Prices

Oil prices fall on bloated U.S. crude storage

22 Mar 2017   Prices

Oil prices dipped on Wednesday as rising crude stocks in the United States underscored an ongoing global fuel supply overhang despite an OPEC-led effort to cut output. Prices for front-month Brent crude futures, the international benchmark for oil, were at $50.92 per barrel at 0051 GMT, down 4 cents from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 8 cents at $48.16 a barrel. “Crude oil prices fell as concerns over rising U.S. inventories resurfaced… Rising exports in Libya also weighed on prices,” ANZ bank said on Wednesday. U.S. crude oil inventories rose by 4.5 million barrels in the week to March 17 to 533.6 million, the American Petroleum Institute (API) said late on Tuesday. The bloated storage comes as U.S. oil production has risen over […]

Oil Prices Fall As Markets Lose Faith In OPEC Output Cut Extension

22 Mar 2017   Prices

Crude prices are coming under selling pressure once again, as oversupply concerns dwarf OPEC production cut expectations. As equity markets join oil prices in charging lower, hark, here are six things to consider in oil markets today. 1) In in the aftermath of the OPEC production cut, Middle East producers have chosen to keep Asian customers well supplied, by swinging their exports east of the Suez. This is illustrated in our ClipperData below, which shows January loadings bound for Asia from Saudi Arabia and Iraq were nearly 800,000 bpd higher than October’s reference level, while flows heading west of Suez to North America were up just 50,000 bpd. This has flipped in March, however, with loadings bound for North America rising nearly 800,000 bpd versus October’s benchmark, while loadings bound for Asia are down nearly 300,000 bpd. We have said before that China is such a big market participant […]

NYMEX April natural gas continues rise, settling 5.2 cents higher

22 Mar 2017   Prices

The NYMEX April natural gas contract continued to march higher Tuesday, climbing 5.2 cents to settle at $3.093/MMBtu on a tightening supply-demand balance characterized by strong LNG feedgas deliveries, March demand above year-ago levels and a 2.8 Bcf/d year-on-year dip in production. “Late season cold strengthened the heating demand and LNG exports revived,” helping to provide support to a sustained recovery of the prompt-month contract throughout March, Viraj Sawant, energy market analyst with Gelber & Associates stated, echoing the tightening supply-demand balance. According to data from Platts Analytics’ Bentek Energy , total US demand for March to date maintains a 5.5 Bcf/d margin above 2016 levels, reaching an average around 82.3 Bcf/d. Total US dry gas production has dipped 2.8 Bcf/d from a year ago to reach a March to date average of 70.8 Bcf/d, resulting in a tighter supply-demand balance. LNG feedgas has been a key outlet for […]

U.S. oil production keeping oil prices low

22 Mar 2017   Prices, Shale Oil

Crude oil futures started the day slightly improved Tuesday after falling for seven of the last 10 sessions.  Prices remained below the $50 per barrel mark, an improvement on January 2016’s fall to below $30 per barrel, but well below the $100 per barrel seen 2014. Oil is regarded as a barometer of the global economy, and while stocks have traded up since the start of President Donald Trump‘s administration, the bump seen in stock prices in other sectors of the economy may not be showing up for the oil industry soon.  Producers in the United States are partially responsible for the current oversupply in oil. Global supply increased by 260,000 barrels per day in February, to 96.52 million barrels per day, and U.S. production is the highest it has been in a year, at 9.1 million barrels per day, roughly the amount Saudi Arabia produced in February.  The United States also has 528.4 million barrels in storage, seven percent more than it stored a year ago. The U.S. effort largely nullified a 2016 agreement by OPEC, Russia and 10 non-OPEC oil producing nations to limit production, which sent oil prices to about $55 per barrel but encouraged U.S. producers to pump more oil.

Oil Falls on Growing U.S. Drilling Activity

21 Mar 2017   Prices

Oil prices extended losses on Monday to trade near a four-month low after increased drilling activity in the U.S. indicated a strong rise in production was coming. U.S. crude futures settled down 56 cents, or 1.15%, at $48.22 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 14 cents, or 0.27%, at $51.62 a barrel on ICE Futures Europe. Oil prices have fallen by around 10% since the start of the…

Bullish Crude Bets Cut by Most Ever as Price Falls Below $50

21 Mar 2017   Prices

The exodus of oil-price optimists has begun. Money managers cut bets on rising West Texas Intermediate crude by a record amount during the week ended March 14, while wagers on a further price drop doubled as oil remained below $50 a barrel. “It’s sort of a negative feedback loop, where money managers were selling because the price was falling, and the price was falling in part because money managers were selling,” said Tim Evans, an analyst at Citi Futures Perspective in New York, in a telephone interview. Bets on rising WTI crude during the report week were reduced by the most on record in data going back to 2006, the U.S. Commodity Futures Trading Commission announced Friday. The cuts came as prices tumbled below $50 a barrel for the first time this year, and anxious executives discussed rising U.S. rig counts at an industry meeting in Houston. On Monday, […]

