Oil prices rise with Libya's force majeure and emerging slowdown in demand held back markets.

Oil Stock Markets

Oil prices climbed on Tuesday after Libya declared force majeure on some of its supplies, although an overall rise in OPEC output and an emerging slowdown in demand held back markets. 

Brent crude oil futures LCOc1 were at $77.71 per barrel at 0217 GMT, up 41 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 57 cents, or 0.8 percent, at $74.51.

OPEC’s June output was 32.32 million barrels per day (bpd), a Reuters survey showed on Monday, up 320,000 bpd from May. The June total is the highest since January 2018.

Libya’s National Oil Corporation (NOC) declared force majeure on loadings from Zueitina and Hariga ports on Monday, resulting in total production losses of 850,000 bpd due to the closure of eastern fields and ports.

Traders have also been watching U.S. oil production C-OUT-T-EIA, which has surged by 30 percent over the last two years to 10.9 million bpd, absorbing some of the recent disruptions.

Overall, however, analysts said OPEC’s production policy as well as unplanned supply disruptions
were currently the main price drivers.

“In the near-term, the level of OPEC production - deployment of spare capacity by Saudi Arabia, Iraq, UAE, Kuwait (and ex-OPEC by Russia), and involuntary disruptions in Libya, Venezuela, Iran - are more important drivers of crude prices,” Goldman Sachs said in a note published late on Monday.

What has become a concern, at least for producers, is a slowdown in demand which may end years of consecutive records.

In Asia, the world’s top oil consuming region, seaborne oil imports have been falling since May, as higher costs turned off consumers and as the escalating trade dispute between the United States and China starts to impact the economy.

Things to watch on the ASX today

Australian Stock Markets

Will the market be able to bounce back on Tuesday? Here are five things that could shape today’s trade:

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) started the new financial year with a day in the red on Monday. It gave back its early gains to finish the day down 0.3% to 6,177.8 points.

ASX expected to open the day higher.

According to the latest SPI futures, the local market is expected to open the day higher by 0.3% or 21 points on Tuesday. This follows a positive night of trade on Wall Street which saw U.S. markets rebound from early declines to push notably higher. The Dow Jones Industrial Average rose 0.15%, the S&P 500 climbed 0.3%, and the NASDAQ pushed almost 0.8% higher.

Reserve Bank of Australia meets today.
The Reserve Bank of Australia will meet at 14:30 AEST today to discuss the cash rate. Think there is not a single economist in the country that expects the central bank to make a move on rates.

In fact, the consensus appears to be for rates to remain on hold at the record low of 1.5% until at least the end of 2019.

Toll road operator Atlas Arteria announces fees.

The shares of Atlas Arteria Group (ASX: ALX), formerly known as Macquarie Atlas Roads, will be on watch on Tuesday after providing its final performance fee. According to the release, a final performance fee was earned by Atlas Arteria’s manager, Macquarie Fund Advisers, for the 12 months ended 30 June 2018.

During this period, the company outperformed the S&P/ASX 300 Industrials Accumulation Index by 10.8%, resulting in a 2018 performance fee of $54.7 million. The 2018 performance fee will be payable in one instalment.

Oil prices give back gains.
Oil prices have taken a tumble overnight after data revealed a surprise rise in output from Saudi Arabia and Russia. The WTI crude oil price has fallen 0.1% to US$74.06 a barrel and the Brent crude oil price is down 2.3% to US$77.39 a barrel.

This could put pressure on the shares of Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL).

Amaysim shares tipped as a buy.
According to a note out of Goldman Sachs, its analysts have retained their buy rating and placed a $1.30 price target on Amaysim Australia Ltd (ASX: AYS) shares.

Despite the company suffering a slowdown in subscriber growth, the broker sees a lot of value in its shares at the current level.

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 ease while Russia warns of gradual production increase

Oil Stock Markets

Oil prices eased on Friday as Russia hinted it may gradually increase output, after having withheld supplies in concert with producer cartel OPEC since 2017.
 

