Prices

Oil nudges higher on tightening supplies, weak dollar

18 Aug 2017   Prices

Oil prices edged higher on Friday, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar. But prices were still on track to close the week 2 to 3 percent lower after concerns about weaker Chinese oil demand weighed earlier in the week. At 0935 GMT, benchmark Brent crude futures LCOc1 were up 7 cents at $51.10 a barrel on the day but still about 2 percent lower on the week. U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 16 cents at $47.25 a barrel, although they were also set to end the week more than 3 percent lower. “Falling U.S. commercial stocks are supportive and I also believe that high U.S. product demand, and gasoline […]

Oil edges up on decline in crude stocks, but high production caps gains

18 Aug 2017   Prices

Oil prices edged up early on Thursday, clawing back some ground after losses in the previous session. Traders said the market was range-bound as falling crude inventories provided price support while high output was capping gains. Brent crude futures, LCOc1 the international benchmark for oil prices, were at $50.43 per barrel at 0101 GMT, up 16 cents, or 0.3 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $46.88 a barrel, up 10 cents, or 0.2 percent. The slight gains followed a more than 1 percent fall in the previous session. Data published late on Wednesday by the Energy Information Administration (EIA) showed that commercial U.S. crude oil stocks C-STK-T-EIA have fallen by almost 13 percent from their peaks in March to 466.5 million barrels, well below this time last year. “If inventory declines continue at this pace, stocks will […]

Oil Falls as Production Increase Outweighs Stockpile Decline

17 Aug 2017   Prices

Oil prices fell to a three week low Wednesday as data showing an increase in U.S. oil production outweighed the largest weekly decline in oil stockpiles this year. U.S. crude futures declined for a third straight day, falling 77 cents, or 1.62%, to $46.78 a barrel on the New York Mercantile Exchange—their lowest settlement since July 24. Brent crude, the global oil benchmark, fell 53 cents, or 1.04%, to $50.27 a barrel on ICE Futures Europe. The amount of oil in U.S. storage tanks fell by more than 8.9 million barrels last week according to the latest figures from the U.S. Energy Information Administration—on par with the 9.2 million barrel drop anticipated by The American Petroleum Institute, an industry group. The decline was nearly three times the 3 million barrel drop forecast by analysts and traders surveyed by The Wall Street Journal. U.S. stockpiles have become a closely watched […]

Goodbye contango? Oil’s long march toward backwardation: Kemp

17 Aug 2017   Prices

“The rebalancing of the oil market desired by the leading producers has been a stubborn process,” the International Energy Agency wrote in its latest monthly oil market report. The agency’s evident frustration about the slow and uneven pace of rebalancing, and the conflicting signals about whether it is happening at all, is shared by many traders, analysts and investors. “The medium-term outlook for oil still looks challenging with, if anything, balances for 2018 having deteriorated in recent weeks,” hedge fund manager Andy Hall wrote to investors this month. The combination of a trendless market and the growing number of computer-driven trading programmes has made trading strategies based on supply and demand fundamentals increasingly difficult: […]

The Single Biggest Bullish Catalyst For Oil

17 Aug 2017   Prices

One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening. Brent futures have recently begun to exhibit a state of backwardation , which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut. There are several reasons why backwardation is bullish, which has been discussed in previous articles […]

Will Oil Demand Growth Be Enough To Tackle Inventories?

17 Aug 2017   Oil Supply, Prices

The first is a report on bets taken by the highly successful hedge fund manager Pierre Andurand on the direction for prices. Andurand is predicting prices will rise above $100 per barrel by 2020 as demand growth exceeds the ability of the U.S. shale industry to meet demand at current prices. The article quite reasonably points out investment in the oil industry has fallen dramatically as prices have declined, saying on average 40 new developments were approved annually between 2007 and 2013 by the oil majors. That number fell to just 12 last year, as the low oil price left only the most simple and straightforward projects viable. Furthermore, Andurand believes the U.S. shale industry will find it increasingly difficult to justify new investment if prices remain at current levels — as new fields will become more expensive to develop and maintain, the industry is surviving on the low-hanging […]

U.S. crude stockpiles fall the most in nearly a year: EIA

17 Aug 2017   Oil Supply, Prices

U.S. crude oil inventories fell for the seventh consecutive week in their largest drawdown in nearly a year while exports and production continued to rise, the Energy Information Administration said on Wednesday. Crude inventories fell 8.95 million barrels in the week to Aug. 11, nearly three times analysts’ expectations for a decrease of 3.1 million barrels and the largest draw in since the week to Sept. 2. At 466.5 million barrels, crude stockpiles were at their lowest since January 2016. Including emergency reserves, crude stocks were at 1.15 billion barrels, the lowest levels since October 2015, according to EIA data. […]