Oil Drops as U.S. Drilling Growth Threatens to Counter OPEC Cuts

20 Mar 2017   Prices

Oil fell as U.S. drilling continued to rise, undermining the potential for even an extended OPEC output-reduction deal to rebalance the market. Futures lost as much as 1.6 percent in New York after gaining 0.6 percent last week. Producers added more oil rigs to U.S. fields, extending a drilling surge into a 10th month, Baker Hughes Inc. said on Friday. Saudi Arabia is ready to extend cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said in an interview on Bloomberg Television last week. U.S. oil this month dropped below $50 a barrel for the first time this year as the nation’s near-record crude stockpiles and increasing production weighed on the output reductions by the Organization of Petroleum Exporting Countries and its allies. While OPEC won’t decide until May whether to prolong the curbs, energy ministers including Russia’s Alexander Novak will meet this weekend in Kuwait […]

Oil prices drop on rise in U.S. drilling

20 Mar 2017   Prices

Oil prices fell on Monday as rising U.S. drilling activity and steady supplies from OPEC countries despite touted production cuts pressured already-bloated markets. Prices for front-month Brent crude futures, the international benchmark for oil, were 20 cents below their last settlement at 0025 GMT (8:25 p.m. ET on Sunday), at $51.56 per barrel. U.S. West Texas Intermediate (WTI) crude futures were down 28 cents at $48.50 a barrel. Traders said that prices were under pressure due to rising U.S. drilling activity and ongoing high supplies by the Organization of the Petroleum Exporting Countries (OPEC) despite its pledge to cut output by almost 1.8 million barrels per day (bpd) together with some other producers like Russia. “Crude oil has attempted to break out of the trading range that formed last […]

Bullish Crude Bets Cut by Most Ever as Price Falls Below $50

20 Mar 2017   Prices

The exodus of oil-price optimists has begun. Money managers cut bets on rising West Texas Intermediate crude by a record amount during the week ended March 14, while wagers on a further price drop doubled as oil remained below $50 a barrel. “It’s sort of a negative feedback loop, where money managers were selling because the price was falling, and the price was falling in part because money managers were selling,” said Tim Evans, an analyst at Citi Futures Perspective in New York, in a telephone interview. Bets on rising WTI crude during the report week were reduced by the most on record in data going back to 2006, the U.S. Commodity Futures Trading Commission announced Friday. The cuts came as prices tumbled below $50 a barrel for the first time this year, and anxious executives discussed rising U.S. rig counts at an industry meeting in Houston. On Monday, […]

Oil Prices Seen Stuck Below $60 This Year as High Stocks Persist

20 Mar 2017   Prices

An historic agreement between OPEC countries and other oil producers to reduce their output won’t be enough to nudge crude prices above $60 a barrel this year, according to energy lender Arab Petroleum Investment Corp.  Consumer countries have built up large stockpiles of crude during nearly three years of low prices, and U.S. shale production is rebounding as prices have recovered since OPEC reached the production deal November. That means the process of balancing the market will take at least until the second half of this year, the company known as Apicorp said Monday in a report.  The inability to balance the market in the first half of the year will mean the Organization of Petroleum Exporting Countries should extend the six-month deal, which took effect on Jan. 1, for the rest of the year, it said. OPEC meets in Vienna on May 25.  “While oil prices are expected to recover toward the end of the year, they will remain in the $50-$60 band given the high level of stocks,” Apicorp said. “We expect OPEC to maintain the agreed production quota at around 32.5 million barrels a day for the rest of the year.” Brent crude was trading at about $51 a barrel at 10:26 a.m. in Dubai.

Bets soar that NYMEX crude futures will head lower:

18 Mar 2017   Prices

Money managers’ position in NYMEX crude futures took a bearish turn in the latest reporting period, according to US Commodity Futures Trading Commission data released Friday. The CFTC data confirmed what analysts suspected was a drastic shift in speculative positioning recently after crude futures fell sharply March 8 and kept declining until a week later, when prices found some support. A sharp buildup in speculative net length left the market vulnerable to the downside, analysts said. Net length rose after OPEC’s supply-cut deal was announced November 30, and accelerated this year. It reached a record-high 405,328 contracts the week ending February 21, according to CFTC data. Article continues below… The following two reporting periods saw money managers cut back slightly on net length, but longs still outnumbered shorts by a nearly 7:1 ratio. But for the week that ended March 14, longs-to-shorts stood at a 3:1 ratio, driven by […]

Oil prices edge up as drop in U.S. crude stocks eases glut worries

18 Mar 2017   Prices

An oil derrick and wind turbines stand above the plains north of Amarillo, Texas, U.S., March 14, 2017. Oil prices edged up on Friday as a drawdown in U.S. crude inventory eased concerns about a global supply glut. Brent crude was up 7 cents, or 0.14 percent, at $51.81 per barrel at 8.21 p.m. ET, after closing the previous session down 7 cents at $51.74. U.S. West Texas Intermediate crude (WTI) was up 11 cents, or 0.23 percent, at $48.86 a barrel. Official data showed crude inventories in the United States, the world’s top oil consumer, fell last week as imports plunged, dropping after nine consecutive increases. [EIA/S] Crude stockpiles fell by 237,000 barrels in the week to March 10, beating analyst expectations for an increase of 3.7 million barrels. “Saudi Arabian Energy Minister Khalid Al-Falih continued to express concern about high global inventories,” ANZ said in a note. […]

