oil Archives - Desmond Gibbons & Co.

Oil prices fall due to weak economic data, Saudi output recovery

Oil prices fall due to weak economic data, Saudi output recovery

Oil prices fell today after weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand.

The drops also came as Saudi Arabia said it could restore oil output faster than anticipated following attacks last week.

Brent crude futures dropped 95 cents to $63.82 a barrel today, while US West Texas Intermediate futures were at $57.91, down 73 cents.

Reuters said yesterday that Saudi Arabia had restored more than 75% of crude output lost after attacks on its oil installations and would return to full volumes by early next week.

But the Wall Street Journal said repairs at the plants could take months longer than anticipated.

“An increasing number of reports pointing to Saudi Aramco purchasing external products and potentially also crude to meet its term commitments do not give the impression that an imminent return to full capacity is in sight,” consultancy JBC Energy said.

State-run oil company Aramco has stepped up purchases of products such as naphtha, gasoline and diesel from Europe and elsewhere.

Still, oil prices remain at comparatively elevated levels for the year in the wake of the September 14 attack on Saudi Arabia’s largest oil-processing facility that halved output in the world’s top oil exporter.

An increase in US oil exports to Asia to replace Saudi crude and a reduction in US imports from Iraq meant crude inventories in the US could be lower than expected, said Mike Tran, commodity strategist at RBC Capital Markets.

European powers – Britain, Germany and France – backed the US in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security.

Meanwhile, a preliminary Reuters poll this week found that US crude oil and distillate stockpiles were expected to have dropped last week.

Seven analysts estimated, on average, that crude inventories fell by 800,000 barrels in the week to September 20.

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Oil falls as US, China add more tariffs in trade war

Oil falls as US, China add more tariffs in trade war

Oil prices weakened this morning after new tariffs imposed by the US and China came into force, raising concerns about a further hit to global growth and demand for crude.

Brent crude slipped 22 cents, or 0.4%, to $59.03 a barrel this morning, while US oil was down two cents at $55.083 at barrel.

The US began imposing 15% tariffs on a variety of Chinese goods yesterday – including footwear, smart watches and flat-panel televisions – as China put new duties on US crude, the latest escalation in a bruising trade war.

US President Donald Trump said both sides would still meet for talks later this month.

Trump, writing on Twitter, said his goal was to reduce US reliance on China and he again urged US companies to find alternate suppliers outside China.

Beijing’s levy of 5% on US crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.

Elsewhere, oil output from members of the Organisation of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by US sanctions on Iran, a Reuters survey found.

In the US, energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.

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Crude oil prices fall 1% on fears for global economy

Crude oil prices fall 1% on fears for global economy

Brent oil ticked higher today, supported by tensions over Iran and the decision by OPEC and its allies to extend a supply cut deal until next year, while US benchmark crude prices fell on weak economic indicators.

Brent was up 53 cents at $63.83 per barrel this afternoon, while US West Texas Intermediate (WTI) slipped 18 cents to $57.16. The US market was closed yesterday for a holiday.

Both benchmarks were set for their biggest weekly falls in five weeks.

A trade war between the US and China has dampened prospects of global economic growth and oil demand, but talks between the two nations resume next week in a bid to resolve the deadlock.

“The truce between the US and China is not translating into anything in the real economy in the short term.

German industrial orders fell far more than expected in May, and the Economy Ministry said this sector of Europe’s largest economy was likely to remain weak in the coming months.

In the US, new orders for factory goods fell for a second month in May in a row, government data showed, stoking the economic concerns.

The U.S. Energy Information Administration reported this week a weekly decline of 1.1 million barrels in crude stocks, smaller than the 5 million barrel draw reported by the American Petroleum Institute and less than analyst expectations.

The Organization of the Petroleum Exporting Countries and other producers such as Russia, a grouping known as OPEC+, supported prices by extending their deal on supply cuts.

Tension in the Middle East also offered some support.

Iran, already embroiled in a row with the US, threatened today to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria.

A Reuters survey found OPEC oil output sank to a new five-year low in June, as a rise in Saudi supply did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere in the group.

Oil production by Saudi Atabia, the world’s top crude exporter, was 9.782 million barrels per day (bpd) in June, an OPEC source said, slightly up from 9.67 million bpd in May.

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Oil jumps 3% towards $64 as US drone downed in Gulf

Oil jumps 3% towards $64 as US drone downed in Gulf

Oil rose more than 3% towards $64 a barrel today after Iran shot down a US military drone, raising fears of a military confrontation between Tehran and Washington.

Expectations that the US Federal Reserve could cut interest rates at its next meeting, stimulating growth in the world’s largest oil-consuming country, and a drop in US crude inventories also supported prices.

Brent crude, the global benchmark, was up $2.06 at $63.88 a barrel this afternoon, having earlier gained 3.4% to $63.93.

US West Texas Intermediate crude rose $2.33 to $56.09.