Oil prices edge up on falling US crude stocks, but global glut still weighs

16 Aug 2017   Prices

Oil prices edged up on Wednesday on a fall in U.S. crude inventories, although markets were still being weighed down by general oversupply. Brent crude futures LCOc1 were at $51.02 per barrel at 0218 GMT, up 22 cents or 0.4 percent from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $47.70 a barrel, up 15 cents, or 0.3 percent. U.S. crude inventories fell by 9.2 million barrels in the week to Aug. 11 to 469.2 million, industry group the American Petroleum Institute said on Tuesday. That compared with analyst expectations for a decrease of 3.1 million barrels. “The market took this as a mildly bullish report,” said William O’Loughlin, investment analyst at Rivkin Securities. However, gasoline stocks climbed by 301,000 barrels, compared with analyst expectations […]

Oil Prices Rise As API Reports Huge Crude Inventory Draw

16 Aug 2017   Prices

The draw compares to analyst expectations of a draw of 3.6 million barrels for the week ending August 11. Gasoline inventories rose by 301,000 barrels for the week ending August 11, compared to analyst expectations that inventories for the fuel would fall by 1.5 million barrels. Crude prices fell on Tuesday—despite an export terminal closure in Libya on the back of worker protests—on weakening China demand. China’s oil refineries saw their lowest daily throughput in July at 10.71 million barrels per day according to China’s National Bureau of Statistics on Monday. OPEC’s noncompliance also continues to weigh on traders, with OPEC’s MMOR last week showing a 172,600-barrel-per-day increase in oil production in July for the cartel, based on secondary sources. Total daily production for OPEC in July was 32.869 million bpd—up from 32.696 million bpd. Traders are also watching US shale production, which is trudging on full steam ahead […]

Oil prices steady after overnight tumble on dollar strength, China concerns

15 Aug 2017   Prices

Oil prices steadied in early Asian trade on Tuesday after sharp falls the session before to the lowest in about three weeks as a stronger U.S. dollar and a drop in Chinese refining runs hit the market. Global benchmark Brent crude futures LCOc1 were up 13 cents, or 0.3 percent, at $50.86 at 0325 GMT. That was just above their 100-day moving average, briefly breached in the previous session. U.S. West Texas Intermediate crude futures CLc1 were up 7 cents, or 0.2 percent, at $47.66 a barrel. Oil prices tumbled more than 2.5 percent on Monday in volatile trade as the dollar strength and the demand concerns in China, the world’s second-largest oil user, weighed on sentiment. A stronger dollar tends to limit the demand for oil for buyers paying in other currencies. Both Brent and WTI had reached two-month highs on Aug. 10. “Stale speculative […]

Oil Prices Inch Higher As Libya Closes Crude Export Terminal

15 Aug 2017   Libya, Prices

The Zueitina oil terminal in Libya has ceased loading cargos as port workers protest, demanding better working conditions, Bloomberg quoted the head of the workers’ union Merhi Abridan as saying. This means that oil coming from the fields around Zueitina will be stored at the port for the duration of the protest, and a spike in exports will likely follow. Zueitina is managed by a joint venture between the National Oil Corporation, Occidental Petroleum, and Austria’s OMV. The port exports an average of six 600,000 to 630,000-barrel cargoes a month, Abridan told Bloomberg. The workers at the port are demanding to be paid 20 months worth of delayed salaries, as well as health insurance, annual leave, payments for overtime work, and more time for maintenance work. At the same time, however, Libya’s overall crude output has been reduced by a decline in the production from its biggest field, Sharara. […]

Oil Prices Slip As Chinese Crude Demand Loses Momentum

15 Aug 2017   China, Prices

Slowly but surely, what we have claimed for the past year – that it is the demand side of the oil equation, not the supply, and especially the “Chinese wildcard” that is the critical factor in setting prices – is starting to emerge and be factored in by markets. And so, just days after we posted ” Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low ” arguably catalyzed by the increasingly full Chinese Strategic Petroleum Reserve, overnight we got another major red flag – once again out of China – when Bloomberg reported that China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, “as the world’s largest consumer showed signs of losing momentum.” According to Bloomberg calculations based on NBS data released on Monday, as shown in the chart below oil […]

Oil prices edge lower on OPEC output

15 Aug 2017   OPEC, Prices

Crude oil prices edged lower early Monday on signals of declining volatility and reports of a stronger position from OPEC-member Libya. Sandy Fielden, the director of research, commodities and energy at Morningstar, said in a report that crude oil prices were settling into a relatively narrow range, which would indicate the volatility that followed a decline in crude oil prices that started in the second half of 2014 is finally starting to ease. “Although outside factors such as geopolitical instability — think Venezuela or North Korea — can always throw a curveball, the indications are that today’s relative stability is here to stay until the next system shock,” his report read. Crude […]