Oil Set for Weekly Gain as Saudis Say Willing to Extend Curbs

18 Mar 2017   Prices

Oil headed for a weekly increase as U.S. stockpiles retreated from record levels while Saudi Arabia said it’s prepared to continue production curbs in the second half of the year. Futures were little changed in New York, up 0.9 percent for the week. U.S. inventories last week fell for the first time this year, according to Energy Information Administration data on Wednesday. Output curbs by OPEC and its partners may continue past June if global stockpiles remain above the five-year average, according to Saudi Arabia’s Energy Minister Khalid Al-Falih. Oil last week broke below $50 a barrel for the first time since December as rising U.S. output countered production curbs by members of the Organization of Petroleum Exporting Countries and other nations. While markets are still struggling to clear a surge in supply from OPEC at the end of 2016, compliance with the cuts remains above 90 percent, the […]

Weak Physical Oil Market Hits $50 Billion Hedge Funds’ Bet

18 Mar 2017   Prices

The real world of oil trading — where actual cargoes are bought and sold — is doing little to help the hedge funds and other speculators who placed record bets that OPEC and its allies would drive up prices. Saudi Arabia, Russia and other big producers are trying to clear a global crude glut, but three months into the effort the physical oil market is still signaling plentiful supplies. The persisting excess offers little comfort to financial traders, whose bets that futures prices will rise equate to about $50 billion in nominal terms. The signs of physical oversupply abound from Europe to West Africa to the U.S. A North Sea grade that helps to set the global Brent benchmark is trading near its weakest in almost two years. In West Africa, lackluster demand means Angolan crude cargoes are selling more slowly than in previous months. In America, a closely […]

Oil prices edge up as drop in U.S. crude stocks eases glut worries

17 Mar 2017   Prices

Oil prices edged up on Friday as a drawdown in U.S. crude inventory eased concerns about a global supply glut. Brent crude was up 7 cents, or 0.14 percent, at $51.81 per barrel at 8.21 p.m. ET, after closing the previous session down 7 cents at $51.74. U.S. West Texas Intermediate crude (WTI) was up 11 cents, or 0.23 percent, at $48.86 a barrel. Official data showed crude inventories in the United States, the world’s top oil consumer, fell last week as imports plunged, dropping after nine consecutive increases. [EIA/S] Crude stockpiles fell by 237,000 barrels in the week to March 10, beating analyst expectations for an increase of 3.7 million barrels. “Saudi Arabian Energy Minister Khalid Al-Falih continued to express concern about high global inventories,” ANZ said in a note. […]

Oil Set for Weekly Gain as Saudis Say Willing to Extend Curbs

17 Mar 2017   Prices

Oil headed for a weekly increase as U.S. stockpiles retreated from record levels while Saudi Arabia said it’s prepared to continue production curbs in the second half of the year. Futures were little changed in New York, up 0.9 percent for the week. U.S. inventories last week fell for the first time this year, according to Energy Information Administration data on Wednesday. Output curbs by OPEC and its partners may continue past June if global stockpiles remain above the five-year average, according to Saudi Arabia’s Energy Minister Khalid Al-Falih. Oil last week broke below $50 a barrel for the first time since December as rising U.S. output countered production curbs by members of the Organization of Petroleum Exporting Countries and other nations. While markets are still struggling to clear a surge in supply from OPEC at the end of 2016, compliance with the cuts remains above 90 percent, the […]

Wall Street Bullish On Oil Prices Despite Saudi Warnings

17 Mar 2017   Prices

Oil prices have given up some of the gains achieved since the OPEC deal was agreed to in late November, and confidence in the buoyancy of crude prices is starting to falter. There are plenty of reasons why: U.S. shale is coming back; OPEC cuts led to higher prices in December, but have had little effect since then; crude and refined product inventories are still extraordinarily high; and speculative bets are looking overly optimistic at this point. But the major investment banks tracking oil markets are surprisingly steadfast in their predictions that the market is proceeding steadily towards balance, albeit at a slow pace. A roundup of the latest research notes from Wall Street banks show little fear of a major downslide in prices. Bloomberg points out that Goldman Sachs, Morgan Stanley, Bank of America and Citigroup are all sticking to their predictions of moderate price gains this year. […]

Why Oil Demand May Be Higher Than Expected

17 Mar 2017   Energy Demand, Prices

Investors fretting about too much oil supply may get some cheer from demand, or at least the statistics that consistently underestimate it. The International Energy Agency’s closely watched annual estimates of global crude demand have been revised up for the past seven years by an average of 880,000 barrels a day, according to a Wall Street…

Oil prices extend gains after drop in U.S. stockpiles

17 Mar 2017   Prices

Crude oil prices rose on Thursday to extend gains from the previous session after official government data showed U.S. stockpiles had eased from record highs. Prices surged on Wednesday after a slew of market reports and official data offered some hope that a near three-year global glut in oil is coming to an end, albeit more slowly than many have anticipated. The market was also buoyed after the Federal Reserve raised interest rates in line with expectations but did not signal any pick-up in the pace of further rises. U.S. West Texas Intermediate (WTI) crude was up 39 cents, or 0.8 percent, at $49.25 a barrel by 0734 GMT, having surged 2.4 percent in the previous session while posting its first increase in eight days. Brent futures climbed 47 cents, or 0.9 percent, to $52.28. They had […]

