TOKYO: Oil prices posted early gains as OPEC’s outlook for oil demand next year fuelled hopes that the producer group and its associates will keep a lid on supply when they meet to discuss policy on output next month.
Optimism that the United States and China could soon sign an agreement to end their trade war also seeped into the market after White House economic adviser Larry Kudlow said a deal was “getting close”, citing what he called very constructive discussions with Beijing.
Brent crude futures were up 30 cents, or 0.5%, at $62.58 a barrel by 0147 GMT, having dropped 9 cents on Thursday.
West Texas Intermediate crude was up 29 cents, or 0.5%, at $57.06 a barrel, after falling 0.6% in the previous session.
The rosy mood came after the Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020. That supports the view among markets that there’s a clear case for the group and other producers like Russia – collectively known as ‘OPEC+’ – to maintain limits on production that were introduced to cope with a supply glut.
OPEC+ on Jan. 1 cut output by 1.2 million barrels per day (bpd), and in July, the alliance renewed the pact until March 2020.
“Energy markets will remain fixated on rhetoric from OPEC+, (U.S.-China) trade updates and whether Beijing can somehow de-escalate the situation in Hong Kong without sending more troops,” said Edward Moya, senior market analyst at OANDA.
Jitters over geopolitical fallout from the Hong Kong situation linger after violent clashes between protesters and police this week, with Chinese President Xi Jinping saying on Thursday that stopping violence was the most urgent task.
Still, investors shrugged off a bigger-than-expected increase in U.S. stockpiles and rising production.
U.S. crude inventories grew last week by 2.2 million barrels, the Energy Information Administration said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll.
Crude production rose by 200,000 bpd to a weekly record of 12.8 million bpd, the EIA said in its weekly report. – Reuters
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TOKYO: Oil prices rose on Wednesday, with U.S. crude gaining 1% after an inventory report showed U.S. stockpiles fell more than expected, helping ease worries about economic growth due to the Sino-U.S. trade war.
Brent crude was up by 37 cents, or 0.6%, at $59.88 a barrel by 0220 GMT. West Texas intermediate crude was up 55 cents, or 1.0%, at $55.48 a barrel.
U.S. crude stockpiles fell sharply last week as imports dropped, plummeting by 11.1 million barrels, compared with expectations for a 2 million barrel draw, data from industry group, the American Petroleum Institute (API), showed.
The U.S. government’s weekly report is due to be released Wednesday morning and if official numbers confirm the API data then it will be the biggest weekly decline in nine weeks.
“The mammoth crude inventory draw has, at least for the time being, put to rest those U.S.
recessionary doom and gloom fears that have been hanging over oil markets like a dark cloud,” said Stephen Innes, managing partner at Valour Markets.
Still, concerns about global growth amid the raging trade war between the United States and China are likely to cap gains.
U.S. President Donald Trump said on Monday that he believed China was sincere about wanting to reach a deal, while Chinese Vice Premier Liu He said China was willing to resolve the dispute through “calm” negotiations.
On Tuesday, however, concerns about trade resurfaced after China’s foreign ministry that it had not heard of any recent telephone call between the United States and China on trade, and said it hopes Washington can stop its wrong actions and create conditions for talks.
Crude oil prices have fallen about 20% from 2019 highs reached in April, partly because of worries that the U.S.-China trade war is hurting the global economy, which could dent demand for oil.
“Global recession risks are higher than at any stage since the (global financial crisis) and the U.S. is not immune,” Morgan Stanley said.
China’s Commerce Ministry last week said it would impose additional tariffs of 5% or 10% on 5,078 products originating from the United States, including crude oil, agricultural products and small aircraft.
In retaliation, Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States. – Reuters
SINGAPORE: Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemeni separatists, although price gains were capped by an unusually downbeat OPEC report that stoked concerns about demand growth.
Brent crude was up 45 cents, or 0.8%, at $59.09 a barrel at 0035 GMT, U.S. crude was up 39 cents, or 0.7%, at $55.26 a barrel.
Prices rose after the drone attack by Yemen’s Houthi group on an oilfield in eastern Saudi Arabia on Saturday added to Middle East tensions. The attack caused a fire at a gas plant, but state-run Saudi Aramco said oil production was not affected.
Still, concerns about an economic recession and the impact on oil demand growth weighed on prices.
In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020.
It is rare for OPEC to give a bearish forward view on the market outlook.
U.S. President Donald Trump and top White House officials dismissed concerns that economic growth may be faltering, saying on Sunday they saw little risk of recession and insisting their trade war with China was doing no damage to the United States.
Trump was less optimistic than his aides on striking a trade deal with China, saying that while he believed China was ready to come to an agreement, “I’m not ready to make a deal yet.”
Also weighing on prices, U.S. energy firms this week increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year.
Companies added six oil rigs in the week to Aug. 16, the biggest increase since April, bringing the total count to 770, General Electric Co’s Baker Hughes energy services firm said on Friday. – Reuters
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SINGAPORE: Oil prices rose on Monday after Saudi Arabia said producer club OPEC and Russia were likely to keep withholding supplies, and in relief as the United States withdrew its threat to impose import tariffs on Mexico, removing one cloud over the global economy.
Front-month Brent crude futures, the international benchmark for oil prices, were at $63.52 at 0310 GMT, 23 cents, or 0.4%, above Friday’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $54.29 per barrel, 30 cents, or 0.6%, above their last settlement.
Traders said crude prices were rising because of statements by OPEC’s de-facto leader Saudi Arabia on Friday saying that the group was close to agreeing extended supply cuts.
“Brent futures continue rising … after the Saudi Arabian Energy Minister expressed confidence that OPEC+ producers will prolong their output cuts programme through the second half of 2019,” said Han Tan, analyst at futures brokerage FXTM.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-members, including Russia, known collectively as “OPEC+”, have withheld supplies since the start of the year to prop up prices.
Stephen Innes, managing partner at Vanguard Markets, said stronger stock markets also supported oil futures.
“With the Mexican stalemate averted and no harmful shockwaves from this weekend G-20 meeting … oil could trade favourably as WTI and Brent will continue to track the broader risk environment high,” Innes said.
Stock markets rose on Monday after a deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of U.S. tariffs on goods imported from Mexico.
But analysts said there were still concerns about the health of the global economy, with the United States and China still locked in a trade war.
“Slowing global demand appears to be featuring prominently on the markets’ collective mind, as the fallout from heightened trade tensions continues to be felt in the global economy,” said FXTM’s Tan.
“The sustainability of oil’s recent climb could be determined by the outlooks of several key industry bodies scheduled this week, whereby more downcast projections for global demand could prompt traders to continue chipping away at oil,” he added.
Oil major BP is to publish its statistical review of global energy markets on Tuesday, while China on Friday is scheduled to publish its monthly commodities output data. – Reuters