oil output


Oil prices climb on tropical storm and geopolitical tensions

LONDON: Oil prices hovered near six-week highs on Friday and was on track for a weekly gain as U.S. oil producers in the Gulf of Mexico cut more than half their output because of a tropical storm and as tensions continued to simmer in the Middle East.

However, an International Energy Agency (IEA) forecast for a global oil surplus capped the gains. The agency on Friday predicted that surging U.S. oil output will outpace sluggish global demand and lead to a large stocks build around the world in the next nine months.

OPEC also predicted on Thursday the return of a surplus next year despite an OPEC-led pact to restrain supplies.

Brent crude futures were up 64 cents, or almost 1%, at $67.16 a barrel by 0850 GMT. The international benchmark settled 0.7% down on Thursday after hitting its highest since May 30 at $67.65.

U.S. West Texas Intermediate (WTI) crude futures were up 46 cents, or 0.8%, at $60.66. In the previous session the U.S. benchmark touched $60.94, its highest since May 23.

Brent prices have climbed 4.5% this week while WTI prices have gained 5.5%. Both registered declines last week.

U.S. crude oil inventories have declined for four weeks and prices were also supported by oil companies in the Gulf of Mexico cutting production because of Tropical Storm Barry.

Companies cut more than 1 million barrels per day (bpd) of output — 53% of the region’s production — as the storm headed for possible landfall on the Louisiana coast on Saturday.

The storm was forecast to become a category one hurricane with winds of at least 74 mph (119 kmh).

The market remained on edge as tensions intensified between Iran and the West. Tehran on Friday said that Britain was playing a “dangerous game” after last week’s seizure of an Iranian tanker on suspicion it was breaking European sanctions by taking oil to Syria.

“As things stands, market players are clearly not envisaging a supply shock in the region. Only time will tell whether this turns out to be a case of wishful thinking but one thing is clear: geopolitical risks are here to stay,” said Stephen Brennock, analyst at PVM Oil Associates.

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Bursa Malaysia closes at nearly four-month high

KUALA LUMPUR: Bursa Malaysia breached the 1,690 resistance level to close at nearly a four-month high, thanks to lingering trade optimism contributed by the US-China trade truce as well as crude oil output cuts by Russia and Saudi Arabia.

At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) jumped 7.38 points, or 0.44%, to finish at 1,691.0, the highest level since March 4, 2019, when the index ended at 1,693.99.

However, Malacca Securities Sdn Bhd senior analyst Kenneth Leong said quick profit-taking activities took place in lower liners, making the market breadth turn slightly negative today with 450 losers against 440 gainers.

The index opened 2.16 points higher at 1,685.78 compared to Monday’s close of 1,683.62, and moved between 1,684.06 and 1,694.55 throughout the day.

Today’s trading saw 386 counters unchanged, 562 untraded and 19 others suspended.

Turnover fell to 2.82 billion units worth RM2.56 billion from 3.31 billion units worth RM2.18 billion on Monday.

When contacted by Bernama today, Leong said he expected the rally to continue although a new round of tariffs on the European Union’s (EU) imports was proposed by the US government early today.

“The new tariffs would not have an immediate impact on Bursa Malaysia, but the impact would probably kick in at end of the month,“ he said.

Reuters reported that the US government has proposed an additional US$4 billion (US$1=RM4.14) in tariffs on EU goods to pressure the EU to fold in a 15-year dispute over aircraft subsidies.

Among heavyweights, Tenaga rose 26 sen to RM14.22, Maybank and Dialog bagged seven sen each to RM8.98 and RM3.34, Maxis increased 10 sen to RM5.67 while Axiata perked up five sen to RM5.20.

Of actives, KNM inched up half-a-sen to 30 sen while its warrant added three sen to 13 sen.

Bumi Armada and Compugates lost half-a-sen each to 22 sen and two sen, respectively, while Ekovest was one sen lower at 87.5 sen.

BLD Plantation topped the gainers list, putting on 43 sen to RM6.78, followed by Nestle, which rose 40 sen to RM148.80, G3 Global gained 25 sen to RM1.75, while Petronas Dagangan and Sungei Bagan Rubber increased 22 sen each to RM25.60 and RM3.03, respectively.

The FBM Emas Index gained 55.60 points to 11,940.76, the FBMT 100 Index increased 56.50 points to 11,784.07 and the FBM Emas Syariah Index was 52.68 points better at 12,318.76.

The FBM 70 jumped 92.22 points to 14,877.14 but the FBM Ace fell 14.94 points to 4,522.89.

Sector-wise, the Financial Services Index added 76.40 points to 16,849.31, while the Industrial Products and Services Index eased 0.51 of-a-point to 163.01 and the Plantation Index shed 37.41 points to 6,940.87.

Main Market volume narrowed to 2.03 billion shares worth RM2.38 billion from 2.59 billion shares worth RM2.02 billion on Monday.

Warrants turnover, however, advanced to 423.88 million units valued at RM77.01 million compared with 302.71 million units valued at 43.23 million.

Volume on the ACE Market shrank to 358.50 million shares worth RM103.32 million versus 416.62 million shares worth RM117.97 million.

Consumer products and services accounted for 239.28 million shares traded on the Main Market, industrial products and services (248.75 million), construction (201.61 million), technology (152.42 million), SPAC (nil), financial services (96.87 million), property (171.10 million), plantation (13.33 million), REITs (10.16 million), closed/fund (10,000), energy (734.86 million), healthcare (27.36 million), telecommunications and media (96.55 million), transportation and logistics (32.79 million) and utilities (12.85 million).