Brent crude futures LCOc1 were at $78.69 per barrel at 0208 GMT, down 10 cents from their last close, and more than 2.2 percent below the $80.50 November 2014 high they reached on May 17. Brent broke through $80 for the first time in more than three years earlier in May.

U.S. West Texas Intermediate (WTI) crude futures were at $70.62 a barrel, down 9 cents from their last settlement.

“Oil prices are now starting to drift a little,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader, adding that this was due to OPEC’s and Russia’s “moves toward an increase in production at the June meeting”.

The Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) as well as a group of non-OPEC producers led by Russia started withholding output in 2017 to tighten the market and prop up prices.

But Russia, in particular, has been floating a potential end to the production cuts, with energy minister Alexander Novak saying on Thursday that restrictions on oil production could be eased “softly” if OPEC and non-OPEC countries see the oil market balancing in June.

 While Russia and OPEC benefit from higher oil prices, which have risen by almost 20 percent since the end of last year, their voluntary production cuts have opened the door to other producers to ramp up output and gain market share.

U.S. crude oil production C-OUT-T-EIA has risen by more than a quarter in the last two years, to 10.73 million barrels per day (bpd). Only Russia produces more, at around 11 million bpd.

Output by producers like the United States, Canada or Brazil who are not bound by the OPEC/Russian led agreement to cut, will likely rise further as higher crude prices improves their profitability.

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 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.

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.

Oil steady on OPEC cuts with looming Iran sanctions and strong demand

Oil Stock Markets

Oil prices held firm on Friday on strong demand, ongoing supply cuts led by producer cartel OPEC and looming U.S. sanctions against major crude exporter Iran. 

But markets remained below multi-year highs from the previous day as surging output from the United States is expected to offset at least some of the shortfalls.

Brent crude futures LCOc1 were at $79.57 per barrel at 0310 GMT, up 27 cents, or 0.3 percent from their last close. Brent broke through $80 for the first time since November 2014 on Thursday.

U.S. West Texas Intermediate (WTI) crude futures were at $71.62 a barrel, up 13 cents, or 0.2 percent, from their last settlement.

Crude prices have received broad support from voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market.

Beyond OPEC’s cuts, strong demand as well as falling output from Venezuela and a U.S. announcement earlier this month to renew sanctions against OPEC-member Iran helped push Brent up by 20 percent since the start of the year.

With crude prices at levels not seen since late 2014, Allardyce warned the high fuel costs could start crimping consumption.

At $80 per barrel, Asia’s thirst for oil costs the region a whopping $1 trillion a year, more than twice what it was in 2015/2016, the two years prior to the OPEC-cuts which started in 2017.

The crude oil price forward curve <0#LCO:> is in firm backwardation, a structure that suggests a tight market as prices for immediate delivery are higher than those for later dispatch.

Front-month Brent prices are now almost $1.80 per barrel more expensive than those for delivery in December.


U.S. crude oil production C-OUT-T-EIA has soared by more than a quarter in the last two years, to a record 10.72 million barrels per day.

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.

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 price drops despite OPEC cuts & Iran sanctions

Oil Stock Markets

Oil prices fell on Wednesday, weighed down by ample supplies despite ongoing output cuts by producer cartel OPEC and looming U.S. sanctions against major crude exporter Iran. 

Brent crude futures LCOc1 were at $78.23 per barrel at 0445 GMT, down 20 cents, or 0.3 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $71.08 a barrel, down 23 cents, or 0.3 percent, from their last settlement.

Despite the dips, both financial oil benchmarks remained close to their November 2014 highs of $79.47 and $71.92 a barrel respectively, reached the previous day.

But there are signs in physical crude markets that may give pause to financial investors.

There are also signs that oil production will rise, especially at majors like ExxonMobil (XOM), Royal Dutch Shell (RDSa.L), Chevron (CVX.N), BP (BP.L) and Total (TOTF.PA).