Oil Stuck in Loop Leaves Bored Hedge Funds Awaiting Clarity

15 Aug 2017   Prices

WTI net-long position little changed, CFTC report shows Money managers raise bullish stance on gasoline, diesel Oil hasn’t been so tedious in a long time, and hedge funds just don’t know what to do with it. Their weekly stance on West Texas Intermediate crude prices barely changed as futures are on track to trade in the tightest monthly range since August 2003. It’s been tough to reconcile the mixed signals from a steady decline in U.S. stockpiles with rising production from shale fields and elsewhere in the world. Funds “are waiting to see if something is going to happen, if something will break where you’ll get some real movement,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, said by telephone. “The other problem is, the fundamentals are kind of mixed, too. You’re just not getting a real clear picture.” In the U.S., crude stockpiles have […]

Oil markets steady as strong demand is met by ample supplies

15 Aug 2017   Prices

Oil prices were steady early on Monday, supported by strong demand and falling inventories, but still under pressure from high output. Brent crude futures, LCOc1 the international benchmark for oil prices, were at $52.08 per barrel at 0048 GMT, down 2 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.85 a barrel, up 3 cents. ANZ bank said prices were being supported by a report from the International Energy Agency (IEA) that crude oil stockpiles were now below 2016 levels. Despite this, the IEA said that stocks remained 219 million barrels above a 5-year average – a level that producer club OPEC is targeting with its output cuts. The agency also raised its 2017 demand growth forecast to […]

Oil markets steady as strong demand is met by ample supplies

14 Aug 2017   Prices

Oil prices were steady early on Monday, supported by strong demand and falling inventories, but still under pressure from high output. Brent crude futures, LCOc1 the international benchmark for oil prices, were at $52.08 per barrel at 0048 GMT, down 2 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.85 a barrel, up 3 cents. ANZ bank said prices were being supported by a report from the International Energy Agency (IEA) that crude oil stockpiles were now below 2016 levels. Despite this, the IEA said that stocks remained 219 million barrels above a 5-year average – a level that producer club OPEC is targeting with its output cuts. The agency also raised its 2017 demand growth forecast to […]

Will Oil Markets Rebalance Before The OPEC Deal Expires?

14 Aug 2017   Prices

Market sentiment has been fickle throughout summer, and despite the recent plateauing of oil prices, the IEA reassured everyone in its new monthly report that things are still proceeding apace. For example, in the second quarter, global inventories fell by 0.5 million barrels per day (mb/d), and preliminary data for July show that the strong inventory declines continued, particularly in the U.S., which showed a 790,000-bpd drawdown. Still, the inventories are falling from “great heights,” the top oil official at the IEA said, and they will take more time to normalize. Quite a bit of time, actually. The IEA estimates that even if global oil inventories decline by 0.5 mb/d through March 2018, when the OPEC deal is set to expire, inventories would still sit 60 million barrels above the five-year average. In other words, even if things continue to go well, without any hiccups, the […]

Oil Gains After IEA Revises Data

12 Aug 2017   Prices

Crude futures turned from losses to gains Friday, recovering from a selloff after the International Energy Agency revised its historical demand figures lower, indicating oil supplies might not be as tight as previously thought. U.S. crude futures rose 23 cents, or 0.47%, to $48.82 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 20 cents, or 0.39%, to $52.10 a barrel on ICE Futures Europe. Oil…

Oil prices sink on IEA warning on balance

12 Aug 2017   Prices

Crude oil prices drifted lower early Friday after a report from the International Energy Agency said the markets were balancing, but it’s a stubborn process. Oil prices rallied early in the Thursday session after the August report from the Organization of Petroleum Exporting Countries showed global demand on the rise, while production from non-member states inched lower. Gains in crude oil prices were quickly erased, however, after Russian oil producer Gazprom boasted of strong production and hinted at a possible acceleration. Russia is the largest contributor to an OPEC-led effort to balance the market with production declines among non-member states. OPEC economists estimate Russian crude oil production will increase about 1 percent from the expected 2017 average to […]

Oil Caps Weekly Drop Amid Shaky OPEC Compliance, Weaker Demand

12 Aug 2017   Prices

IEA sees OPEC’s commitment to clearing global glut fading Agency reduced demand estimates for this year and 2018 Start your day with what’s moving markets in Asia. Sign up here to receive our newsletter. Oil had its worst week in a month as compliance with OPEC’s deal falters and the outlook for demand worsens. While a weaker dollar helped push prices in New York 0.5 percent higher on Friday, erasing earlier losses, futures closed 1.5 percent down for the week. The International Energy Agency reduced demand estimates for OPEC crude this year and 2018, and said there are doubts about the group’s commitment to cutting production. Even a pledge by Saudi Arabia and Iraq to strengthen their commitment to the curbs isn’t helping. “With the latest rhetoric from the IEA, it looks like the balancing cycle is further protracted, which is not great for the market,” Michael Loewen, a […]

Have Oil Markets Reached A Tipping Point?