Oil Prices Rally on Report of Drop in U.S. Inventory

16 Mar 2017   Prices

Oil prices rose Wednesday, snapping a week-long losing streak, as a drop in U.S. stockpiles supported a rally from Tuesday’s three-month lows. Light, sweet crude for April delivery settled up $1.14, or 2.4%, at $48.86 a barrel on the New York Mercantile Exchange. That is its biggest one-day gain since Jan. 11. Brent crude, the global benchmark, gained 89 cents, or 1.7%, to $51.81 a barrel on ICE Futures Europe. Crude levels in…

Citi Tells Investors to Stop Worrying and Learn to Love Oil

16 Mar 2017   Oil Supply, Prices

Buy oil now, and count on Saudi Arabia for support, according to Citigroup Inc.  OPEC’s output cuts aimed at easing a global glut are “real” and is cleaning up the market, analysts including Seth Kleinman wrote in a report dated March 14. While prices have dropped recently amid rising U.S. inventories and drilling activity, investors should take advantage of the slide because the Saudis are likely to defend prices this year, according to the bank.  The bank’s comments are similar to Goldman Sachs Group Inc., which called for investors to be patient and said they should go, or stay, long on oil. Prices last week fell below $50 for the first time since December on concern rising U.S. output will offset curbs by the Organization of Petroleum Exporting Countries and other producers. While Saudi Arabia told OPEC it dialed back on some of its cuts last month, the extra supplies were moved into storage and the kingdom said it remains determined to stabilize the market.

View full article at www.bloomberg.com

Oil Gains on U.S. Supply as IEA Says Time Needed to Drain Glut

15 Mar 2017   Prices

Oil rebounded above $48 a barrel amid a reported decline in U.S. crude stockpiles as the International Energy Agency said the market needs time to drain a global inventory glut. Futures advanced as much as 2.4 percent in New York after slumping almost 11 percent the previous seven sessions. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles rose for a 10th week. Oil markets are still struggling to clear a surge in supply from OPEC at the end of last year, according to the International Energy Agency. Oil last week broke below $50 a barrel for the first time since December as rising U.S. supply has swamped the impact of supply reductions from members of the Organization of Petroleum Exporting Countries and 11 other nations that started Jan. 1. While an OPEC […]

Oil prices jump after surprise U.S. stock draw

15 Mar 2017   Prices

Oil prices rebounded from three-month lows on Wednesday after industry data showed a surprise drawdown in U.S. crude stockpiles and as Goldman Sachs put a positive spin on OPEC’s compliance with output cuts. U.S. West Texas Intermediate crude CLc1 was trading up 81 cents, or 1.7 percent, at $48.53 a barrel by 0749 GMT. That came after the contract fell for a seventh session on Tuesday in its longest losing streak since January 2016. Brent futures were up 71 cents, or 1.4 percent, at $51.63, after settling down 43 cents at $50.92 on Tuesday, their lowest finish since November. U.S. crude stocks fell by 531,000 barrels last week, industry group the American Petroleum Institute said on Tuesday after settlement. [API/S] That compared with analyst expectations for an increase of 3.7 million […]

Why Last Week’s Oil Price Crash Was Inevitable

15 Mar 2017   Prices

For traders who were paying attention, the weekly COT (Commitments of Traders) reports from the CFTC (U.S. Commodity Futures Trading Commission) have recently been screaming out a warning…crude oil bear market ahead. What the COT reports were showing was wildly bullish investor sentiment matched with equally extreme hedging activity as investors piled into the WTI crude oil futures contract. While bullish sentiment peaked as of the 10 February report, as recently as the beginning of March, hedge funds and other large speculative (that is non-commercial) players held near-record net long positions in WTI crude oil futures. Commercials are industry players who are largely hedgers and are usually considered smart money. In fact, total net long positions were just over 525,000 contracts for the week ended February 28, 2017, as concurrently the U.S. rig count had increased to 609 and inventories had risen for an eighth week in a row […]

Brent spreads become battleground amid doubts over oil rebalancing

15 Mar 2017   Prices

Global oil markets are gradually rebalancing, but progress has been slower and more uneven than the Organization of the Petroleum Exporting Countries and bullish hedge funds expected. OPEC as well as most commentators, crude traders and hedge funds have assumed the rebalancing of the oil market will be accompanied by a shift from contango towards backwardation in oil futures prices. Officials at the producer group have focused on the shift to backwardation as a key indicator of whether their policies are working. Hedge funds and physical traders appear to have been trading around the futures curve as they speculate on when and how quickly the oil market will tighten. But OPEC officials acknowledged in Houston last week that the rebalancing and the shift to backwardation had not […]

Five things to watch as oil prices fall

15 Mar 2017   Prices

1. Shale The US shale industry has come back with a bang, with oil prices back above $50 a barrel. After two years of contraction, the US Energy Information Administration sees output rising 300,000 barrels a day to 9.2m b/d in 2017 before adding a further 500,000 b/d next year. Those are already big numbers but only tell half the story. The industry has squeezed down costs during the two-year downturn and executives are talking up efficiency and production gains that lead many to forecast an even bigger rebound.

2. Opec Stronger than expected North American production poses a serious threat to Opec. The 13-member cartel successfully boosted prices after they agreed supply cuts late last year, bringing other big producers from outside the group — such as Russia — onboard. But after the initial rally in December prices flatlined above $50 a barrel for the first two months of 2017, despite signs the group was collectively coming close to its output target. The group faces a difficult decision when it next meets on May 25.

