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Energy | Oil | Today's Price Report on Thursday 17, September 2020.

  

Oil reverses losses to gain 2% as OPEC urges compliance with production cuts


An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.

An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.

David McNew | Getty Images

Oil prices rose about 2% on Thursday, turning positive as OPEC and its allies said the producer group would crack down on countries that failed to comply with output cuts and planned to hold an extraordinary meeting in October if oil markets weaken further.

Brent oil futures extended their gains to trade up 2.3% at $43.21 a barrel. U.S. crude futures settled 81 cents, or 2%, higher at $40.97 per barrel. Both contracts rose more than 4% on Wednesday.

The panel of major producers, including Saudi Arabia and Russia, did not recommend any changes to their current output reduction target of 7.7 million barrels per day (bpd), or around 8% of global demand, according to a draft press release and an internal report.

The panel pressed laggards such as Iraq, Nigeria and the United Arab Emirates to cut more barrels to compensate for overproduction in May-July, while extending the compensation period from September to the end of December, according to three OPEC+ sources.

“They were coming down hard on the UAE,” said Phil Flynn, senior analyst at Price Futures Group in New York. The expectation that output could fall as the UAE and others trim production bolstered prices, he said.

The OPEC news overshadowed the restart of U.S. offshore production after Hurricane Sally passed through the Gulf of Mexico and bearish U.S. economic news.

U.S. energy companies were starting to return crews to offshore oil platforms in the Gulf of Mexico after Sally halted operations for five days, shutting down nearly 500,000 bpd of output.

Prices were also under pressure from the slow economic recovery from the pandemic.

Global coronavirus cases are expected to pass 30 million on Thursday, according to a Reuters tally.

The U.S. Labor Department’s report showed the number of Americans filing new claims for unemployment benefits fell last week, but remained at extremely high levels as the labor market recovery shifts into low gear and consumer spending cools.

Even OPEC+ cautioned that the pandemic could continue to curb demand. An OPEC+ technical panel warned that a rise in coronavirus cases in some countries may curb oil demand despite signs of economic recovery and initial indications of a decline in oil stocks, according to an internal document seen by Reuters.

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On Wednesday 16, September 2020

Oil jumps nearly 5% in best day since June as inventories fall, hurricane hits output


An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.

An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.

JOHANNES EISELE | AFP via Getty Images

Oil prices jumped more than 4% on Wednesday, following a drawdown in U.S. crude and gasoline inventories and as Hurricane Sally forced a swath of U.S. offshore production to shut.

Brent crude rose $1.69, or 4.17%, to $42.22 a barrel, while West Texas Intermediate crude gained $1.88, or 4.9%, to settle at $40.16.

U.S. crude stocks fell 4.4 million barrels last week to 496 million barrels, their lowest since April, the U.S. Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 1.3 million-barrel rise,

U.S. gasoline stocks fell 400,000 barrels, the EIA said, more than double the draw forecast, despite a 4 percentage point hike in refining utilization rates.

“The inventory numbers are significant - refineries seemed to jump back to activity, gasoline demand jumped back so that’s definitely positive,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It seems that we’re back on the track of the drawdown on supplies.”

Sally, which made landfall on the U.S. Gulf Coast as a Category 2 hurricane, also boosted oil prices as more than a fourth of offshore output shut due to the storm.

Nearly 500,000 barrels per day (bpd) of offshore crude oil production was taken offline in the U.S. Gulf of Mexico, according to the U.S. Interior Department, roughly a third of the shut-ins caused by Hurricane Laura, which landed farther west in August.

Oil collapsed to historic lows as the coronavirus crisis hit demand. A record supply cut by OPEC and its allies, a grouping known as OPEC+, and an easing of lockdowns have helped Brent recover from a 21-year low below $16 in April.

Prices have sunk in September, pressured by rising coronavirus cases and concerns about demand.

The Organization of the Petroleum Exporting Countries and International Energy Agency both cut their demand outlooks this week.

A panel of OPEC+ oil ministers meets to review the supply pact on Thursday and is unlikely to recommend further output curbs despite the price drop, sources told Reuters.

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On Tuesday 15, September 2020


Oil jumps nearly 3% as Gulf Coast storm forces output cuts


The Wilmington ARCO refinery is seen before dawn on December 19, 2003 in Los Angeles, California.

The Wilmington ARCO refinery is seen before dawn on December 19, 2003 in Los Angeles, California.

David McNew | Getty Images

Oil prices rose nearly 3% on Tuesday, supported by hurricane supply disruptions in the United States, but demand concerns loomed as energy industry forecasters predicted a slower-than-expected recovery from the pandemic.

Brent crude rose 92 cents, or 2.5%, to $40.59 a barrel, while West Texas Intermediate crude futures gained $1.02, or 2.74%, to settle at $38.28 per barrel. Both contracts fell on Monday.

Futures gained ahead of Hurricane Sally’s expected landfall on the U.S. Gulf Coast. More than a fifth of U.S. offshore oil production was shut and key exporting ports were closed as the storm’s trajectory shifted east toward western Alabama, sparing some Gulf Coast refineries from high winds.

“Harsh weather events in the U.S. cause some unpredictability about its oil production and that’s always good news for prices,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.

But oil demand’s outlook remains weak, which limited gains during the session. The International Energy Agency (IEA) on Tuesday trimmed its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd, citing caution about the pace of economic recovery.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report.

The agency said commercial oil stocks in the developed world hit an all-time high of 3.225 billion barrels in July, and cut its forecast for implied stock draws for the second half of the year.

The IEA’s demand revision aligns with forecasts from major oil industry producers and traders. OPEC downgraded its oil demand forecast and BP said demand might have peaked in 2019.

World oil demand will tumble by 9.46 million bpd this year, the Organization of the Petroleum Exporting Countries said in a monthly report on Monday, more than the 9.06 million bpd decline OPEC expected a month ago.

Still, a meeting of the OPEC+ joint ministerial committee on Thursday is not expected to make recommendations for deeper output cuts, but focus rather on compliance and compensation mechanisms for its current cuts, sources told Reuters.

Meanwhile, China’s crude oil throughput in August rose from a year ago, reaching its second-highest level on record, as refineries worked to digest record imports earlier this year.

Investors awaited industry data due later on Tuesday that was expected to show U.S. crude inventories rose last week.

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On Monday 14, September 2020

Oil slips, building on two straight weeks of declines


South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.

South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.

David McNew | Getty Images


Oil prices slipped slightly on Monday amid concerns about a stalled global economic recovery and with Libya poised to resume production, and failed to get support from an impending storm which has disrupted U.S. oil output.

Brent crude was down 35 cents, or 0.9%, at $39.48 a barrel while U.S. West Texas Intermediate crude futures settled 7 cents, or 0.19%, lower at $37.26 per barrel.

Both contracts ended last week lower, falling for a second week in a row.

“The storm is taking production offline in the Gulf of Mexico, and the market doesn’t care - that shows just how bad the situation is,” said Bob Yawger, director of energy futures for Mizuho in New York.

Tropical Storm Sally gained in strength in the Gulf of Mexico, west of Florida on Sunday and was poised to become a category 2 hurricane. The storm is disrupting oil production for the second time in less than a month after Hurricane Laura swept through the region.

Typically oil prices rise when production is shut down, but with the coronavirus pandemic getting worse, demand concerns are to the fore, while global supplies continue to rise.

The path towards global fuel demand recovery is likely to be rocky, several senior industry executives said.

″(Coronavirus) infection rates are on the rise again, there are localized lockdowns introduced in a growing number of countries hindering regional economic growth and the number of unemployed is failing to fall significantly,” oil broker PVM’s Tamas Varga said.

“This leads to dismal oil demand growth.”

The Organization of the Petroleum Exporting Countries said on Monday that world oil demand would tumble by 9.46 million barrels per day (bpd) this year, a sharper decline than it predicted in a report a month ago.