12 Aug 2017   Prices

Oil prices were down at the end of the week on fears of lingering oversupply. The U.S. reported a strong drawdown in crude inventories and flat production, although those bullish figures were outweighed slightly by an uptick in gasoline inventories. Investors chose to focus on rising OPEC supply, which led to a selloff in crude on Thursday and Friday. IEA: Oil demand up; oil market rebalancing . In its latest monthly report, the IEA revised up its forecast for oil demand this year to 1.5 mb/d, up 100,000 bpd from last month. Oil demand growth continues into next year, expanding at an annual rate of 1.4 mb/d. The IEA also said that the rebalancing effort is continuing – the OPEC cuts, combined with demand growth, will erase the […]

Oil Futures Point To Higher Oil Prices

11 Aug 2017   Prices

The EIA reported another strong week of inventory declines in its most recent data release, revealing a drawdown of 6.5 million barrels for the week ending on August 4. That means that the U.S. has now pulled more than 60 million barrels from storage since inventories peaked in March at 535 million barrels. More importantly, there is growing evidence to suggest that the inventory drawdowns will continue and might even accelerate. That evidence can be found in the futures market, where changes in longer-dated contracts are no longer trading at a much higher price than near-term prices. For much of the past three years, the oil futures market has been stuck in a state of contango – a situation in which oil contracts for the next month are trading at a steep discount compared to oil futures that would expire in six or twelve months. It may seem like […]

Oil prices drop as oversupply concerns linger

11 Aug 2017   Prices

Oil prices fell on Friday, dragged lower by persistent oversupply worries despite a bigger-than-expected drawdown in U.S. crude inventories. Investors were also keeping a close eye on the broad market impact of tensions between the United States and North Korea. Brent crude, the global benchmark, was at $51.62 a barrel at 0652 GMT, down 28 cents, or 0.54 percent from its last close. That was the lowest since Aug. 1. U.S. West Texas Intermediate (WTI) crude was down 32 cents, or 0.66 percent, at $48.27 per barrel, reaching the lowest since July 26. Oil prices touched 2-1/2 month highs on Thursday, but retreated to close down around 1.5 percent, with U.S. prices slipping back below $50 per barrel amid ongoing oversupply concerns. “Crude oil prices failed to hold recent gains, with a […]

Oil Drops After Failure to Hold $50 Even as Stockpiles Shrink

11 Aug 2017   Prices

OPEC boosts oil-demand outlook, yet group’s output increases In the U.S., crude stockpiles have dropped six straight weeks Oil retreated to the lowest level in more than two weeks after a surge above $50 a barrel didn’t last long. Futures slipped 2 percent in New York as support for the key $50 threshold proved weak. Even though U.S. crude inventories shrunk for a sixth week, the declines are seen by some investors as simply seasonal. While OPEC raised demand forecasts for its crude this year and next, a rise in Libyan production pushed the group’s output in July to the highest this year. “What you’re looking at is a nervous market,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “$50 is a major psychological number for this market and it may need to see a little bit more evidence of falling production […]

Oil market marches on toward backwardation

11 Aug 2017   Prices

Oil traders are increasingly convinced the market will rebalance over the next year with a major drawdown in crude and products stocks. Conviction about market rebalancing is showing in a big rise in the calendar spreads for West Texas Intermediate (WTI) and especially Brent crude in the last two months ( tmsnrt.rs/2fviNVk ). Calendar spreads, which measure price differences between any pair of contracts with different delivery dates, are closely tied to changes in the supply-demand balance. Calendar spreads are conventionally expressed as the price of a near-dated futures contract (such as October 2017) minus the price for a contract maturing later (such as March 2018). When the oil market is oversupplied, and crude stocks are high and rising, calendar spreads tend to be negative, a state known as contango (near-dated contracts trade at a discount). When the market is undersupplied, and stocks are low and […]

Graphic: Oil bulls party like it’s 2014 and $100 a barrel

11 Aug 2017   Prices

Brent crude futures finally bear the hallmarks of a market in which supply and demand are falling into balance, although the last time this happened, it was 2014 and the price was over $100 a barrel. Prices of oil for prompt delivery are above those for delivery further in the future to the extent that the first three timespreads, or price differences between two futures contracts, are in negative territory. The first three spreads last showed this structure, known as backwardation, in mid-2014, just before a tidal wave of surplus oil washed the crude price below the $100 milestone. At around $53, the price is about half that level now, but this inversion shows investors and traders may just […]