3. Inventories The biggest short-term problem for Opec is that US inventories keep on rising. The sell-off really got going last week after the EIA reported crude stocks had gone up for the ninth consecutive week to an all-time high of more than 528m barrels. While some analysts argue stocks are tightening elsewhere in the world, the US has by far the best — and most timely — data, giving it an outsized influence over the market. The US also remains the world’s biggest oil consumer, making it the key battleground between shale and Opec.

4. Hedge funds Investors had lined up to back Opec’s cuts, amassing the biggest ever bet on rising prices in the first two months of this year. Across Brent and US benchmark West Texas Intermediate their net long position — the difference between bets on rising and falling prices — had reached 951m barrels, or the equivalent of 10 days of oil demand, by February 21. But oil’s failure to break higher in 2017 meant that position was getting more expensive to defend. Traders say it is not surprising funds have started to scale back their position — a move that probably accelerated after Wednesday’s drop.

5. Demand If the supply picture has many moving parts, demand should be easier to track, and may provide some comfort to Opec. The group raised its estimates and predicts growth at almost 1.3m b/d to average 96.3m b/d in 2017. While the rise of electric cars has led some big players in the industry to warn of peak oil demand in the near future, others are far more sceptical. Analysts at Morgan Stanley point out that the conventional global car fleet is increasing by 40m a year, net of scrapping. That alone should account for about 600,000 b/d of growth, or half the 10-year average. Higher use in planes, freight and petrochemicals will also boost consumption.

An OPEC Deal Extension Won’t Affect Oil Prices

15 Mar 2017   Prices

The possibility of OPEC deciding to extend the deadline of its November 30 oil output cut agreement is growing, according to one former senior U.S. energy official. Former Assistant Secretary of Energy Chuck McConnell told Sputnik, however, that this decision will hardly affect prices in any significant way. McConnell’s comments come on the heels of reports that Kuwait has called for an extension of the deal – the first OPEC member to acknowledge the fact that international oil markets are not regaining their balance as fast as initially expected by the group, thanks largely to growing U.S. production. Although there are expectations that prices will soar if OPEC announces an extension, McConnell believes this will not be the case, because the market is already relatively stabilized. Besides, he said, “I think the OPEC situation and the deal is not a governing factor for how the market will go forward. […]

Drop in crude oil prices keep U.S. gas prices low

15 Mar 2017   Prices

A drop in crude oil prices was a relief for U.S. consumers who saw retail gas prices drop in kind, but the relief may be short-lived, a market analysis finds. Motor club AAA reports a national average retail price for a gallon of regular unleaded at $2.29, a slight drop from the previous day and the eleventh consecutive day for a decline. That follows a dramatic drop last week in crude oil prices, which account for the bulk of what consumers pay at the pump. “Gas prices may continue to drop in the near future due to declining crude oil prices and a well-supplied market, but will begin to creep up again over the next month due to seasonal refinery maintenance and […]

Natural Gas Prices Could Plunge Below $2

So far this year, natural gas has performed the worst among major commodities, posting painful losses in January and February. It has rebounded somewhat in the last few weeks, but hovering around $3 per MMBtu, gas prices are still sharply lower compared to the fourth quarter. Changes in seasonal temperatures are a pivotal factor for natural gas markets, and warmer winters mean weaker demand. Natural gas consumption spikes during winter months as millions of people crank up the heat, while consumption patterns descend into valleys in the spring and fall, with a smaller peak in the summer. A bout of warm weather during winter can upend gas demand forecasts. And that is exactly what happened this year. According to NOAA, the U.S. just posted its second warmest February on record, dating back to when data collection began in the 19th century. Average temperatures were 7.3 degrees higher than average. […]

Oil hovers near three-month lows as investors await data

14 Mar 2017   Prices

Crude oil prices hovered near three-month lows on Tuesday in early Asian trading as investors await key reports and data that may shed light on a supply overhang in the global market. U.S. West Texas Intermediate crude (WTI) CLc1 edged down 3 cents to $48.37 a barrel by 0026 GMT(8.26 p.m. ET). The contract ended down 9 cents in the previous session after touching $47.90, the lowest since the end of November. Brent crude futures LCOc1 were down 1 cent at $51.34 a barrel, having settled down 2 cents on Monday after dipping to as low as $50.85. Prices fell sharply last week as investors worried that swelling U.S. crude supplies would hinder OPEC’s efforts to restrict output and reduce a global glut. Prices had risen after the Organization of […]

Oil prices drop as hedge funds head for the exit

14 Mar 2017   Prices

Hedge funds and other money managers had barely started liquidating their record bullish position in crude oil futures and options before prices tumbled on March 8. The critical question is how much more of the position will need to be liquidated before the market stabilizes again. Hedge funds still held a net long position in the three major Brent and WTI futures and options contracts amounting to 874 million barrels at the close of business on March 7 ( tmsnrt.rs/2mRYP96 ). Fund managers had reduced their net position by 16 million barrels compared with the previous week and by a total of 77 million compared with the record of 951 million barrels set on Feb. 21. The net position has been trimmed in the two weeks ending […]