The drone was downed in international airspace over the Strait of Hormuz by an Iranian surface-to-air missile, a US official said.

Iran’s Revolutionary Guards said the drone was flying over southern Iran.

Tension has been rising in the Middle East, home to over 20% of the world’s oil output, after attacks on two tankers near the Strait of Hormuz, a chokepoint for oil supplies.

Washington blamed Tehran for the tanker attacks. Iran denied any role.

Concern about slowing economic growth and a US-China trade dispute has pulled oil lower in recent weeks. Brent reached a 2019 high of $75 in April.

Also propelling oil higher today was a decline in US crude inventories and the prospect of prolonged supply restraint by producer group OPEC and its allies.

US crude stocks fell by 3.1 million barrels last week, more than analysts expected, the Energy Information Administration said yesterday.

Meanwhile, the Organization of the Petroleum Exporting Countries and allies including Russia agreed this week to meet on July 1-2, ending a month of wrangling about the timing.

The coalition known as OPEC+ looks set to extend a deal on cutting 1.2 million barrels per day of production. The deal expires at the end of June.

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Oil prices fall 1% as economic worries outweigh tanker tensions

Oil prices fall 1% as economic worries outweigh tanker tensions

Oil prices slipped more than 1% today as signs of an economic slowdown amid international trade disputes began to outweigh supply fears stoked by attacks on oil tankers in the Gulf of Oman last week.

Brent futures were down 68 cents, or 1.1%, to $61.33 a barrel today, having gained 1.1% on Friday.

US West Texas Intermediate (WTI) crude futures were down 58 cents, or 1.1%, at $51.93, having firmed by 0.4% in the previous session.

“China’s industrial output growth (is) falling to the lowest level in 17 years amid trade tensions with the US. Today, oil markets will have to digest more demand concerns as India implemented retaliatory tariffs on a number of U.S. goods yesterday,” consultancy JBC Energy said in a note.

Also sapping prices was the dim outlook for oil demand growth in 2019 projected by the International Energy Agency (IEA) on Friday, citing worsening prospects for global trade.

Market expectations of a price rise had been shrinking in the period leading up to the tanker attacks.

Though danger of an immediate confrontation over last week’s tanker attacks – which the US blamed on Iran but Tehran denied – appeared to recede, tensions over the strategic route remain high.

A fifth of the world’s oil passes through the Strait of Hormuz.

US Secretary of State Mike Pompeo yesterday said that Washington does not want to go to war with Iran but will take every action necessary, including diplomacy, to guarantee safe navigation in the Middle East.

Prices received no boost from comments by Saudi energy minister Khalid al-Falih today reiterating that OPEC was moving was towards a consensus on extending a production cut agreement in a meeting he predicted would convene in the first week of July.

The Organization of the Petroleum Exporting Countries plus Russia and other producers, have a deal to cut output by 1.2 million bpd from January 1.

The pact ends this month and the group meets in the coming weeks to decide its next move.

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Oil prices set for 2019’s biggest weekly loss

Oil prices set for 2019’s biggest weekly loss

Oil rose towards $69 a barrel today after two sessions of losses, but remained on track for its biggest weekly drop this year due to rising inventories and concerns about an economic slowdown.

US crude inventories rose to hit the highest since July 2017, suggesting ample supplies in the world’s top consumer.

Meanwhile, worries that the US-China trade is developing into a more entrenched dispute have also hit prices.

Brent crude, the global benchmark, rose 98 cents to $68.74 a barrel but remained on course for a decline of nearly 5% this week. US West Texas Intermediate crude added 75 cents to stand at $58.66.

Even so, supply cuts – both voluntary and those resulting from US sanctions, kept a floor under prices and some analysts expect the market to recover.

The Organization of the Petroleum Exporting Countries and allies including Russia, an alliance known as OPEC+, have been cutting supply since January to tighten the market and prop up prices.

US sanctions on the oil industries of Iran and Venezuela, both OPEC members, have curbed their crude exports, reducing supplies further than the OPEC+ deal aimed to.

Brent’s price structure remains in “backwardation”, in which prices for prompt delivery are higher than those for later dispatch, suggesting a tight balance between supply and demand.

UBS kept a forecast for Brent to again reach $75 – the year’s high – this month, citing tighter supplies.

“Compliance of OPEC and its allies to the production cut deal remains high, while production from Iran and Venezuela is likely to again trend lower this month,” the bank said.

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Oil rises after OPEC+ says to keep output cuts, Iran tension rises

Oil rises after OPEC+ says to keep output cuts, Iran tension rises

Oil prices rose to multi-week highs today after OPEC indicated it would probably maintain production cuts that have helped support prices this year, while tension continued to escalate in the Middle East.

Brent crude was up by 90 cents, or 1.3%, at $73.11 a barrel this morning, having earlier touched $73.40, the highest since April 26.