IEA says strong oil demand growth helps market’s rebalancing

11 Aug 2017   IEA, Prices

Global oil demand will grow more quickly than expected this year, helping to ease a glut despite rising crude production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday. The agency revised its 2017 demand growth forecast to 1.5 million barrels per day (bpd) versus 1.4 million bpd in its previous monthly report and said it expected demand to expand by a further 1.4 million bpd next year. “Producers should find encouragement from demand, which is growing year-on-year more strongly than first thought,” the Paris-based IEA said. “There would be more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve,” the IEA added. The Organization of the Petroleum Exporting Countries is curbing output by about 1.2 […]

Oil rises as inventory overhang erodes and Saudi cuts exports

10 Aug 2017   Prices

Oil prices rose on Thursday, lifted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its prized Asian customers. Crude is down nearly 7 percent so far this year, suppressed in large part by concern that OPEC and its partners may not be able to force global oil inventories to drop by cutting production. However, Saudi Arabia said on Tuesday it would cut supplies to most buyers in Asia – the world’s biggest oil-consuming region – by up to 10 percent in September. Brent crude futures were up 29 cents at $52.99 a barrel by 0855 GMT, while U.S. West Texas Intermediate crude was up 17 cents at $49.73. In a sign that investors are turning more optimistic about the pace at which oil […]

Are Oil Bulls About To Be Burned Again?

10 Aug 2017   Prices

Oil investors have grown more optimistic as of late, as oil prices have moved back to $50 per barrel. The market appears to be on sounder footing, suggesting that things will gradually tighten for the rest of the year. But it is unclear how far oil prices can really move above today’s position. Hedge funds and other money managers have begun buying up long positions on oil futures, a sign of growing bullishness. Reuters analyst John Kemp argues that the positioning of hedge funds has entered the third bullish phase of 2017, after two previous cycles ran their course earlier this year. In fact, the most recent data saw the largest weekly increase in net-long positions so far this year, and interestingly, Kemp points out that the net-long build is due to new long positions, rather than simply just a reduction of shorts. In other words, investors are betting […]

Geopolitical tension in the driver’s seat for oil prices

10 Aug 2017   Prices

Crude oil prices were on solid black territory in early Wednesday trading as geopolitical tensions escalated between the United States and North Korea . Crude oil prices drifted into negative territory for most of the Tuesday session and closed lower even after Washington offered a bellicose response to North Korean nuclear threats against the United States. Traders were moving Tuesday on data from the American Petroleum Institute, which offered a bearish reading of U.S. crude oil inventories in Cushing, Okla., the key storage hub in the United States. Gasoline inventories, which offer a loose indication of the demand from the transportation sector, increased by more than 1 million barrels. North Korea continued the pressure Wednesday with a response to U.S. President Donald […]

Kemp: US Shale Breakeven Price Revealed Around $50

10 Aug 2017   Prices, Shale Oil

U.S. shale producers need a WTI oil price around $50 per barrel to break even, according to an analysis of financial statements for the second quarter. Fifteen of the largest shale oil and gas producers reported total net losses of $470 million for the three months between April and June when benchmark WTI prices averaged $48. Total losses were down from $3.7 billion in the first three months of the year and $7.4 billion in the same period in 2016, according to earnings statements published in the last week ( http://tmsnrt.rs/2ftmgnd ). Nine of the companies in the sample reported positive net income in the second quarter, down […]

Oil falls for third day as doubts over OPEC cuts linger

9 Aug 2017   Prices

Crude futures fell for a third day on Wednesday despite a bigger than expected drop in U.S. oil inventories reported by an industry group, with doubts lingering over OPEC’s ability to restrain supply as promised. Benchmark Brent crude was down 27 cents, or 0.5 percent, at $51.87 a barrel at 0233 GMT. In the previous session, it settled down 0.4 percent. U.S. West Texas Intermediate (WTI) crude was down 21 cents, or 0.4 percent, at $48.96 a barrel, after falling 0.4 percent on Tuesday. Crude stockpiles in the U.S. dropped more than expected last week as imports declined and refinery runs increased, while gasoline inventories grew unexpectedly, the American Petroleum Institute said late on Tuesday. Crude inventories declined by 7.8 million barrels in the week to 478.4 million, compared […]