Oil Executives Are Confident That the Future Is Bright

14 Mar 2017   Prices

Oil prices are down nearly 10 percent over the past month, leading some to wonder if we’re set for a resumption of the plunge seen between 2014 and early 2016. Executives at oil companies, however, are optimistic. A new note from Goldman Sachs Group Inc. dives into fourth quarter earnings calls to get a sense of how these CEOs were dealing with the downturn that has been dragging on for nearly three years. The team of strategists, led by Peter Hackworth, came away with good news for oil bulls. “There is one clear message from the 1,000 plus pages of fourth quarter transcripts: that most CEOs believe that the worst is over, and the time for growth is now,” the team writes. “While some management teams expressed more caution than others, the industry as a whole is retooling,” they said, adding that they estimate 85 percent of the companies […]

Oil Bulls Exit Before Market Dive on Swollen U.S. Stockpiles

14 Mar 2017   Prices

Oil’s fall from grace last week started with hedge funds, and it may only get worse from here. Investors cut bullish wagers on West Texas Intermediate crude to a one month-low, according to U.S. Commodity Futures Trading Commission data, a move that came just prior to a market dive that sent prices below $50 a barrel for the first time since December. “This report is just the beginning,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “The volume and breadth of the decline this week show that there was massive liquidation. Next week’s report will be the blockbuster.” Optimism about an agreement between the Organization of Petroleum Exporting Countries and some non-OPEC producers to cut output is fizzling as stockpiles continue to climb and U.S. drilling rigs are returning at the fastest rate since 2012. The slide in oil […]

New oil price slump beckons, says Harvard’s Maugeri

14 Mar 2017   Prices

Leonardo Maugeri of Harvard University, who in 2012 predicted a glut in oil supplies and a steep fall in prices, has warned that there is again a prospect that the market is heading for “a substantial fall”. Strong growth in global supply, he argues in a new paper, is outpacing the increase in demand, in spite of the production cuts agreed by Opec and 11 non-Opec countries last year. “It’s not too early to raise a red flag,” he writes. “Unless oil demand growth rebounds to record levels in 2017, oil prices could head for another substantial fall.” Oil prices slumped last week and broke out of a long standing range. West Texas Intermediate crude is now trading below $49 a barrel for the first time since December. A return to growth in the US shale oil industry, which has been bouncing back strongly after the downturn of 2014-16, is one of the principal contributors to excess supply, he adds, but there is also additional production coming on stream from multiyear developments that were approved before crude prices slumped.

Will Trump Send Oil Prices Crashing?

14 Mar 2017   Prices, USA

Oil markets are looking particularly bearish this week, with WTI once again below $50, the OPEC cuts in jeopardy over Iran and Iraq ramping up production, the second U.S. shale revolution underway, and an overwhelming U.S. supply glut which shows no signs of easing. In this environment, signs that President Donald Trump’s energy policies could further disrupt markets are worrying for the industry. With his pro-drilling nominations for the Departments of State, Energy, Interior, and EPA, the American renaissance of oil and natural gas production is set to skyrocket, which will cause prices of WTI and Brent to move lower in the foreseeable future. Some of the geopolitical conflicts that could offset this downward pressure are: 1) Rising tensions in East Asia involving the U.S., China, South Korea, and Japan, 2) Iran’s aggressive stances towards the west, 3) Russia’s movements against NATO in Ukraine, and 4) the possible collapse […]

NYMEX April gas rises 3.5 cents to $3.043/MMBtu

14 Mar 2017   Prices

The NYMEX April natural gas futures contract continued to increase Monday, fueled by strong demand as weather forecasts indicate winter is not over just yet. This on the heels of three straight sessions of gains that have seen the prompt month increase 21.9 cents since the March 7 close of $2.824/MMBtu. However, prices may face headwinds later in the week as warmer weather is expected to return in a few weeks for a majority of the continental US. The NYMEX April contract settled trading at $3.043/MMBtu Monday, up 3.5 cents, and traded in a range between $3.028/MMBtu and $3.089/MMBtu in the session. The National Weather Service’s six- to 10-day forecast called for most of the continental US to see temperatures rise above normal, except for a small portion of the Pacific Northwest and the Northeast. This pattern is expected to hold through the rest of the month. Temperatures plummeted […]

Oil Steadies Below $49 as U.S. Drilling Threatens Longer Glut

13 Mar 2017   Prices

Oil steadied below $49 a barrel as U.S. drillers continued to boost activity, countering OPEC’s efforts to drain a global glut. Futures were little changed in New York after falling 9.1 percent last week, the biggest weekly loss since November. Rigs targeting crude in the U.S. rose to the most since September 2015, according to Baker Hughes Inc. In Libya, crude production dropped 11 percent as clashes among rival armed groups led to the closure of some of the OPEC nation’s biggest oil-export terminals. Oil last week broke below the $50 a barrel level it had held above since the Organization of Petroleum Exporting Countries and 11 other nations started trimming supply on Jan. 1. U.S. crude stockpiles have climbed to a record and production surged to the highest in more than a year, while Saudi Arabia’s Oil Minister Khalid Al-Falih said global supplies are falling slower than expected. […]

Oil prices hit three-month low as U.S. rig count climbs

13 Mar 2017   Prices

Oil prices dropped to their lowest in three months on Monday despite OPEC efforts to curb crude output, dragged down as U.S. drillers kept adding rigs. Brent crude LCOc1 had by 0011 GMT (8:11 p.m. ET) fallen 42 cents, or 0.82 percent, to its lowest since Nov. 30 at $50.95 per barrel. It closed the previous session down 1.6 percent at $51.37 a barrel. U.S. West Texas Intermediate crude (WTI) CLc1 declined 50 cents, or 1.03 percent, to $47.99 a barrel, its weakest since Nov.29. U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes said on Friday, as energy companies increased spending to take advantage of a recovery in crude prices since the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut output late last year. [RIG/U] OPEC and […]