In Libya, commander Khalifa Haftar committed to ending a months-long blockade of oil facilities, a move that would add more supplies to the market.

“If Libya’s production comes back online soon, we are talking about 1 million barrels per day or more, this will be a significant addition to the global balances. And the market is pricing this in today,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

OPEC and its allies, a grouping known as OPEC+, meets on Sept. 17 to discuss compliance with deep cuts in production, although analysts do not expect further reductions to be made.

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On Thursday 10, September 2020

Oil prices dip as inventory builds



A line handler helps dock the oil tanker, Texas Voyager, as it pulls into its mooring to offload its crude oil at Port Everglades on April 21, 2020 in Fort Lauderdale, Florida.
A line handler helps dock the oil tanker, Texas Voyager, as it pulls into its mooring to offload its crude oil at Port Everglades on April 21, 2020 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

Oil prices eased on Thursday after U.S. data showed a surprise build in crude stockpiles last week, confirming an industry report.
Brent futures fell 25 cents, or 0.6%, to $40.54 a barrel. West Texas Intermediate crude fell 75 cents, or 2%, to settle at $37.30 per barrel.
The U.S. Energy Information Administration (EIA) said crude inventories rose 2.0 million barrels last week. Analysts in a Reuters poll had forecast a 1.3-million barrel draw, and the American Petroleum Institute on Wednesday reported a 3 million-barrel increase.
“The market was a little surprised by the build given that much of the Gulf of Mexico production had not returned but this was offset as refineries ... have struggled to return after Hurricane Laura,” said Andrew Lipow, president of Lipow Oil Associates in Houston, noting “The decline in gasoline and distillate demand was another disappointment.”
Brent futures remained in oversold territory after dropping to their lowest since mid June earlier this week. Brent’s Relative Strength Index (RSI) was under 30 for a fifth straight day for the first time since March. WTI was in oversold territory for a fourth day.
In China, Bank ANZ said oil imports were likely to level off as independent refineries reach their maximum quotas.
In a further bearish sign, leading commodity traders were booking tankers to store crude oil and diesel.
The rising stockpiles come ahead of a meeting on Sept. 17 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.
“Despite the recent slide in oil prices, we think that the OPEC+ leadership will continue to direct its efforts towards securing better compliance rather than pushing for deeper cuts at this stage,” RBC analysts said.

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On Wednesday 9, September 2020

Oil jumps more than 3% after hitting multi-month low, but demand concerns remain



An oil refinery is situated along a highway in Big Spring, Texas.
An oil refinery is situated along a highway in Big Spring, Texas.
Spencer Platt | Getty Images

Oil futures on Wednesday clawed back some of the losses they sustained in the previous session, but a rebound in COVID-19 cases in some countries undermined hopes for a steady recovery in global demand.
Brent crude rose $1.21, or 3%, to $40.99 a barrel. The benchmark dropped more than 5% on Tuesday to fall below $40 a barrel for the first time since June.
U.S. crude settled $1.29, or 3.5%, higher at $38.05 per barrel, having fallen nearly 8% in the previous session.
That lifted the major benchmarks off Tuesday’s levels near three-month lows. Prices fell this week after Saudi Arabia’s state oil company Aramco cut the October official selling prices for its Arab light oil, a sign of softening demand.
“When strong Middle Eastern producers are willing to sell-off in lower prices it is normal that the global market panics and follows suit,” said Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst.
The global health crisis continues to flare with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States. The outbreaks are threatening to slow a global economic recovery and reduce demand for fuels from aviation gas to diesel.
“Short-term oil market fundamentals look soft: the demand recovery is fragile, inventories and spare capacity are high, and refining margins are low,” Morgan Stanley said.
Record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ have helped support prices, but with grim economic figures being reported almost daily, the outlook for demand for oil remains bleak.
China’s factory gate prices fell for a seventh straight month in August although at the slowest annual pace since March, suggesting industries in the world’s second-biggest economy continued their recovery from the coronavirus-induced downturn.
Investors awaited industry data on U.S. crude stockpiles due on Wednesday. U.S. crude oil stockpiles were expected to fall for a seventh straight week, while refined product inventories also likely dropped last week, a Reuters poll showed on Wednesday.
U.S. crude oil production is expected to fall 870,000 barrels per day to 11.38 million bpd this year, a less steep decline than previously forecast, the U.S. government said in its latest monthly outlook on Wednesday.
Further oil production cuts are expected in 2021, according to the report.

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On Tuesday 8, September 2020


Oil drops 8% to multi-month low on demand fears

Pippa Stevens



Paul Putnam, 53, a rancher and independent contract pumper walks past a pump jack in Loving County, Texas, U.S. November 25, 2019.
Paul Putnam, 53, a rancher and independent contract pumper walks past a pump jack in Loving County, Texas, U.S. November 25, 2019.
Angus Mordant | Reuters

Oil prices tumbled to their lowest level since June on Tuesday amid growing demand concerns as Covid-19 continues to spread.
West Texas Intermediate crude, the U.S. oil benchmark, slipped $3.19, or 8%, to trade at $36.60, its lowest level since June 16. International benchmark Brent crude dipped 5.4%, or $2.26, to trade at $39.75, also its lowest level since June.
“Today’s oil price move is a clear sign that the market now seriously worries about the future of oil demand,” said Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy. “The streak of losses is driven by a stalling crude demand outlook for the rest of the year, with rising cases of Covid-19 and the end of the summer driving season in the U.S., as well as Asian refineries putting on [the] breaks,” she added.
Since WTI plunged into negative territory in April for the first time on record, oil prices have staged a big comeback. WTI jumped nearly 90% in May, and has posted monthly gains ever since. The gains were, of course, on the back of record lows, but prices moved higher as international producers scaled back production in an effort to counteract the demand drop-off caused by the pandemic.
But in recent sessions prices have begun to trend lower. WTI fell during Monday’s session after registering a 7.45% loss in the prior week, snapping a four-week win streak and posting its worst weekly decline since June.
Tuesday’s move lower followed Saudi Aramco cutting its official selling prices for October, which RBC’s Helima Croft said triggered new demand concerns.
In a recent note to clients, Bank of America said that it will take three years for demand to recover from Covid-19, assuming there’s a vaccine or cure. The firm believes peak oil will come as soon as 2030 due in part to electric car proliferation.
Rising U.S.-China trade tensions, as well as production coming back online also pressured prices on Tuesday, as did a stronger U.S. dollar.
“The market has its eye on the big picture: where and when we see demand normalize globally and what happens with both US production and OPEC+ agreement over the medium term,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management.

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On Friday 4, September 2020

Oil drops nearly 4% to end the week lower, snapping four-week win streak



A man walks on a path in front of an oil derrick near the Huntington Beach Oil Fields on April 20, 2020 in Huntington Beach, California.
A man walks on a path in front of an oil derrick near the Huntington Beach Oil Fields on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices fell more than 3% on Friday, headed for their biggest weekly decline since June as concern around a slow economic recovery from the COVID-19 pandemic added to worries about weak oil demand.
Brent crude, the international benchmark, settled $1.41, or 3.2%, lower at $42.66 per barrel. West Texas Intermediate crude fell $1.60, or 3.8%, to settle at $39.77 per barrel.
Prices were pressured by extended declines in the U.S. equities market and by a report showing U.S. job growth slowed further in August as financial assistance from the government ran out.
Nonfarm payrolls increased by 1.37 million jobs last month, though employment remained 11.5 million below its pre-pandemic level and the jobless rate was 4.9 percentage points higher than in February.
The unemployment rate fell to 8.4% last month, compared with a forecast 9.8%, which some market analysts said would lessen urgency in Washington, D.C. to pass additional economic stimulus legislation.
“The hopes for more stimulus are going out the window,” said John Kilduff, partner at Again Capital in New York. “We need to see economic activity back up to get demand flowing.”
A U.S. government report this week showed domestic gasoline demand has fallen again, while middle distillate inventories at Asia’s Singapore oil hub have surpassed a nine-year high, official data showed. .
“The bigger market picture is overall bearish sentiment that kicked off with lower gasoline demand reports on Wednesday,” said Paola Rodriguez-Masiu, analyst at Rystad Energy.
Global oil demand could fall by 9-10 million barrels per day (bpd) this year due to the pandemic, Russian Energy Minister Alexander Novak said.
A record supply cut since May by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, has supported prices.
OPEC began in August to ease the scale of the cuts, raising output by almost 1 million bpd, according to a Reuters survey.