The physical price of gold as at 5pm stood at RM179.22 per gramme, up 56 sen from RM178.66 at 5pm yesterday. — Bernama

Opec extends oil cut to prop up prices as economy weakens

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Oil jumps over 2% as Saudi Arabia, Russia back supply cuts

SINGAPORE: Oil prices rose more than $1 a barrel on Monday after Saudi Arabia, Russia and Iraq backed an extension of supply cuts for another six to nine months ahead of an OPEC meeting in Vienna.

Front-month Brent crude futures for September touched an intraday high of $66.44 a barrel and were up $1.57, or 2.4%, at $66.31 a barrel by 0436 GMT.

U.S. crude futures for August rose $1.36, or 2.3%, to $59.83 a barrel after earlier hitting a peak of $60.10, the highest in over five weeks.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies look set to extend oil supply cuts until the end of 2019 after top producers on Sunday endorsed a policy aimed at propping up the price of crude.

OPEC, Russia and other producers, an alliance known as OPEC+, meet on Monday and Tuesday to discuss supply cuts. The group has been reducing oil output since 2017 to prevent prices from sliding amid a weakening global economy and soaring U.S. output.

Russian President Vladimir Putin said on Sunday he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million barrels per day (bpd) by six to nine months.

Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed.

“While this needs to be ratified by the remaining members of the OPEC+ group, this appears to be a fait accompli,” ANZ analysts said in a note.

Stephen Innes, managing partner at Vanguard Markets in Bangkok, said oil prices could also be supported in the medium term because of geopolitical tensions in the Middle East and as China’s central bank eases monetary policy to offset the impact from U.S. tariffs.

Oil prices have come under renewed pressure in recent months from rising U.S. supplies and a slowing global economy.

U.S. crude oil output in April rose to a fresh monthly record of 12.16 million bpd, the U.S. Energy Information Administration said in a monthly report on Friday.

Financial markets, meanwhile, were buoyed by a thawing of U.S.-China relations after leaders of the world’s two largest economies agreed on Saturday to restart trade talks.

Still, Citi analysts saw the announcements as a temporary truce to de-escalate the trade and tariff war, and were sceptical that both sides can reach a deal soon even though 90% of the trade deal has been completed.

“The fact that both sides have not been able to get the remainder of the deal done is difficult to comprehend, suggesting either the timing is not good or some may not want a deal,” they wrote in a note.

OPEC set to prolong oil output cuts after Moscow-Riyadh deal

VIENNA: OPEC and its allies are set this week to prolong oil output cuts to further boost prices, after the two biggest players Russia and Saudi Arabia agreed to do so.

Ministers from the 14-nation Organization of the Petroleum Exporting Countries (OPEC) meet in Vienna on Monday to discuss output, before gathering a day later for OPEC+, a group of 24 oil-producing countries that includes Russia.

Russian President Vladimir Putin and OPEC cartel kingpin Saudi Arabia agreed Saturday on the sidelines of the G20 in Osaka to extend their deal which aims to keep oil output low owing to abundant world supplies.

“We will extend this deal, Russia and Saudi Arabia. For how long? We will think about that. For six or nine months. It is possible that it could be up to nine months,” Putin said.

OPEC and its oil-producer allies decided in December to trim daily crude output by 1.2 million barrels.

The reduction contributed to oil prices soaring by almost one-third in the first quarter of 2019, boosting precious revenues for OPEC and non-OPEC members alike.

The cartel meanwhile remains on red alert over escalating US-Iran tensions that have fuelled recent strong oil-price gains — but it and other producers are unlikely to end output cutbacks just yet.

Nine more months?

Saudi Arabia’s influential energy minister Khalid al-Falih, arriving in Vienna early on Sunday, declared that he wanted the cutbacks which began in January to be extended by nine more months.

“We have to talk about it with the other ministers. My preference will be nine (months)”, he told reporters. That would extend the deal to March 2020.

United Arab Emirates energy minister Suhail al-Mazrouei, upon arrival in the Austrian capital, voiced his support to an extension.

“We look forward to a positive meeting, my view is that an extension is needed given the current conditions of the market,” he told reporters.

Quizzed about the so-called “pre-deal” unveiled in Osaka, Mazrouei replied: “Each country’s voice counts and each country can veto a decision.”

OPEC’s meeting comes against a background of ample global crude supplies, according to both the cartel and International Energy Agency.

The Paris-based IEA watchdog has cut its forecast for 2019 oil demand-growth for a second straight month and has trimmed also its second-quarter forecast.

Saudi Arabia argues that oil supplies are sufficient, pointing to rising stockpiles despite significant output reduction in sanctions-hit Iran and Venezuela, both members of OPEC.

Falih admitted on Sunday that demand “is softening a little bit” but stressed that he expected demand and supply to strike a balance.

“It is still healthy. So it is likely that the market will balance in due course in six to nine months. So we are happy,” he said.

Middle East tensions

Global oil prices began a sharp ascent in mid-May after the sabotage of several tankers off the Emirati coast.

They jumped further after Washington blamed Tehran for a second spate of such incidents close to the strategic Strait of Hormuz shipping lane in mid-June.

Oil prices rose even more after Iran shot down a US spy drone and President Donald Trump axed retaliatory strikes against Tehran at the last minute.

Worries over the demand backdrop persist — particularly from the US-China trade war despite a truce agreed over the weekend.

“Geopolitical risk means the supply outlook is tightening, offsetting the moderate weakening in oil demand growth thus far this year,” said oil specialist Ann-Louise Hittle at consultancy Wood Mackenzie.

“There is a downside risk for oil demand through the rest of the year if the ongoing trade war intensifies,” she added. – AFP

Opec set for oil cut extension if Iran endorses pact

VIENNA, July 1 — Opec and its allies look set to extend oil supply cuts next week at least until the end of 2019 as Iraq joined top producers Saudi Arabia and Russia yesterday in endorsing a policy aimed at propping up the price of crude amid a…