OPEC’s uphill effort leaves oil prices in negative territory

9 Aug 2017   OPEC, Prices

Crude oil prices move into negative territory early Monday as some market analysts say they’re seeing a ceiling start to emerge over the recent rally. File photo by Monika Graff/UPI Aug. 7 (UPI) — With demand pressures from seasonal factors starting to fade, crude oil prices lost ground early Monday as questions about balance start to resurface. Crude oil prices broke out of the mid-$40 range in mid June as demand factors started to show up as declining oil and gasoline inventories. Brent, the global benchmark for the price of oil, and West Texas Intermediate, the U.S. benchmark, both broke through the $50 mark late in the second quarter, but WTI lost grip on the psychological threshold in recent sessions. Efforts by the Organization of Petroleum Exporting Countries to balance the market through coordinated production declines have been offset at times by a U.S. shale oil sector that’s more […]

Oil Edges Down on Oversupply Concerns

7 Aug 2017   Prices

Oil futures edged down on Monday, on concerns about major oil producers’ wavering commitment to output caps and ahead of a meeting of the Organization of the Petroleum Exporting Countries. The two-day gathering in Abu Dhabi will discuss members’ compliance level to the output pact the cartel agreed with 10 other oil suppliers, including Russia, in late 2016. The deal so far hasn’t produced meaningful effects to tamp down global…

Oil steady near nine-week highs on fall in U.S. drilling activity

7 Aug 2017   Prices

 Oil prices held near nine-week highs on Monday, buoyed by robust U.S. jobs data last week and a slight fall in U.S. drilling, although rising output from OPEC capped gains. Global benchmark Brent crude futures LCOc1 were up 8 cents, or 0.15 percent, at $52.50 a barrel at 0059 GMT. U.S. crude futures CLc1 were up 7 cents, or 0.14 percent at $49.65 per barrel. Prices for both benchmarks have been on the rise, hovering near their highest since late May, when oil producers led by the Organization of the Petroleum Exporting Countries (OPEC) rolled over a deal to reduce output by 1.8 million barrels per day (bpd) until the end of next March. “Crude oil prices rose strongly as investors viewed (U.S. jobs) data as a positive sign for oil demand in the United States … A small fall in the number of drill rigs […]

Macroeconomic risks for the oil industry: Kemp

7 Aug 2017   Prices

The global oil industry now appears to be in the early stages of a cyclical expansion which is likely to see prices rise over the next few years, slowly at first but then accelerating later. Deep and long cycles in oil prices have been the defining characteristic of the industry since the 1860s (“Crude volatility: the history and the future of boom-bust oil prices”, McNally, 2017). The boom-bust cycle which started in late 1998, with prices briefly below $10 per barrel, and was only briefly interrupted by the recession of 2008/09, ended in January 2016, with prices briefly below $28. In the 18 months since then, the industry has returned to an expansion phase, with a gradual increase in prices and drilling activity, much of it centered on the shale plays of North America. Most of the industry’s cyclical indicators (production, consumption, stocks, investment, employment, prices, […]

Barclays: Oil Prices To Drop This Quarter

7 Aug 2017   Prices

The combination of bullish indicators that boosted oil prices last month are unlikely to last, and the price of oil in the third quarter is expected to drop from current levels, Barclays said in a recent research note. “Prices have moved higher, due to a perfect combination of a favorable macro environment, a seasonal uptick in consumption, continued inventory drawdowns, and geopolitical unrest,” according to Barclays’ note, as quoted by CNBC . However, the bank noted that “Certain factors that supported prices in July are unlikely to last, and we expect a downward correction during this quarter.” On the last day of July this past Monday, WTI prices closed above US$50 for the first time in more than two months. The price of WTI gained 9 percent in July, the best month since April 2016. But as we are moving into the second month of the third quarter, Barclays […]

Oil Rises Ahead of OPEC Meeting

7 Aug 2017   Prices

Oil futures pushed higher Friday as investors looked ahead to a planned meeting of the Organization of the Petroleum Exporting Countries next week. U.S. crude futures rose 55 cents, or 1.12%, to $49.58 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 41 cents, or 0.79%, to $52.42 a barrel on ICE Futures Europe. …

Shale Producers Hedge At Much Lower Prices

7 Aug 2017   Prices, Shale Oil

Shale oil producers are hedging again – this is the latest message coming from investment banks and analytical firms, according to Bloomberg . After hedging largely died down when WTI fell into a bearish market in June, now the risk-curbing activity is again on the rise. There is, however, a difference from the last hedging spree that took place after OPEC and Russia struck their output cut deal. Now, some E&Ps are hedging at prices as low as US$45 a barrel. Last December, shale boomers rushed to lock-in higher prices for their future output encouraged by the quick rise in Brent and WTI on expectations that the cut deal would take care of the global glut. This didn’t happen, however, and prices have been declining relatively steadily since February. Over the last two weeks, though, crude has enjoyed a rally on the back of renewed hopes for the success […]