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On Thursday 3, September 2020

Oil closes slightly lower, regaining most of an early 3% drop




The silhouette of an oil pump is seen at sunset.
The silhouette of an oil pump is seen at sunset.
Pramote Polyamate | Getty Images

Oil prices fell on Thursday, at one point touchig their lowest since early August as U.S. unemployment data fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data.
Brent crude fell 30 cents, or 0.7%, to $44.13 a barrel. West Texas Intermediate crude futures settled 14 cents, or 0.34%, lower at $41.37 per barrel.
Both benchmarks fell more than 2% earlier in the session.
U.S. stock prices sank as investors sold high-flying tech stocks and worried about economic recovery after Labor Department data showed the number of Americans filing new claims for unemployment reached a seasonally adjusted 881,000 for the latest week. Continuing claims remained high, with millions out of work.
A day earlier both oil benchmarks fell more than 2% after U.S. Energy Information Administration (EIA) data showed domestic gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. Consumption of other oil products also fell.
“The market failed to react positively to the drawdown in inventories and then threw in the towel for the Labor Day weekend,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Analysts warn that upcoming refinery maintenance and the end of the summer driving season could also limit crude demand.
WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.
Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said. Some analysts believe processing will not rebound in the fall.
“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.

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On Wednesday 2, September 2020

Oil drops 3% to one-month low on weak U.S. gasoline demand



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil fell more than 2% on Wednesday, reversing course as gasoline demand fell in the United States in the latest week, an indication that economic recovery from the pandemic may be slower than expected.
Futures prices turned negative after weekly government data from the U.S. showed lower gasoline demand from a week earlier, shrugging off bullish crude inventory data.
“The market is trying to dismiss the number as a storm-related one-off,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “While the storm may have exaggerated the numbers, it doesn’t justify the amount of the sell-off that we got.”
Crude inventories fell by 9.4 million barrels in the last week to 498.4 million barrels, a far steeper dive than the 1.9 million-barrel drop that analysts expected in a Reuters poll. The data reflects a period during which Hurricane Laura shut output and refining facilities.
Brent crude, the global benchmark, fell $1.15, or 2.5%, to settle at $44.43 per barrel, after two days of price gains. West Texas Intermediate crude settled 2.9%, or $1.25, lower at $41.51 per barrel.
Oil has recovered from historic lows hit in April, when Brent slumped to a 21-year low below $16 and U.S. crude ended one session in negative territory.
A record supply cut by the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, has supported prices.
The producers have begun to return some crude to the market as demand partially recovers and OPEC in August raised output by about 1 million barrels per day (bpd), a Reuters survey found on Tuesday.

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On Tuesday 1, September 2020

Oil prices rise on improving economic data



A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.
A line of oil tankers transporting fuel to the refineries located along the Mississippi River just north of New Orleans, Louisiana.
Art Wager | Getty Images

Oil prices rose on Tuesday, reversing overnight losses as better-than-expected U.S. manufacturing activity data spurred hope for a post-pandemic economic recovery, and as analysts forecast a sixth weekly drawdown in U.S. crude inventories.
The dollar was at it lowest in more than two years against a basket of currencies, pressured by the U.S. Federal Reserve’s loosening of inflation policy last week, which was supportive for oil as dollar-priced commodities become cheaper for global buyers.
Brent crude futures gained 30 cents, or 0.66%, to settle at $45.58 per barrel, while West Texas Intermediate crude futures settled 15 cents, or 0.4%, higher at $42.76 per barrel.
“Everyone is looking for a draw, of one degree or another, in the API this afternoon,” said Bob Yawger, director of energy futures at Mizuho in New York. “The manufacturing numbers and the bullishness around the AstraZeneca virus vaccine added to the optimism,” he said.
U.S. crude stocks were forecast to have fallen by about 2 million barrels last week, according to analysts in a Reuters poll ahead of weekly data from the American Petroleum Institute at 4:30 p.m. ET (2030 GMT) and the government on Wednesday.
Gasoline inventories were expected to have fallen by 3.6 million barrels.
U.S. manufacturing activity accelerated to a more than 1-1/2-year high in August amid a surge in new orders, but employment continued to lag, supporting views that the labor market recovery was losing momentum.
The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 56.0 last month from 54.2 in July. That was the highest level since January 2019 and marked three straight months of growth.
AstraZeneca has expanded its previous agreement with Oxford Biomedica to mass-produce the British drugmaker’s COVID-19 vaccine candidate, as it looks to scale-up supply ahead of a possible fast-track approval from the United States.
Strong Chinese manufacturing data also lifted oil prices, said Jeffrey Halley, a senior market analyst at OANDA.
The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) showed China’s factory activity expanded at the fastest pace in nearly a decade last month, bolstered by the first increase in new export orders this year.
Bulls also pushed up equities, with the MSCI world equity index close to a record peak on Tuesday.
Yet oil, which often moves in tandem with equities, remains reined in by demand concerns.
PVM analyst Tamas Varga said oil prices are likely to move below recent levels, citing sizeable downward revisions to second-half demand estimates by the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC).
In a Reuters poll of 43 analysts and economists, global oil demand was seen contracting by between 8-10 million barrels per day (bpd) versus July’s 7.2-8.5 million bpd consensus.
Brent was forecast to average $42.75 a barrel in 2020, up from July’s $41.50 consensus and compared with an average price of $42.60 so far this year. Brent is expected to average $50.45 in 2021.
The 2020 U.S. crude price outlook rose to $38.82 a barrel from July’s $37.51.

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On Monday 31, August 2020

Oil prices edge up on stimulus support despite ample supplies



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices nudged up on Monday, with Brent futures set to post a fifth straight monthly gain, as global stimulus measures underpin prices even as demand struggles to return to pre-COVID levels in a well supplied market.
Brent crude futures for November were unchanged at $45.81 per barrel, while U.S. West Texas Intermediate crude was at $43.05 a barrel, up 8 cents.
WTI is on track for a fourth monthly rise, reaching $43.78 a barrel on Aug. 26 when Hurricane Laura struck.
Oil markets largely shrugged off the hurricane’s impact on Friday as energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm.
A weak U.S. dollar has supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain excessive, although crude may face hurdles going forward, analysts said.
“We believe that the impact of a cheaper dollar from current levels will see a minimal impact on crude purchases, irrespective of slightly more favorable crude pricing,” RBC Capital’s Mike Tran said in an Aug. 27 note.
“The relationship between demand and price elasticity is blunted in the current environment, because oil is already cheap and readily available and there currently exist a dearth of buyers.”
China’s crude imports in September are set to fall for the first time in five months as record volumes of crude are storedin and outside of the world’s largest importer, data from Refinitiv and Vortexa showed.
Reflecting concerns about rising supplies and sluggish global economic recovery, hedge funds and money managers cut bullish wagers on U.S. crude to the lowest level in nearly four months, data showed on Friday.
Higher oil and gas prices are also encouraging U.S. producers to resume drilling as the country’s oil and gas rig count rose by three to 254 in August, according to data from energy services firm Baker Hughes Co.
Separately, Saudi Aramco discovered two new oil and gas fields in the northern regions, the kingdom’s energy minister said on Sunday, state news agency SPA reported.