Spot crude oil cargo prices are at their steepest discounts to futures prices in years as sellers are struggling to find buyers for West African, Russian and Kazakh cargoes, while pipeline bottlenecks trap supply in west Texas and Canada.

The bottleneck in North America likely contributed to a 4.9 million barrel rise in U.S. crude oil inventories, to 435.6 million barrels, that the private American Petroleum Institute reported on Tuesday.

Official U.S. government fuel storage data is due for release by the Energy Information Administration (EIA) later on Wednesday.

Despite Wednesday’s dips and some indicators implying the financial oil has overshot physical oil, overall crude market conditions have tightened since 2017 when the Organization of the Petroleum Exporting Countries (OPEC) started to withhold supplies to push up oil prices.

With renewed U.S. sanctions looming against OPEC-member Iran and oil demand strong, analysts said crude markets will likely remain tight for much of the year.

Stronger oil prices are also spilling into other markets.

Oil prices firm amid Iran sanctions and OPEC cuts

Oil Stock Markets

Oil prices held firm on Tuesday as ongoing production cuts by OPEC and looming U.S. sanctions against Iran tightened the market amid strong demand. 

Brent crude futures LCOc1, the international benchmark for oil prices, were at $78.37 per barrel at 0028 GMT, up 14 cents from their last close and not far off a three-and-a-half year high of $78.53 a barrel reached the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $71.09 a barrel, up 13 cents and also not far off their Nov. 2014 high of $71.89 a barrel reached last week.

Markets have generally tightened as the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, have been withholding supplies since 2017 in order to push up oil prices.

With renewed U.S. sanctions looming against OPEC-member Iran and oil demand strong, analysts said crude prices were well supported.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

OPEC figures published on Monday showed that oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

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.

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

Oil Stock Markets

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

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

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

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

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

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

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

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


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

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

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

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

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

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.

ASX futures are pointing higher

Australian Stock Markets

ASX futures are pointing higher.
 

According to the latest SPI futures, the Australian share market is expected to open the day 20 points or 0.3% higher on Tuesday.

The local market is following the lead of U.S. markets which had a positive start to the week as well. The Dow Jones started the week with a 0.4% gain, the S&P 500 rose 0.35%, and the Nasdaq climbed almost 0.8%.

Today is budget day.
Tax cuts and infrastructure spending will dominate tonight’s Federal Budget.

And while the announcement isn’t until 7:30pm Eastern Time, it seems likely that a few details will leak throughout the day. Healthcare shares and aged care companies such as Japara Healthcare Ltd (ASX: JHC) could be worth keeping an eye on today.

Oil prices continue to climb higher.
The shares of Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) could be set for another positive day of trade after oil prices rose again overnight.

According to Bloomberg, WTI crude oil is up 0.4% to US$70.00 a barrel and Brent crude oil is up 1% to US$75.64 a barrel. Oil prices have been rising on the back of supply concerns caused by possible sanctions on Iran.

Retail sales data is released this morning.
Retail shares including Domino’s Pizza Enterprises Ltd. (ASX: DMP), Myer Holdings Ltd (ASX: MYR), and Premier Investments Limited (ASX: PMV) will be on watch this morning when the Australian Bureau of Statistics releases its retail sales data for the month of April at 11:30am Eastern Time.

 According to Trading Economics, the consensus estimate is for retail sales rising 0.3% month-on-month.

 CYBG could be on the move.
The CYBG PLC (ASX: CYB) share price will be one to watch this morning after the UK bank confirmed that it has it has made a preliminary approach for a potential all share combination of it and Virgin Money.

The proposal would see CYBG acquire all of Virgin Money on the basis of an exchange ratio of 1.1297 new CYBG shares for each Virgin Money share.

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

Oil Markets

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

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

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

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

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

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

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

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

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

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

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

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

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