Oil dips on high OPEC supplies, defying falling U.S. crude stocks

3 Aug 2017   Prices

Oil dipped on Thursday as a rally that has pushed up prices by almost 10 percent since early last week lost momentum despite renewed signs of a gradually tightening U.S. market. Strong demand in the United States provided prices with support, traders said, but ongoing high supplies from OPEC producers were restricting further gains. Brent crude futures, the international benchmark for oil prices, were trading down 17 cents, or 0.3 percent, at $52.19 per barrel at 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $49.44 per barrel, down 15 cents, or 0.3 percent, from their last settlement. U.S. crude prices held below $50 per barrel despite record gasoline demand of 9.84 million barrels per day (bpd) last week and a fall in commercial crude inventories in the week to July 28 of 1.5 million barrels to 481.9 million barrels, according to the U.S. […]

As Oil Prices Rise, Are Oil Bulls Too Optimistic?

3 Aug 2017   Prices

Optimism, at first tentative and in the last week more pronounced, has been taking over oil markets. Short positions on WTI were at a three-month low as of Monday, according to Bloomberg, while long positions continued to rise. The last couple of weeks have seen some strong indications that the oil market is returning to balance. The latest OPEC meeting with Russia in St. Petersburg on July 24 had Saudi Arabia pledge to further cut its crude exports from this month, and Russia’s Energy Minister said that global inventories have shrunk by 350 million barrels since last December. At the same meeting, Nigeria said it was willing to stop increasing its production once it reaches 1.8 million barrels of crude oil production daily. In the U.S., there were indications of a slowdown in the growth of shale oil production, with new rigs being added in smaller numbers amid warnings […]

Big Oil Seen Vulnerable to Fresh Slump Despite Growth at $50

3 Aug 2017   Prices

Europe’s oil industry is once again generating cash even as crude languishes at half the price of three years ago. Yet companies remain vulnerable to a renewed downturn. The region’s top three — Royal Dutch Shell Plc, Total SA and BP Plc — can now cover spending from cash flow with oil at $50 a barrel. But BP predicts prices will drop this year, while Shell talks of a “ lower forever” view. A fresh slump could put dividends at risk, and investors know it. Energy stocks are the worst performers in the MSCI World Index this year, with the 89 companies in the industry losing more than $146 billion in market value. High dividend yields — a signal that shareholders fear a cut in payouts — […]

Oil dips on high OPEC supplies, defying falling U.S. crude stocks

3 Aug 2017   Prices

Oil dipped on Thursday as a rally that has pushed up prices by almost 10 percent since early last week lost momentum despite renewed signs of a gradually tightening U.S. market. Strong demand in the United States provided prices with support, traders said, but ongoing high supplies from OPEC producers were restricting further gains. Brent crude futures, the international benchmark for oil prices, were trading down 17 cents, or 0.3 percent, at $52.19 per barrel at 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $49.44 per barrel, down 15 cents, or 0.3 percent, from their last settlement. U.S. crude prices held below $50 per barrel despite record gasoline demand of 9.84 million barrels per day (bpd) last week and a fall in commercial crude inventories in the week to July 28 of 1.5 million barrels to 481.9 million barrels, according to the U.S. […]

Goldman: $50 Oil More Profitable Than $100 Oil

Big international oil companies are currently generating more cash at around-US$50 oil price than they did when the price of oil exceeded US$100 in early 2014, Goldman Sachs reckons. “Simplification, standardization and deflation are repositioning the oil industry for better profitability and cash generation in the current environment than in 2013-14 when the oil price was above $100 a barrel,” Goldman Sachs analysts said in a research note on Wednesday, as quoted by Bloomberg . Cost cuts and refocusing strategies have allowed Big Oil to adapt to the lower-for-longer oil prices. At US$100 oil price, the majors were spending en masse on giant projects, but these mega projects are now coming online and are starting to produce oil, revenues, and cash, according to Goldman. At the same time, the big firms have slashed expenditure and costs since the price of oil started tumbling in the second half of 2014. […]

Oil Rises After Inventory Data

3 Aug 2017   Prices

Oil prices rose Wednesday after U.S. data showed that crude inventories continued to shrink and gasoline demand climbed to a record last week. U.S. crude futures settled up 43 cents, or 0.87%, to $49.59 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 58 cents, or 1.12%, to $52.36 a barrel on ICE Futures…

Oil prices fall on surprise rise in U.S. inventories, high OPEC output

2 Aug 2017   Prices

Oil fell on Wednesday, with rising U.S. fuel inventories pulling U.S. crude back below $50 per barrel, while ongoing high supplies from producer club OPEC weighed on international prices. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $48.85 per barrel at 0046 GMT, down 31 cents, or 0.6 percent, from their last settlement. That came after the contract opened above $50 for the first time since May 25 on Tuesday. Brent crude futures LCOc1, the international benchmark for oil prices, were trading down 30 cents, or 0.6 percent, at $51.48 per barrel. The American Petroleum Institute (API) said late on Tuesday that U.S. crude stocks rose by 1.8 million barrels in the week ending July 28 to 488.8 million, hitting hopes that recent inventory draws were a sign of a tightening U.S. market. In global markets, prices were weighed down by a survey this […]