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On Friday 28, August 2020


Oil moves lower, but posts sixth positive week in last seven



Storage tanks stand the Sabine Pass LNG Export Terminal ahead of Hurricane Laura in Sabine Pass, Texas, U.S., on Tuesday, Aug. 25, 2020.
Storage tanks stand the Sabine Pass LNG Export Terminal ahead of Hurricane Laura in Sabine Pass, Texas, U.S., on Tuesday, Aug. 25, 2020.
Luke Sharrett | Bloomberg | Getty Images

Oil prices inched lower on Friday as Hurricane Laura passed the heart of the U.S. oil industry in Louisiana and Texas without causing any widespread damage and companies were beginning to restart operations.
Brent crude futures for October, set to expire on Friday, were down 5 cents to $45.04 a barrel. West Texas Intermediate crude settled 7 cents, or 0.2%, lower at $42.97 per barrel.
Both benchmarks were on track for weekly gains of about 1.4%, with WTI headed for a fourth straight weekly rise. The benchmarks hit five-month highs during the week as U.S. producers cut crude output ahead of Laura at a rate close to the level of 2005′s Hurricane Katrina.
“The oil trade has been featured by strong advances at the start of the week as a sizable amount of storm premium was pumped into the market ahead of Hurricane Laura, followed by a major erasure of hurricane premium following the storm’s arrival as limited impact on offshore crude production or refinery activity was indicated,” said Jim Ritterbusch, president of Ritterbusch and Associates.
The oil market has had an unusually long spell of low volatility, analyst Eugen Weinberg at Commerzbank said, in contrast with stock markets.
“It didn’t even react to a weaker dollar. There’s no impulse in either direction. It has seldom had so little volatility for such a long period, especially given the dynamic situation on the demand and supply sides,” Weinberg said.
Laura, since downgraded to a tropical depression, hit Louisiana early on Thursday with winds of 150 miles per hour (240 km per hour). The storm killed at least six people, damaged buildings and felled trees. Power was cut to hundreds of thousands in Louisiana and Texas, but refineries were spared from massive flooding.
Oil producers had shut 1.56 million barrels per day (bpd) of crude output, or 83% of the Gulf of Mexico’s production, while nine refineries had shut around 2.9 million bpd of capacity, or 15% of U.S. processing capacity, ahead of the hurricane.
Valero Energy Corp began restarting its 335,000 bpd Port Arthur, Texas, refinery on Friday, while Exxon Mobil was preparing to restart its 370,000 bpd Beaumont, Texas, refinery.
However, repairs to Citgo Petroleum’s 418,000-bpd Lake Charles, Louisiana, plant could take four to six weeks, according to Mizuho Securities. The company did not immediately reply to a request for comment.
Late on Thursday, the Port of Houston, the top U.S. crude oil export hub accounting for about 600,000 bpd of shipments, was in the process of reopening to commercial shipping.
U.S. energy firms kept the number of oil and natural gas rigs operating unchanged this week, resulting in the first monthly increase since December as higher crude prices prompt some producers to start drilling again.
Further ahead, demand expectations remained bearish. The contango between Brent crude for nearby delivery and six-months ahead remained near its widest since late May with the front-month contract more than $2 cheaper.
“Aside from Saudi Arabia, everyone else is clear that global oil demand won’t return to 2019 (levels) until at least 2022. The latest monthly estimate from the IEA/EIA/OPEC triumvirate suggests consumption will not recover to pre-pandemic levels next year,” PVM Oil Associates said in a daily note.

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On Thursday 27, August 2020

Oil dips as Hurricane Laura hammers U.S. Gulf Coast



An oil refinery is situated along a highway in Big Spring, Texas.
An oil refinery is situated along a highway in Big Spring, Texas.
Spencer Platt | Getty Images

Oil prices fell on Thursday as a massive hurricane in the Gulf of Mexico made landfall in the heart of the U.S. oil industry, forcing oil rigs and refineries to shut down.
Brent crude futures for October, which expire on Friday, fell 57 cents, or 1.3%, to $45.10 a barrel. West Texas Intermediate crude futures settled 35 cents, or 0.8%, lower at $43.04 per barrel.
The storm hit Louisiana early Thursday with 150 mile-per-hour (240 kph) winds, damaging buildings, knocking down trees and cutting power to more than 400,000 people in Louisiana and Texas. Its storm surge was less than predicted, sparing inland plants from feared flooding.
Oil producers on Tuesday had shut 1.56 million barrels per day (bpd) of crude output, or 84% of the Gulf of Mexico’s production, evacuating 310 offshore facilities.
At the same time, refiners that convert nearly 2.33 million bpd of crude oil into fuel, and account for about 12% of U.S. processing, halted operations.
“On the one hand refinery shutdowns reduced the demand for crude oil, but at the same time Gulf of Mexico production was shut in, nearly offsetting each other,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Exxon Mobil Corp said it was contacting employees of its 369,000 barrel-per-day oil refinery and chemical plant in Beaumont, Texas, and preparing a preliminary tally of damages. The large plant was one of six plants along the Gulf Coast’s refinery row that shut this week ahead of the storm.
“These guys have gone through these drills many times,” said Jennifer Rowland, senior analyst at Edward Jones in St. Louis. “They know how to turn those units down and get them back up within a number of days...it shouldn’t be that big of an impact,” she added.

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On Wednesday 26, August 2020


Oil holds near five-month high as U.S. braces for hurricane, but virus concerns weigh



A Marathon oil refinery stands in Louisiana, La. Gulf Coast.
A Marathon oil refinery stands in Louisiana, La. Gulf Coast.
Patrick Semansky | Bloomberg | Getty Images

Oil prices steadied on Wednesday, pressured by worries about the demand outlook during the coronavirus pandemic but buoyed as U.S. producers shut output in the Gulf of Mexico ahead of Hurricane Laura.
Renewed worries over the COVID-19 pandemic, which has squeezed demand and sent prices to record lows in April, dampened market sentiment after reports this week of patients being re-infected, raising concerns about future immunity.
Brent crude fell 6 cents to $45.80 a barrel, while West Texas Intermediate crude settled 4 cents higher at $43.39 per barrel. Both benchmarks settled at a five-month high on Tuesday.
The U.S. energy industry was preparing for Hurricane Laura, expected to make landfall along the Gulf Coast late Wednesday or early Thursday. Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of U.S. processing, were shutting down.
Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production.
“Oil traders will be preoccupied with the hurricane today,” said Tamas Varga of broker PVM. “Once the danger passes, demand considerations will come into focus again.”
Ahead of the storm, crude exports last week rose by the most since February 2019 to nearly 3.4 million barrels per day, U.S. Energy Information Administration data showed on Wednesday.
“These guys are aware that the storm is on the way and they will try to get as much crude oil out of here as fast as they can,” said Bob Yawger, director of energy futures at Mizuho.
Meanwhile, U.S. crude inventories fell by 4.7 million barrels in the week to Aug. 21, compared with analysts’ expectations for a decrease of 3.7 million barrels, EIA said.