Race to Bottom on Costs May Cause Oil to Choke on Supplies

13 Mar 2017   Oil Supply, Prices

Houston hosted two events this week: the nation’s largest energy conference and the town’s famous rodeo. They have more in common than you’d think. In both cases, the key for top performers is how efficiently they perform. For cowboys, it means tightly controlling every muscle to stick on a bucking bronco. For energy executives, it means controlling every cost to lower the break-even price and survive what’s been a wild ride on the oil market. When companies can lower the price at which they break-even, it means they can approve more projects and produce more oil, keeping dividends safe and investors happy. The risk: By drilling up their share price, they can also end up drilling down the price of oil. Welcome to 2017, the year after a two-year market rout made companies more efficient. At the CERAWeek by IHS Markit conference this week, fears of too much supply […]

Saudi Arabia Won’t Let Oil Head Back To $20s Again

13 Mar 2017   Prices, Saudi Arabia

Saudi Arabia and American frackers are gearing up for the second oil war. It will take oil lower, but not back to $20 again. Saudi Arabia has kept its promise. It has cut oil output by 486,000 barrels a day, in line with the OPEC agreement the Kingdom pulled together last October, helping oil stabilize above $50 per barrel. And it has set up an example for the rest of OPEC and Russia, who have kept their own promise to stick with the October accord, officially at least. For a while things in the oil market seemed like back in the old good days: oil prices headed north, approaching the magic number of $60, and the Saudi Kingdom was talking up its grand plan, the Aramco IPO. But in the last three days the oil market has gotten oversupplied, and oil prices are heading south again, dropping below the […]

Oil Extends Slide After Sharp Selloff

11 Mar 2017   Prices

Oil prices continued to slide Friday on fears that coordinated production cuts won’t be enough to eliminate a glut of oil that has weighed on the market. U.S. crude futures fell 79 cents, or 1.6%, to $48.49 a barrel on the New York Mercantile Exchange, their lowest level since before the Organization of the Petroleum Exporting Countries struck a deal to cut production. Brent, the global benchmark, fell 82 cents, or 1.6%, to $51.37 a…

Oil Trades Down 1.6% As Baker Hughes Reports 12 Rig Gain In U.S.

11 Mar 2017   Prices

This week’s Baker Hughes report shows the U.S. domestic oil rig count up eight sites this week, bringing the total to 617 active oil rigs – the highest since the end of September 2015. Both West Texas Intermediate and Brent barrels traded down roughly 1.6 percent on Friday following the release of the report, which hinted at rising U.S. shale production. All week, oil experts and officials from the Organization of Petroleum Exporting Countries (OPEC) have been issuing warnings of impending market volatility due to high American shale oil output. Saudi Oil Minister Khalid al-Falih told reporters at a conference in Houston on Tuesday that OPEC would not be giving a “free ride” to U.S. shale producers—shale producers that have taken the liberty of bringing over a hundred new rigs online in the market upturn fueled by the bloc’s recent production cuts. Since the bloc’s announced cuts, the United […]

How Much Further Can Oil Prices Fall?

11 Mar 2017   Prices

Oil prices fell nearly 8 percent this week as speculators rushed for the exit and closed near record long positions. (Click to enlarge) Friday, March 10, 2017 Oil prices awoke from their slumber this week, breaking out of a narrow trading range and plunging by more than 8 percent. WTI dipped below $50 per barrel on Thursday, and Brent dropped below $53 per barrel, the lowest levels since early December when the OPEC deal was announced. The reason for the sudden decline was the bearish EIA report, which showed a whopping 8.2 million barrel increase to crude oil inventories, pushing total stocks to another record high. The inventory increases have been consistent throughout 2017, but the combination of rising U.S. oil production and relentless stock builds seems to have finally put a dent in market bullishness. OPEC outreach to shale comes with warning. At the CERAWeek Conference in Houston […]

Race to Bottom on Costs May Cause Oil to Choke on Supplies

11 Mar 2017   Prices

Houston hosted two events this week: the nation’s largest energy conference and the town’s famous rodeo. They have more in common than you’d think. In both cases, the key for top performers is how efficiently they perform. For cowboys, it means tightly controlling every muscle to stick on a bucking bronco. For energy executives, it means controlling every cost to lower the break-even price and survive what’s been a wild ride on the oil market. When companies can lower the price at which they break-even, it means they can approve more projects and produce more oil, keeping dividends safe and investors happy. The risk: By drilling up their share price, they can also end up drilling down the price of oil. Welcome to 2017, the year after a two-year market rout made companies more efficient. At the CERAWeek by IHS Markit conference this week, fears of too much supply […]

Is The Oil Price Plunge A Turning Point?