Oil Slides as Industry Is Said to Report Unexpected Crude Build

2 Aug 2017   Prices
Oil Slides as Industry Is Said to Report Unexpected Crude Build

Oil extended its slide below $50 a barrel after an industry report was said to show U.S. crude inventories unexpectedly jumped.  Crude stockpiles climbed by 1.78 million barrels last week in an American Petroleum Institute report released Tuesday, according to people familiar with the data. That would be the first crude build since the end of June when compared with Energy Information Administration data. Yet, a Bloomberg survey showed nationwide crude inventories probably fell last week. The EIA will release its inventory data Wednesday.  “Any build in inventories at this point is negative for the market because this is the time of year when inventories drop naturally anyway,” James Williams, an economist at London, Arkansas-based energy-research firm WTRG Economics, said by telephone.

Oil settled above $50 for the first time since May on Monday. While the Organization of Petroleum Exporting Countries and its allies work to rebalance the market and trim global inventories, doubts remain that supplies will increase from elsewhere, with the U.S. oil rig count at the highest level since April 2015.  West Texas Intermediate for September delivery was at $48.68 a barrel at 4:50 p.m. on the New York Mercantile Exchange in aftermarket trading. Prices closed at $49.16 a barrel Tuesday. Total volume traded was about 41 percent above the 100-day average.

Bulls Crushed As Oil Crashes Again

2 Aug 2017   Prices

(Click to enlarge) (Click to enlarge) (Click to enlarge) Chart of the Week (Click to enlarge) • The EIA published a new report on global oil chokepoints, or narrow channels that pose a vulnerability in the oil trade. • The Strait of Hormuz is the most strategic and important chokepoint in the world, a narrow channel that sees 18.5 million barrels of oil pass through it every single day. • The Strait of Malacca is the other highly important chokepoint, with 16 mb/d of oil passing through daily, mostly Middle Eastern oil heading for China. Market Movers • Penn Energy (OTCQX: PVAC) agreed to buy $205 million worth of Eagle Ford assets from Devon Energy (NYSE: DVN). • Natural gas prices fell 5 percent on Monday on weather forecasts predicting below-average temperatures for the next two weeks. September contracts moved down to $2.79/MMBtu in the largest daily loss in […]

Have Oil Majors Really Adapted To $50 Oil?

2 Aug 2017   Prices

The oil majors, by and large, have posted dramatically better financial figures for the second quarter, a sign that their cost reduction efforts are bearing fruit. They are no longer in the red, but at the same time, there is little chance that they will return to aggressive growth. Here is a quick rundown of the headline figures for some of the largest publicly-traded oil companies in the world: ExxonMobil : $3.35 billion in profits , double from a year earlier Chevron : $1.45 billion in profits , up from a loss in the second quarter of 2016 Royal Dutch Shell : Net profit (on a current cost of supplies (CCS) basis) $3.6 billion, up more than triple from a year earlier Total SA : Profits of $2.5 billion, up 14 percent from a year earlier Statoil : Profits of $3 billion, three times higher than 2Q2016 BP : […]

U.S. gas prices for August could be the highest for the year

2 Aug 2017   Prices, USA

Peak summer demand and declining levels of supplies, both domestic and foreign, mean spikes in the price of gas for U.S. consumers, market analyses find.  Motor club AAA reports a national average retail price for a gallon of regular unleaded gasoline at $2.32 for Tuesday, up a fraction of a percent from Monday and 1.75 percent, or 4 cents per gallon, higher than last week. All but three states reports hikes in the price at the pump during the last week. e official summer driving season is nearing a peak and domestic inventories are moving lower, which means higher gasoline prices for the near future, AAA spokesperson Jeanette Casselano said in a statement.  “As summer moves forward, the days of dropping summer gas prices appear to be behind us for now,” she said. “U.S. crude inventories are moving in the opposite direction of demand – a perfect storm for continued price increases heading into August.”  A July forecast from the U.S. Energy Information Administration put the average price per gallon for the summer driving season, which runs through September, at $2.38, about 7 percent, or 15 cents, higher than the average last summer.  The West Coast market is the most expensive in the country, with California holding the distinction as the state in the Lower 48 with the highest price at $2.94 per gallon, but were also more or less stable compared with last week. In its weekly retail market report, AAA found supply and demand were in check, as a breakdown at a Phillips 66 refinery was offset by a 200,000 barrel jump in gasoline inventories in the market.