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On Tuesday 25, August 2020

Oil climbs to five-month high on storm-driven output cuts



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Crude oil prices rose on Tuesday, hitting a five-month high as U.S. producers shut most output in the Gulf of Mexico ahead of Hurricane Laura even as rising coronavirus cases in Asia and Europe capped gains.
Brent futures rose 83 cents, or 1.8%, to $45.96 a barrel, while West Texas Intermediate crude rose 73 cents, or 1.7%, to settle at $43.35 per barrel.
U.S. producers cut crude output ahead of Hurricane Laura at a rate approaching the level of 2005′s Hurricane Katrina and halted most oil refining along the Texas/Louisiana coast.
Laura is expected to strengthen into a major hurricane with 115 mile per hour (185 kph) winds when it strikes the coast near the Texas-Louisiana border early Thursday, according to the U.S. National Hurricane Center.
On Monday, energy firms shut 1.5 million barrels per day of crude output, 82% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.
“The storm factor will remain a primary focus in the energy complex through the rest of this week, likely overshadowing tomorrow’s (Energy Information Administration) report as a significant price driver,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Analysts forecast U.S. crude stockpiles fell for a fifth week in a row last week, according to a Reuters poll conducted ahead of reports from the American Petroleum Institute (API) on Tuesday and the U.S. Energy Information Administration on Wednesday.
“Overall, hurricanes may be limiting supply this week ... but the market will soon again focus on the biggest hurricane of them all, COVID-19,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Europe is seeing a rise in coronavirus cases, including re-infection. Two re-infections were reported in Europe and one in Hong Kong.
Elsewhere, U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal.

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On Monday 25,  August 2020

Muted oil reaction to dual storm threat is 'remarkable,' Kilduff says

Pippa Stevens



This is a file photo showing Chevron Corp. Jack/St. Malo deepwater oil platform stands in the Gulf of Mexico in the aerial photograph taken off the coast of Louisiana, on Friday, May 18, 2018.
This is a file photo showing Chevron Corp. Jack/St. Malo deepwater oil platform stands in the Gulf of Mexico in the aerial photograph taken off the coast of Louisiana, on Friday, May 18, 2018.
Luke Sharrett | Bloomberg | Getty Images

Two storms are barreling toward the Gulf Coast forcing a shutdown in oil operations, but the muted reaction in oil prices demonstrates just how closely the market is tied to a global recovery from Covid-19.
“Due to the moribund demand for gasoline and diesel fuels these days, due to the pandemic, it is hard to get a rally going off this remarkable dual-storm threat, which itself is remarkable,” Again Capital’s John Kilduff told CNBC.
Marco, which is expected to make landfall first, has weakened as it approaches the coast and was downgraded to a tropical storm on Sunday night. The other storm Laura, however, is strengthening and “could be more menacing,” according to Kilduff.
“Given that both storms appear modest based on current forecasts we see lower potential for a sustainable impact on crude ... We expect the elevated storm activity to offer modest but short lived support for both oil prices and refining margins,” added Bank of America’s Doug Leggate.
West Texas Intermediate crude, the U.S. oil benchmark, gained 9 cents, or 0.2%, to trade at $42.41 per barrel. International benchmark Brent crude advanced 43 cents to $44.78 per barrel.
As of Sunday, about 57.6% of offshore oil production in the Gulf of Mexico had been shut-in, or roughly 1.07 million barrels per day, according to the U.S. government.
The primary driving force for oil prices continues to be the unprecedented fall-off in demand caused by the coronavirus pandemic, as well as worldwide producers’ response to the plunge in prices.
“Today is more of an opportunity to see that even such a sudden event is weak to really put aside the concerns that Covid-19 has brought upon market participants,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets. “Yes, a dip in oil production provides a breath to traders, who have been seeing global output rising over the last weeks, amid a demand recovery lag. But what will really make a difference is news from the recovery front,” he added.
Henry Hub natural gas futures also got a boost on Monday with the contract for September delivery advancing 3.64% to $2.53 per million British thermal units. About 44.6% of natural gas production in the Gulf of Mexico is currently offline, which has helped fuel the jump in prices. But Brian Lovern, chief meteorologist at Bespoke Weather Services, noted that the boost could be short-lived.
“The other side of the storm is that it looks like it will be heading toward Sabine Pass and/or Cameron, [Louisiana], which means it will have a detrimental impact on LNG volumes as well in the coming days, and wherever the storm makes landfall, there will be demand destruction via rain and power outages, and this will be very significant if the storm tracks far enough westward to impact the Houston/Galveston region,” he said.
Gasoline futures gained 5.86% on Monday to trade at $1.36, the highest level since March 6.
- CNBC’s Michael Bloom contributed reporting.

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On Friday 21, August 2020

Oil slides 1%, but still posts fifth week of gains in last six



Two workers stand before the backdrop of an oil pump, while silhouetted against the sunset.
Two workers stand before the backdrop of an oil pump, while silhouetted against the sunset.
David Jones | Getty Images

Oil prices dropped on Friday as the economic recovery worldwide runs into stumbling blocks due to renewed coronavirus lockdowns, even as major global crude producers limit crude supply.
The euro zone’s economic recovery from its deepest downturn on record has stalled this month as pent-up demand unleashed by the easing of lockdowns in July dwindled, a survey showed.
By contrast, U.S. housing and manufacturing survey data came in better than expected, offsetting a surprising increase in jobless claims on Thursday.
Brent crude futures were down 84 cents, or 1.9%, at $44.06 a barrel, heading for a nearly 2% weekly fall.
West Texas Intermediate crude futures settled 48 cents, or 1.12%, lower at $42.34 per barrel.
“Right now, the concerns about demand and the uptick in COVID cases seems to be the big reason why we’re weaker,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
India’s crude oil imports fell in July to their lowest level since March 2010, while U.S. motorists drove 13% fewer miles in June than a year earlier, according the U.S. Department of Transportation.
Libya’s national oil company said it could restart oil exports after the North African country’s internationally recognized government in Tripoli announced a ceasefire, putting further pressure on oil prices.
“This is a market that can’t afford to absorb any additional barrels,” said John Kilduff, partner at Again Capital LLC in New York.
OPEC+, which consists of the Organization of the Petroleum Exporting Countries and allies, including Russia, was focused on ensuring members that had overproduced against their commitments would reduce output.
An internal report showed the group wanted oversupply between May and July compensated for with cuts this month and next, Reuters reported.
It also showed OPEC+ expects oil demand in 2020 to fall by 9.1 million barrels per day, and by as much as 11.2 million bpd if there is a resurgence of coronavirus infections.

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On Thursday 20, August 2020


Oil falls on oversupply concerns, U.S. jobless data



Oil pipeline and refinery.
Oil pipeline and refinery.
Michael Krakowiak | Getty Images

Oil fell on Thursday after Reuters reported OPEC+ needed to address daily oversupply of more than 2 million barrels, and the number of U.S. unemployment benefit claims rose unexpectedly, signalling a slow economic recovery.
Brent crude fell $1.24, or 2.7%, to $44.13 a barrel, and West Texas Intermediate crude settled 35 cents, or 0.82%, lower at $42.58 per barrel.
“While oil-market fundamentals may have started to normalise, much of the progress comes from the supply side, while demand continues to disappoint,” said Emily Ashford, energy analyst at Standard Chartered Bank.
A firmer U.S. dollar, which makes oil more expensive for holders of other currencies, also put pressure on prices, analysts said, leaving them stuck in a narrow trading range.
Oil prices have been rangebound since mid-June, with Brent trading from $40 to $46 per barrel and WTI between $37 and $43.
The Organization of the Petroleum Exporting Countries and its allies, known an OPEC+, said on Wednesday the pace of the oil market recovery appeared to be slower than anticipated with growing risks of a prolonged second wave of the pandemic.
Prices came under renewed pressure after Reuters reported that some OPEC+ members would need to cut output by an extra 2.31 million barrels per day (bpd) to make up for recent oversupply.
Markets also turned sour as the number of new U.S. claims for unemployment benefits rose back above 1 million last week.
The setback came a day after several U.S. Fed members said additional monetary policy easing may be needed because a rebound in employment was already slowing.
“All roads in global and regional economies lead to the containment of the virus and the end of these roads is not in sight yet,” said oil broker PVM’s Tamas Varga.
The U.S. Energy Information Administration said on Wednesday U.S. fuel demand fell by more than 2 million bpd to 17.2 million bpd in terms of product supplied.
Overall fuel demand in the last four weeks is down 14% from year-ago levels. As the summer driving season comes to a close, fuel demand tends to decline.
However, stockpiles of crude in the United States fell for a fourth straight week, even as net imports rose, the EIA said.

