an interim correction into 1Q18 cannot be ruled out,” said Barnabas Gan, economist at OCBC Bank in Singapore.

Oil prices tumble as hedge funds liquidate record bullish position

Oil Stock Markets

Hedge funds have started to liquidate some of their record bullish positions in crude oil and refined fuels as the rally has gone into reverse and amid signs that U.S. shale production is surging. 

Hedge funds and other money managers cut their combined net long position in the six most important futures and options contracts linked to petroleum by the equivalent of 41 million barrels in the week to Feb. 6. 

The combined net long position has been cut by a total of 63 million barrels over the two most recent weeks after being raised by 258 million barrels over the previous five weeks. 

Even after the recent reduction, however, the net long position across all six contracts is still a massive 1,112 million barrels higher than at the end of June 2017.

The change has come from a reduction in long positions rather than an increase in short ones, which indicates that it has been driven by profit-taking after the rally. 

Portfolio managers have cut bullish long positions in Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil by a combined 71 million barrels since Jan. 23. 

Bearish short positions have actually fallen by 8 million barrels over the same period, and are at the lowest level since oil prices started to slide in June 2014, according to records published by regulators and exchanges. 

The liquidation of some of the record long positions hedge fund managers accumulated in the weeks and months before Jan. 23 has coincided with a softening in benchmark Brent prices since Jan. 25.

The accumulation of such an enormous number of long positions by fund managers had left the market looking very stretched, with long positions outnumbering short ones by a ratio of more than 11:1. 

The recent downward correction in prices therefore came as no surprise since lopsided positioning has normally preceded a sharp reversal in the previous price trend since at least the start of 2015. 

Commentators have identified several possible triggers for the correction in oil prices, including the sharp drop in U.S. equities, recent dollar strengthening and the unexpectedly rapid increase in U.S. shale production. 

In reality, positioning in the oil market had become so stretched almost anything (or nothing at all) could have sparked a sell off. 

Even after the recent liquidation, fund managers still hold a near-record net long position with longs far outnumbering shorts, underscoring the lingering downside risk.

California says will block crude oil from Trump offshore drilling plan

Oil Stock Markets

California will block the transportation through its state of petroleum from new offshore oil rigs, officials told Reuters on Wednesday, a move meant to hobble the Trump administration’s effort to vastly expand drilling in U.S. federal waters. 

California’s plan to deny pipeline permits for transporting oil from new leases off the Pacific Coast is the most forceful step yet by coastal states trying to halt the biggest proposed expansion in decades of federal oil and gas leasing.

Officials in Florida, North and South Carolina, Delaware and Washington, have also warned drilling could despoil beaches, harm wildlife and hurt lucrative tourism industries.

The commission sent a letter on Wednesday to the U.S. Interior Department’s Bureau of Ocean Energy Management (BOEM) urging the bureau’s program manager Kelly Hammerle to withdraw the draft proposal, saying the public did not have an adequate opportunity to provide input on the plan.

California has clashed repeatedly with President Donald Trump’s administration over a range of other issues since last year, from climate change to automobile efficiency standards to immigration.

The Interior Department last month announced its proposal to open nearly all U.S. offshore waters to oil and gas drilling, sparking protests from coastal states, environmentalists and the tourism industry.
Governors from nearly every U.S. coastal state except Alaska and Maine expressed opposition, and even Alaska’s governor requested sensitive areas be removed.

The proposal also comes amid low U.S. oil industry demand for new offshore leases, as drillers focus on cheaper and highly-productive wells onshore that have pushed U.S. production over 10 millions barrels per day for the first time since 1970.

Heather Swift, spokeswoman for Secretary of the Interior Ryan Zinke, said developing the five-year plan for offshore oil and gas leases is “a very open and public process.”

Trump has said more offshore drilling would boost the U.S. economy and national security by reducing reliance on imported oil.
Opponents of offshore drilling have complained that Congress has passed no new safety standards since BP Plc’s Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010. It took months to stop that leak, which became the largest oil spill in American history, despoiling the environment of Gulf Coast states and causing billions of dollars in economic damage.

Offshore drilling has been restricted in California since a 1969 oil spill off the coast of Santa Barbara. In 2015, another spill in Santa Barbara County sent as much as 2,400 barrels of oil (101,000 gallons or 382,000 liters) onto the coast and into the Pacific, leaving slicks that stretched over nine miles (14 km).

Major oil companies, like Chevron Corp (CVX.N), have long since abandoned their efforts in California’s offshore region, despite its estimated 250 million barrels of proven oil reserves, due in part to legislative and political hurdles and easier prospects elsewhere.

Chevron gave away the U.S. Geological Survey seismic data on offshore California and other parts of the U.S. West Coast for research use in 2005, deeming it no longer commercially useful.


A number of other states have asked the Interior Department to exempt them from the drilling plan. So far, Secretary Zinke has said he would exempt Florida, which borders the Eastern Gulf and the Southeastern Atlantic, to protect its tourism industry and he has promised to hold discussions with other states that have expressed concerns.


Environmentalists and some elected officials plan to protest the drilling plan at a public meeting on Thursday in Sacramento.