oil market


Palm hits over 1-week top on US soyoil strength, weak ringgit

KUALA LUMPUR: Malaysian palm oil futures rose by more than 1 percent on Tuesday to their highest level in over one week, tracking strength in U.S. soyoil prices and on a weaker ringgit.

The ringgit, palm’s currency of trade, weakened as much as 0.2 percent, making the vegetable oil cheaper for holders of foreign currencies.

The currency was last down 0.1 percent at 4.0850 per dollar.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.6 percent at 2,299 ringgit ($562.79) a tonne at the midday break.

Earlier in the session, it climbed as much as 1.1 percent to 2,311 ringgit, its highest since Feb. 8. Trading volumes stood at 12,586 lots of 25 tonnes each at noon.

“The palm market is up on supportive external markets, along with the weaker ringgit,“ said a Kuala Lumpur-based trader, referring to soyoil prices on the U.S. Chicago Board of Trade.

The market was also up on expectation of supportive cargo surveyor export data for Feb. 1-20, said the trader.

Exports from Malaysia during Feb. 1-15 rose between 4.2-12.9 percent from a month earlier, according to cargo surveyors.

Cargo surveyors are scheduled to release export data for the Feb. 1-20 period on Wednesday.

In other related oils, the Chicago March soybean oil contract was up 0.8 percent on Tuesday, in line with gains in soybeans on optimism about a trade deal between the United States and China.

The May soyoil contract on the Dalian Commodity Exchange rose 0.8 percent, while the Dalian May palm oil contract added 1.1 percent.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.

Palm oil may rise to 2,316 ringgit per tonne, as it has broken a resistance at 2,285 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Brent oil eases from 2019 highs as markets await trade talks outcome

SINGAPORE: Brent crude oil prices eased away from 2019 highs on Tuesday on caution that economic growth may dent fuel demand this year, although supply cuts led by producer cartel OPEC still meant markets were relatively tight.

International Brent crude oil futures were at US$66.08 (RM270.20) per barrel at 0220 GMT, down 42 cents, or 0.6% from their last close, but still not far off the 2019 high of US$66.83 (RM273.23) a barrel hit in the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at US$55.71 (RM227.80) per barrel. While that was up 12 cents from their last settlement, it was below the US$56.33 (RM230.33) 2019 high from the previous day.

Traders said the slight downward correction was driven by concerns about the health of the global economy this year.

Bank of America Merrill Lynch said in a note that the Sino-American trade dispute was hurting economic growth globally.

“Addressing global trade tensions is key for improving the economic outlook,“ it said in a note.

China’s vice premier and chief trade negotiator, Liu He, and U.S. Trade Representative Robert Lighthizer lead a round of trade talks this week in Washington.

Considering the economic outlook and supply and demand balances, the bank said it expects Brent prices to average between US$50 (RM204.5) and US$70 (RM286) per barrel, “anchored around US$60.”

Despite some caution around trade, global oil markets remain relatively tight because of supply cuts led by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), with top crude exporter Saudi Arabia cutting the most.

Saudi seaborne crude exports fell in the first half of February, with departures standing at 6.204 million barrels per day (bpd), a 1.341 million bpd decline on the previous month and 0.91 million bpd decline on the year, data intelligence firm Kpler said.

Further providing oil markets with support are US sanctions against petroleum exporters Iran and Venezuela.

Venezuela is a major crude supplier to US refineries while Iran is a key exporter to major demand centres in Asia, especially China and India. — Reuters

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Oil slips on rising US rig count, China industrial slowdown

SINGAPORE: Oil prices fell on Monday after US energy firms added rigs for the first time this year in a sign that crude production there may rise further, and as China, the world’s second-largest oil user, reported additional signs of an economic slowdown.

US crude oil futures were at $53.43 per barrel at 0253 GMT, down 26 cents, or 0.5%, from their last settlement.

International Brent crude oil futures were at $61.50 a barrel, down 14 cents, or 0.2%.

High US crude oil production , which rose to a record 11.9 million barrels per day (bpd) late last year, has been weighing on oil markets, traders said.

In a sign that output could rise further, US energy firms last week raised the number of rigs looking for new oil for the first time in 2019 to 862, an additional 10 rigs, Baker Hughes energy services firm said in its weekly report on Friday.

Beyond oil supply, a key question for this year will be demand growth.

Oil consumption has been increasing steadily, likely averaging above 100 million bpd for the first time ever in 2019, driven largely by a boom in China.

However, an economic slowdown amid a trade dispute between Washington and Beijing is weighing on fuel demand-growth expectations.

Earnings at China’s industrial firms shrank for a second straight month in December on falling prices and sluggish factory activity, piling more pressure on the world’s second-largest economy, which reported the slowest pace of growth last year since 1990.

China is trying to stem the slowdown with aggressive fiscal stimulus measures.

But there are concerns that these measures may not have the desired effect as China’s economy is already laden with massive debt and some of the bigger government spending measures may be of little real use.

The increased US supply, the country is now the world’s largest producer, and the economic slowdown are weighing on the oil price outlook.

“We expect US crude oil prices to range between $50-$60 per barrel in 2019 and about $10 more per barrel for Brent,” Tortoise Capital Advisors said in its 2019 oil market outlook.

However, Tortoise added that oil prices would be supported above $50 per barrel as it was “very clear that Saudi Arabia will no longer be willing to accept these lower oil prices”.

The Organization of the Petroleum Exporting Countries (OPEC), de-facto led by Saudi Arabia, started supply cuts late last year to tighten markets and buoy prices. – REUTERS

Oil prices fall on worries fuel demand to stall amid slowing global growth

By Colin Packham and Koustav Samanta

SYDNEY/SINGAPORE, Jan 24 (Reuters): Oil prices declined on Thursday amid lingering concerns over slowing global economic growth that may limit fuel demand and after a surprise build in U.S. crude inventories.

International Brent crude oil futures were at $60.89 a barrel at 0352 GMT, down 25 cents, or 0.4 percent, from their last settlement, having closed down 0.6 percent in the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $52.40 per barrel, 22 cents lower from their last settlement.

“Crude oil came under further pressure as concerns of faltering global growth remained at the forefront in investor’s minds,” ANZ Bank said.

The prospects of future oil demand are getting clouded by the global growth worries, analysts said.

“With the IMF downgrading 2019/20 and the continued rhetoric from Davos reiterating that they expect global growth to slow down over the next two years, is providing selling pressure in oil,” said Hue Frame, portfolio manager at Frame Funds in Sydney.

Earlier this week, the International Monetary Fund (IMF) cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets.

Meanwhile, world leaders and top executives are meeting in Davos, Switzerland, this week to discuss how to steer policy amid worries of slowing economic growth, damaging trade wars and Brexit.

Oil market sentiment was also weakened by an increase in U.S. crude inventories after refineries cut output, data from industry group the American Petroleum Institute showed on Wednesday.

Crude inventories rose by 6.6 million barrels in the week ended Jan. 18 to 443.6 million, compared with analysts’ expectations for a decrease of 42,000 barrels, the API said. Refinery runs fell by 152,000 barrels per day.

“Sharp production cuts by OPEC+ have kept crude oil futures supported however as market reports indicate for a marked output reduction in Dec 2018,” said Benjamin Lu, analyst at Phillip Futures.

“Though oil prices have demonstrated for higher upside potential in the first quarter of 2019, mounting economic challenges will continue to impede exponential gains in the longer term,” Lu added.