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On Wednesday 19, August 2020

Oil rises slightly as inventory draw outweighs demand worries



Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices were little changed on Wednesday as concerns lingered over soft U.S. fuel demand while global producers feared a second prolonged wave of the coronavirus pandemic was a major risk for the market recovery.
U.S. crude oil stockpiles fell 1.6 million barrels last week, while fuel demand was down 14% from the year-ago period over the last four weeks, Energy Information Administration data showed.
“The drop in gasoline demand week-over-week was a concern. That’s still showing weakness,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “The only thing that is holding us back is demand,” he said.
Brent crude futures were down 13 cents at $45.33 a barrel, but still not far off a five-month high above $46 a barrel reached earlier in August.
West Texas Intermediate crude settled 4 cents higher at $42.93 per barrel.
Global oil demand should recover to pre-pandemic levels as soon as the fourth quarter, the Saudi Energy minister said, while urging compliance with a global deal to cut output.
The Organization of the Petroleum Exporting Countries and its allies such as Russia, a grouping dubbed OPEC+, began a meeting on Wednesday to review the compliance levels with the deal, aimed at supporting prices. .
“Based on the average projections of various institutions, ... it is estimated that the world will reach about 97% of pre-pandemic oil demand during the fourth quarter - which is a big recovery from the huge falls in April and May,” said Prince Abdulaziz bin Salman. A draft OPEC+ statement, seen by Reuters, said a second prolonged wave of the pandemic was a major risk for the oil market recovery.
OPEC+ sources have said the group was unlikely to change on Wednesday its output policy, which currently calls for reducing output by 7.7 million barrels per day (bpd) versus a record high 9.7 million bpd up until this month.

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On Tuesday 18, August 2020


Oil unchanged as traders await inventory data



A worker pours liquid oil into a barrel
A worker pours liquid oil into a barrel
Akos Stiller | Bloomberg | Getty Images

Oil prices steadied on Tuesday as demand fears from the new coronavirus offset high compliance with supply cuts from the OPEC+ producer group.
Brent crude futures rose 4 cents to $45.41 a barrel by. U.S. West Texas Intermediate crude futures were unchanged at $42.89 per barrel.
The coronavirus pandemic, which has raged for months, shows no signs of letting up. In the Americas alone, almost 11.5 million have contracted the disease, and over 400,000 people have died as a result of the pandemic, the World Health Organization regional director Carissa Etienne said on Tuesday.
The United States and Brazil are the biggest drivers of the COVID-19 case count in the Americas, Etienne added.
“There are still ongoing concerns about COVID and there are continuing concerns about the lack of a deal in Congress for stimulus,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
The U.S. Congress has so far failed to agree on another fiscal relief package to stem economic fallout from the pandemic.
Meanwhile, some European countries have renewed travel quarantines, which impact jet and motor fuel demand.
Supporting prices on Tuesday, a technical panel found that compliance with OPEC+ oil output cuts in July was between 95% and 97%, according to a draft report seen on Monday by Reuters.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a grouping known as OPEC+, eased their cuts in August to 7.7 million barrels per day (bpd) from 9.7 million bpd previously.
OPEC+ will hold a ministerial panel meeting on Wednesday.
Australian miner and oil producer BHP said in its earnings on Tuesday that it believes “the most significant risks to the physical (oil) market have now passed,” adding that the pace of gains could be modest given potential headwinds from supply returning.
Market participants awaited weekly industry data later on Tuesday on U.S. crude inventories. Analysts expect the data to show that U.S. crude oil stockpiles and refined product inventories fell last week.

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On Monday 17, August 2020

Oil steady as China's plans to boost U.S. imports counters tensions



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices steadied on Monday as news that China planned to ship large volumes of U.S. crude in August and September countered rising tensions between the two countries and a delay in the review of their trade pact over the weekend.
Brent crude was up 17 cents at $44.97 per barrel, and West Texas Intermediate crude traded 32 cents higher at $42.33 per barrel.
The emergence of new coronavirus hot spots particularly in Europe also put pressure on fuel demand and oil prices, analysts said, while a weak dollar lent some support.
“Clearly the market is not tightening as quickly as initially anticipated. Demand is taking longer than expected to get back to normal levels,” ING Group said.
Market sentiment soured after the United States and China delayed a review of their Phase 1 trade deal initially slated for Saturday, citing scheduling conflicts.
However, in a positive signal, Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September.
Investors are also looking for more clues on future supply from a meeting this week of a panel representing ministers of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+.
The Joint Ministerial Monitoring Committee (JMMC) monitors OPEC+ production curbs agreed earlier this year. Last month, the JMMC recommended that cuts be eased from Aug. 1 to about 7.7 million barrels per day (bpd) from a reduction of 9.7 million bpd since May, in line with an earlier OPEC+ agreement.
Iran’s oil minister, Bijan Zanganeh said “OPEC’s performance has been successful because the price of oil has risen from $16 in May to around $45 and has stabilised.”
ANZ estimated that demand had risen 8 million barrels per day (bpd) over the past four months to 88 million bpd - still 13 million bpd below this time last year.
In the United States the number of oil and natural gas rigs operating last week remained anchored at a record low for a 15th week, even as higher oil prices prompt some producers to start drilling again.

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On Friday 14, August 2020


Oil slips on demand fears, but posts gain for the week



A view of the Marathon Petroleum Corp's Los Angeles Refinery in Carson, California, April 25, 2020.
A view of the Marathon Petroleum Corp’s Los Angeles Refinery in Carson, California, April 25, 2020.
Robyn Beck | AFP | Getty Images

Oil prices edged lower on Friday on worries that demand would recover more slowly than expected from COVID-19 pandemic lockdowns, while rising supply also overshadowed optimism over falling crude and fuel inventories.
This week, two prominent forecasters, the International Energy Agency and the Organization of the Petroleum Exporting Countries, trimmed their 2020 oil demand forecasts. OPEC and its allies are increasing output this month.
“The big-picture question is whether the spread of coronavirus is going to continue to impact on the return of gasoline and diesel demand,” said Andy Lipow of Lipow Oil Associates in Houston.
Brent crude fell 10 cents to $44.86 per barrel, while West Texas Intermediate settled 23 cents lower at $43.01 per barrel.
Prices had been bolstered this week by U.S. government data showing crude oil, gasoline and distillate inventories falling last week as refiners ramped up production and demand for oil products rose.
“If that trend continues, it’s very supportive of prices and should drive prices higher,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
The number of U.S. oil and gas rigs, an indicator of future supply, fell this week for a 15th straight week to record lows, according to energy services firm Baker Hughes.
“What’s holding us back on that sentiment is that the market is still afraid of what is going to happen next with the virus,” Flynn said.
Oil has recovered from lows touched in April, when WTI briefly turned negative. Still, a rise in the number of novel coronavirus infections has limited gains. India reported another record daily rise in cases on Thursday.
OPEC and allies including Russia, a group known as OPEC+, have cut output since May by around 10% of pre-pandemic global demand to support the market. The deal calls for an increase in output this month as demand recovers.
An OPEC+ panel meets on Wednesday to review the market.