US West Texas Intermediate crude was up 71 cents, or 1.1% higher, at $63.47 a barrel. The US benchmark had reached $63.81 earlier, the highest since May 1.

Saudi Energy Minister Khalid al-Falih said yesterday there was consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market”.

United Arab Emirates (UAE) Energy Minister Suhail al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not the right decision.

US President Donald Trump had threatened Tehran yesterday, tweeting that a conflict would be the “official end” of Iran, while Saudi Arabia said it was ready to respond with “all strength” and it was up to Iran to avoid war.

The rhetoric follows last week’s attacks on Saudi oil assets and the firing of a rocket on Sunday into Baghdad’s heavily fortified “Green Zone” that exploded near the US embassy.

OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) from January 1 for six months to prevent inventories from increasing and weakening prices.

Brent touched $75.60 on April 25, while the WTI high for 2019 is $66.60, reached on April 23. As of today, Brent is up more than 35%, while WTI has gained nearly 40%.

Another bullish signal was a second week of declines in US drilling operations, with energy companies cutting oil rigs to the lowest since March 2018.

The rig count, an early indicator of future output, fell by three to 802, General Electric’s Baker Hughes energy services unit said on Friday.

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Oil consumption here continues to increase with diesel volumes up 42% last year

Oil consumption here continues to increase with diesel volumes up 42% last year

The organisation representing the petroleum industry here has pledged to play its part in Ireland’s transition to a low carbon and environmentally sustainable economy.

But the Irish Petroleum Industry Association (IPIA) says moving to such an economy requires a clear understanding of the current situation around the country’s use of oil products.

In order to aid such knowledge, the IPIA has produced its first sector profile outlining statistics underpinning the industry here.

It shows that despite a move away from fossil fuels, especially diesel, overall oil consumption was 11% higher in 2018 than in 2011 with diesel volumes up 42% and petrol down 34%.

However, biofuels also account for a greater share of both petrol and diesel volumes, with such fuels accounting for 5.2% of gasoline sold (up from 1.7% in 2010) and 4.7% of diesel volumes (up from 2.6% nine years ago).

In overall terms, oil derived products now account for 50% of all energy consumption here, considerably higher than the EU average of 35%.

Nearly three quarters of that oil is consumed by transport, with roads accounting for more than half of that and air travel 13%.

15% of oil is used by the residential sector, nearly double the EU average because a higher proportion of households here rely on heating oil for central heating than in Europe.

40% of households in Ireland now rely on oil to heat their homes, down from 43% in 2011.

This share varied significantly by region, with roughly 26% of households located in towns using oil for central heating compared to 65% in rural areas.

Food manufacturing and agriculture account for 4.2% of all petroleum products consumed here, the research shows.

Oil imports have dropped since 2007 but this has mainly been driven by refined oil imports, the analysis finds.

Crude oil imports have remained relatively stable since 2005.

In total, the IPIA says over 13,000 people were employed in filling stations around the country in 2016, up almost 15% since 2010.

The reliance of the exchequer on tax on oil products is also spelled out in the data, with €3 billion of the tax take last year coming from the sector.

€2 billion of that total came from excise duty, with €337 from the carbon tax and €600m from VAT.

According to the IPIA, 61% of the price of a litre of petrol and 57% of a litre of diesel is tax.

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Oil prices fall despite tighter global supply

Oil prices fall despite tighter global supply

Oil prices fell yesterday, dragged down by concerns about global economic growth as the US-China trade dispute rumbled on, but receiving some support from tightened supply.

International Brent crude oil futures were at $67.35 a barrel at lunchtime in London, down 26 cents, or 0.38pc.

US West Texas Intermediate (WTI) crude futures were at $58.43 per barrel, down 60 cents, or 1.02pc.

An eight-month trade war between China and the United States has worried global markets already concerned by signs of a slowdown in economic growth this year.

But there have been mixed signals that the standoff between the world’s top two economies can soon be resolved.

A Bloomberg report on Tuesday, citing concern among US officials that China is pushing back on American demands, briefly weakened oil prices before both benchmarks again approached four-month highs.

However, Washington announced that Treasury Secretary Steven Mnuchin plans to travel to China next week for another round of trade talks with senior Chinese officials.

“US-China trade talks continue to present a binary risk for the oil market and other risky assets,” BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.

“A trade agreement is likely to boost oil prices above current forecasts whereas failure can lead to the type of sell-off we saw last December.”

Analysts said an economic slowdown could soon dent fuel consumption, holding back crude.

“Global growth concerns and ongoing oversupply fears (are) creating headwinds for the commodity,” said Lukman Otunuga, analyst at futures brokerage FXTM.

Asian business confidence held near three-year lows in the first quarter as the US-China trade dispute dragged on, pulling down a global economy that is already on a downward path, a Thomson Reuters/INSEAD survey found.

But crude prices have risen almost a third this year, pushed up by supply cuts among Opec and its allies including Russia, as well as US sanctions against oil exporters Iran and Venezuela.

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