10 Mar 2017   Prices

WTI futures fell $2.86 from $53.14 to $50.28 per barrel, and Brent futures dropped $3.81 from $55.92 to $52.11 per barrel. WTI is trading below $49 and Brent below $52 per barrel at the time of writing. The apparent cause was a larger-than-expected 8.2 million-barrel (mmb) addition to U.S. crude oil inventories. Over-Reaction Based on history, we can see that this was an over-reaction. WTI has fallen below the $50 to $55 per barrel range in which oil futures have traded for the last 3 months (Figure 1). (Click to enlarge) Figure 1. Oil prices have not exceeded $55 per barrel since early 2015. Source: EIA, CBOE and Labyrinth Consulting Services, Inc. An 8.2 mmb addition to crude oil storage is actually fairly normal during the annual re-stocking season that we are in now (Figure 2). Inventories increased 10.4 mmb during this week in 2016 and the 5-year average […]

Oil price cracks as market focuses on rising production

10 Mar 2017   Prices

The two most powerful men in the world oil market appeared together in Houston on Tuesday to tell the world that their strategy was on track. In December, Khalid al-Falih and Alexander Novak, the energy ministers of Saudi Arabia and Russia, orchestrated a 24-nation plan to cut oil output in the first half of 2017. This week they spoke to reporters in a hotel conference room at the annual CERAWeek energy conference to emphasise their commitment to the pact.  Despite their reassurances, the US oil price suffered its sharpest one-day sell-off for 13 months on Wednesday, and has fallen by 7 per cent over the week. After months floating sideways, West Texas Intermediate crude is now trading below $50 for the first time since December. The impression of price stability, created by three forces: Opec, hedge funds and shale oil producers in the US, now appears misleading and augers further volatility for the industry. While Mr Falih described compliance among the Opec members and other parties to the production cut agreement as “very satisfactory,” the oil market was jolted on Wednesday when government data showed that crude stocks in the US had climbed a ninth straight week to a new record.

Oil edges off three-month low, but glut worries fester

10 Mar 2017   Prices

Crude prices inched up on Friday after dropping to their lowest in more than three months the session before, pressured by concerns that a global supply glut is proving stubbornly persistent. U.S. West Texas Intermediate crude (WTI) was up 40 cents at $49.68 a barrel at 0151 GMT. It fell below $50 on Thursday for the first since mid-December, when OPEC and other producers agreed to cut output. Brent crude was up 35 cents at $52.54 a barrel. On Thursday, it settled down 92 cents, or 1.7 percent, at $52.19 a barrel, after slumping 5 percent the day before in its biggest percentage decline in a year. Market confidence has taken a hit after a period of higher prices enticed more U.S. shale oil companies to drill more wells and as stockpiles have remained high. Data showed […]

Oil Prices Continue Plunging As Speculators Rush For Exit

10 Mar 2017   Prices

After having dipped 5 percent on Wednesday, oil prices continued plunging on Thursday by more than 2 percent, as speculators have started exiting the nearly record long positions in oil futures that they had amassed. As of 11:54 AM (EST), WTI Crude was trading down 2.27 percent at US$49.14, while Brent was down 2.09 percent at US$52.00. Having traded in a tight range with low volatility for three months, oil prices are now breaking loose, and WTI is testing the US$49 floor, after it dipped below US$50 for the first time since December. The volatility could create a sense of panic and prompt even more speculators rush to liquidate their long positions, according to The Street . “It’s a combination of an overhang of (speculative) length and the overhang in inventories … and the other thing unnerving the market is rapid growth in U.S. crude production,” Andrew Lebow, senior […]

Harold Hamm: U.S. Shale Spending Binge Could Destroy Oil Market

10 Mar 2017   Prices, Shale Oil

In a rather unconventional warning, Continental Resources chief executive Harold Hamm said on Wednesday that should the U.S. oil industry embark on another spending spree, it could “kill” the market. Speaking at the CERAWeek conference in Houston – one of the largest gatherings of oil executives and ministers, including this year Saudi Arabia’s oil minister Khalid Al-Falih – Hamm said that U.S. crude oil output “could go pretty high”. But Hamm was quick to add, as quoted by Bloomberg : “But it’s going to have to be done in a measured way, or else we kill the market.” The warning of Hamm came on the day in which WTI prices plunged 5 percent, to below US$50 for the first time since December amid concerns over record-breaking inventories in the U.S. Many U.S. companies have announced higher spending plans for this year, having seen prices stable above US$50. Hamm’s Continental […]

WTI under $50 as crude slide continues

9 Mar 2017   Prices

Oil prices stabilised on Thursday after falling by the most in more than a year over the previous session when US crude inventories climbed for the ninth straight week to a fresh high. Renewed concerns about a supply glut sent ripples through the currency market and hammered energy shares on Wednesday, but by Thursday in early European trade, Brent and West Texas Intermediate crude found support. The benchmarks were up 1.1 per cent to $53.69 and 0.8 per cent at $50.70 respectively. During Wednesday’s heavy selling, WTI, the US crude marker, fell by as much as 5.8 per cent to $50.05 a barrel before settling at $50.28, while Brent crude slid 4.9 per cent to $53.10 a barrel, the lowest since November. Since Opec and a group of large producer nations including Russia agreed a pact to cut production in late November, oil prices have moved in tightest range for more than decade. Brent, the global oil marker has traded between $53 and $57 a barrel as the market has reacted to news of strong Opec compliance with the output-cut agreement and evidence that US shale production is starting to pick up. “If things stay unchanged, then this week will be worst week for oil prices since the Opec deal,” said Olivier Jakob of Petromatrix, a Swis-based consultancy. “If oil prices continue to slide then the risk increases that the weaker Opec nations (Iraq, Venezuela, Angola) start to export more oil to reduce diminishing revenues.”