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On Thursday 13, August 2020

Oil drops 1% after IEA lowers demand forecast



A heavy crude oil pump.
A heavy crude oil pump.
Jsmes Hall | EyeEm | Getty Images

Oil prices eased on Thursday after the International Energy Agency lowered its 2020 oil demand forecast following unprecedented travel restrictions, but resilience in equities markets and a weak dollar limited losses.
Brent crude was down 43 cents, or 0.95%, at $45.00 a barrel, and West Texas Intermediate settled 43 cents, or 1.01%, lower at $42.24 per barrel.
The International Energy Agency cut its 2020 oil demand forecast on Thursday and said reduced air travel because of the COVID-19 pandemic would lower global oil consumption this year by 8.1 million barrels per day (bpd).
The Organization of the Petroleum Exporting Countries (OPEC) also said that world oil demand will fall by 9.06 million bpd this year, more than the 8.95 million bpd decline expected a month ago.
“Overall, neither yesterday’s OPEC or today’s IEA release appeared to have much effect on an oil market that is still primarily focused on the ongoing expansion in risk appetite that remains undeterred by lack of progress in formulating a viable U.S. stimulus deal,” said Jim Ritterbusch of Ritterbusch and Associates.
Wall Street has recovered most of the trillions lost during the start of the COVID-19 pandemic and the S&P 500 remained within striking distance of a record high.
The dollar fell to its lowest in a week against a basket of currencies on Thursday. A weaker dollar makes oil cheaper for holders of foreign currencies.
Investors across asset classes are still awaiting a breakthrough on a U.S. stimulus package and keeping watch on frayed U.S.-China ties ahead of trade talks on Aug. 15.
Russian Energy Minister Alexander Novak said he did not expect hasty decisions on output cuts when a monitoring committee of OPEC and its allies, known as OPEC+, meets next week as the oil market has been stable.
Last month OPEC+ eased the cuts to around to 7.7 million bpd until December from a previous reduction of 9.7 million bpd, reflecting a gradual improvement in global oil demand.
Prices found some support as U.S. crude oil, gasoline and distillate inventories dropped last week as refiners ramped up production and demand improved, a government report showed.
Oil prices have been range-bound since mid-June with Brent trading between $40 and $46 per barrel, and WTI between $37 and $43.
“The market moved from chronic oversupply in April-May to a deficit by June,” said Ehsan Khoman, head of MENA research and strategy at MUFG. “The underlying oil market deficit is becoming more evident and, along with a broader reflation narrative, is keeping oil prices on an even keel.”

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On Wednesday 12, August 2020

Oil jumps more than 2% after larger-than-expected U.S. inventory drop



A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters

Crude prices rose more than 2% on Wednesday after government data showed U.S. oil inventories fell across the board, bolstering hopes that fuel demand in the world’s biggest economy will withstand the coronavirus pandemic.
Brent crude was up 95 cents, or 2.1%, at $45.44 a barrel, after falling around 1% on Tuesday. West Texas Intermediate oil gained $1.06, or 2.55%, to settle at $42.67 per barrel, having dropped 0.8% in the previous session.
U.S. crude oil, gasoline and distillate inventories fell last week as crude production dropped sharply and refiners ramped up production, the Energy Information Administration said on Wednesday.
Crude inventories fell by 4.5 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 2.9 million-barrel drop.
The report was “very supportive,” said Tony Headrick, energy markets analyst at CHS Hedging. “Looking beyond draws across the board, crude oil production finally caved in as anticipated, down 300,000 barrels.”
U.S. crude output dropped to 10.7 million barrels per day from 11 million bpd in the previous week, according to the report.
The EIA’s downward revision on Tuesday to a key U.S. oil production forecast for this year also lent support to prices.
U.S. crude production is forecast to fall 990,000 bpd this year to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month.
World oil demand will fall by 9.06 million bpd this year, the Organization of the Petroleum Exporting Countries said in a monthly report on Wednesday, more than the 8.95 million bpd decline expected a month ago.
Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices.
In India, refined fuels consumption fell to 15.68 million tonnes in July, down 11.7% year-on-year and 3.5% below June’s levels, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.

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On Tuesday 11, August 2020

Oil drops, reversing more than 2% gain in volatile session



Men work for Iraqi Drilling Company at Rumaila oilfield in Basra, Iraq,
Men work for Iraqi Drilling Company at Rumaila oilfield in Basra, Iraq,
Essam Al-Sudani | Reuters

Crude oil prices turned negative on Tuesday, despite expectations of U.S. economic stimulus to support the world’s biggest oil consumer as well as a rebound in Asian demand as economies reopen.
West Texas Intermediate crude settled 33 cents, or 0.79%, lower at $41.61 per barrel, after earlier rising more than 2%. International benchmark Brent crude fell 37 cents, or 0.82%, to trade at $44.64 per barrel.
U.S. President Donald Trump tweeted on Monday that top congressional Democrats want to meet him to discuss coronavirus-related economic relief after talks broke down last week.
“A deal on the support package is not a foregone conclusion, but if a mutually acceptable accord is struck, stocks and oil will get a short-term boost,” said Tamas Varga of oil brokerage PVM.
Signs of recovering Asian oil demand also boosted prices.
On Sunday, Saudi Aramco CEO Amin Nasser said he expects oil demand to rebound in Asia as economies open up.
China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of recovery in the world’s second-largest economy.
Prices also found support from a rally in European stocks, which rose for a third straight session on Tuesday as automakers gained on firm Chinese sales data.
U.S. passenger airline traffic, which was hit hard by the COVID-19 pandemic, was down 80% year on year in June, official figures showed, but was still nearly twice the levels in May.
Energy companies have begun taking back millions of barrels of oil from the U.S. government’s emergency stockpile after renting storage to manage a glut of crude this spring after energy demand collapsed during coronavirus lockdowns, a Department of Energy website showed on Monday.

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On Monday 10, August 2020

Oil jumps nearly 2% on Chinese factory data, U.S. stimulus hopes



Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil rose on Monday, supported by an improvement in Chinese factory data, rising energy demand and hopes for an agreement in the United States on more coronavirus-related economic stimulus.
Brent crude rose 82 cents, or 1.9%, to $45.22 a barrel. West Texas Intermediate crude settled 72 cents, or 1.7%, higher at $41.94 per barrel.
Prices found support after U.S. President Donald Trump said House Speaker Nancy Pelosi and Senator Chuck Schumer, top Democrat in that chamber of congress, wanted to meet with him to make a deal on coronavirus-related economic relief.
The talks between Democrats and members of Republican Trump’s administration broke down last week.
“The oil complex is heavily reliant on that aid. We need people to be able to boost economic activity to spur demand,” said John Kilduff, partner at Again Capital in New York.
On Sunday, Saudi Arabian Aramco CEO Amin Nasser he sees oil demand rebounding in Asia as economies gradually open up.
China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed toward pre-pandemic levels.
“With oil demand still slowly grinding higher, and oil supply in check due to the OPEC+ production cut deal and prices too low to incentivise strong production growth in the United States, the oil market remains undersupplied,” UBS analyst Giovanni Staunovo said.
Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months.
The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.
“This would send out a strong signal to the oil market on various levels. That said, this would also require the international companies operating in Iraq to join in with the cuts,” Commerzbank analyst Eugen Weinberg said.

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On Friday 7, August 2020

Oil slips on demand concerns, but posts a gain for the week



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices fell more than 1% on Friday, limiting their weekly gain due to concerns the global recovery could falter from a resurgence of coronavirus cases.
The rise in infections remains the dominant issue for the fuel demand outlook. Cases in the United States are still rising in a number of states, while India recently reported a record daily jump in infections. More than 700,000 people have died in the worldwide pandemic.
Brent crude fell 78 cents, or 1.7%, to $44.31 a barrel. West Texas Intermediate crude settled 67 cents, or 1.6%, lower at $41.28 per barrel.
Brent is set for a weekly gain of 2.3%, while WTI is on track to rise 2.1%.
Talks between U.S. lawmakers over another round of stimulus have stalled, meanwhile. U.S. President Donald Trump has threatened to pull White House representatives out of talks and instead issue executive orders to address economic needs.
“The U.S. Congress can’t seem to come up with a plan for the next round of stimulus and it’s creating doubt for U.S. economic recovery,” said Gary Cunningham, director of market research at Tradition Energy.
OPEC member Iraq pledged to cut output further in August, which helped support prices. The nation has been a laggard in fully meeting its pledge as part of an April deal to reduce supply.
Crude has recovered from lows reached in April, when Brent slipped below $16, a 21-year low.
“Keeping the price levels would be unrealistic,” Bjornar Tonhaugen of Rystad Energy said of this week’s rise. “Traders rushed to the task today to correct the gains, remembering the invisible enemy, COVID-19.”
U.S. non-farm payrolls for July came in slightly better than expected, but still showed employment growth slowed. U.S. Democratic leaders said the jobs report showed more investments were needed.
U.S. energy companies cut the number of oil and natural gas rigs this week to a record low for a 14th week. U.S. oil rigs fell by four to 176 this week, their lowest since July 2005, according to data on Friday from energy services firm Baker Hughes Co.

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On Thursday 6, August 2020

Oil struggles to hold 5-month high amid pandemic worries



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices hovered near five-month highs on Thursday as support from a weak dollar and Iraq’s planned production cuts counteracted bearish sentiment about fuel demand, pushing the benchmarks in and out of positive territory.
Brent crude was up 9 cents at $45.25 a barrel, while West Texas Intermediate crude fell 24 cents, or 0.57%, to settle at $41.95 after a four-day streak of gains.
“It’s very choppy today, rallying on Iraq production cuts,” said Phil Flynn, senior analyst at Price Futures group in Chicago.
Iraq said it would make an additional cut in its oil production of about 400,000 barrels per day in August to compensate for its overproduction over the past period under the OPEC supply reduction pact.
Concerns remain that demand is depressed due to an economic slowdown due to the coronavirus, he said.
“Everyone is waiting for the coronavirus relief package to come through to give a bounce to the economy,” he said.
The two benchmarks rose to their highest since March 6 in the previous session after the U.S. government reported a much bigger-than-expected drop in crude stockpiles.
A weaker U.S. dollar was also supportive for oil prices as it makes dollar-priced oil cheaper for holders of other currencies.
The dollar index, which measures the greenback against a basket of six major currencies, logged its biggest monthly percentage fall in a decade in July, and a Reuters poll found analysts expected it to continue falling into next year.
The index was up around 0.1% Thursday after falling for two sessions, but stayed near two-year lows.
Still, oil investors remain wary of rising U.S. refined product inventories at a time when U.S. central bankers said the resurgence in coronavirus cases was slowing the economic recovery in the world’s biggest oil consumer.
“In the medium term the weak demand is likely to weigh more heavily than the positive sentiment (is supportive), which is why we expect prices to correct in the near future,” Commerzbank analyst Eugen Weinberg said.
JPMorgan trimmed its oil demand forecast for the second half of the year by 1.5 million bpd, but raised its average Brent price forecast for the whole year to $42 a barrel from $40.
Saudi Arabia’s state oil giant Aramco cut its September official selling prices (OSPs) for its Arab light crude for deliveries to Asia by 30 cents a barrel from August, and left its prices to the U.S. unchanged from the previous month.
This lent strength to the market, quelling concerns that the producer could slash prices, spiking another price war, said Bob Yawger, director of Energy Futures at Mizuho in New York.

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On Wednesday 5, August 2020

Oil jumps more than 1% to five-month high on larger-than-expected inventory drop



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose to their highest since early March on Wednesday after a large decline in U.S. crude inventories and the dollar weakened, but mounting coronavirus infections had investors worried about the demand outlook.
Brent crude was up 70 cents, or 1.6%, at $45.13 a barrel. West Texas Intermediate oil settled 49 cents, or 1.18%, higher at $42.19 per barrel.
Both contracts gained over 4% earlier in the session.
U.S. crude inventories fell by 7.4 million barrels last week, the Energy Information Administration said. That exceeded the draw of 3 million barrels analysts predicted in a Reuters poll.
A weaker dollar, which makes oil cheaper for holders of foreign currencies, also supported prices.
“There’s no escaping the benefits of a weaker dollar in the commodity space and oil is certainly basking in its decline,” senior OANDA analyst Craig Erlam said.
Oil also drew support from signs that talks between the White House and Democrats in Congress on a new coronavirus relief package are making progress, although the sides remain far apart.
U.S. factory data this week also showed an improvement in orders, which some analysts took as a hint of economic recovery.
Euro zone business activity returned to modest growth in July as some curbs imposed to stop the spread of the coronavirus eased, the Composite Purchasing Managers’ Index from IHS Markit showed.
Rising prices come against the backdrop of a surge in coronavirus cases which could threaten a recovery in fuel demand.
Global coronavirus deaths surpassed 700,000 on Wednesday, according to a Reuters tally, with the United States, Brazil, India and Mexico leading the rise in fatalities.
“We see gasoline demand coming in close to 7% year-on-year lower through Q3, with gasoil/diesel registering a decline of some 4%, implying a continued slowdown of the recovery, with a global return to 2019 levels this year increasingly in doubt,” JBC Energy said, referring to global consumption, which has collapsed due to lockdowns to help contain the pandemic.
The consultancy sees jet fuel demand down 50% year on year through the third quarter.
In the United States, the world’s top oil consumer, distillate inventories rose last week to their highest in 38 years for the third week in a row, while Gulf Coast distillates were at record high levels, the EIA said. Gasoline stocks rose for a second straight week.
“As we approach the end of the driving season and enter into the fall heating oil season, refining margins are going to remain under pressure as gasoline and distillate inventories remain substantially above last year and we have been unable to cut into that overhang in a meaningful way,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

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On Tuesday 4, August 2020

Oil jumps more than 1% on weekly inventory decline forecast



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images
Oil prices rose on Tuesday, on track to close at near five-month highs, on hopes the United States is making progress on a new economic stimulus package and signs America is making progress on curbing the coronavirus spread.
Brent futures rose 57 cents, or 1.3%, to $44.72 a barrel, while West Texas Intermediate crude rose 69 cents, or 1.68%, to settle at $41.70 per barrel.
Both benchmarks were set to close at their highest since early March.
“Crude prices turned positive on stimulus hopes and after another positive round of economic data showed manufacturing recovery continued in June,” Edward Moya, senior market analyst at OANDA in New York, said, pointing to better than expected manufacturing data in Asia, Europe and the United States.
Negotiations between congressional Democrats and the White House on a new round of coronavirus relief have begun to move in the right direction, though the two sides remain far apart, the U.S. Senate’s top Democrat said on Tuesday.
New U.S. coronavirus cases fell below 50,000 over the weekend for the first time since early July, according to the U.S. Centers for Disease Control.
Despite Tuesday’s price rise, traders said crude remained under pressure due to concerns a fresh wave of COVID-19 infections elsewhere in the world will hamper demand recovery just as major producers ramp up output.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, were boosting output this month by about 1.5 million barrels per day. U.S. producers also plan to restart shut-in production.
In Europe and Asia, meanwhile, concerns are growing that coronavirus may be spreading in a global second wave, said Paola Rodriguez Masiu of Rystad Energy.
In a further sign of a patchy demand rebound, analysts forecast U.S. distillate stockpiles rose while crude and gasoline drew down last week, according to a Reuters poll. The American Petroleum Institute releases its weekly inventory report at 4:30 p.m., followed by government data on Wednesday.

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On Tuesday 4, August 2020

Oil rises 2% on positive economic data


An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose more than 2% on Monday on positive economic data from Europe, Asia and the United States, but investors remained concerned about rising COVID-19 cases globally and oversupply as OPEC begins to lift supply cuts.
Brent crude rose 86 cents, or 2%, to $44.38 a barrel, while West Texas Intermediate crude gained 90 cents, or 2.2%, to trade at $41.17.
U.S. manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, the Institute for Supply Management said.
A similar survey showed manufacturing activity across the euro zone expanded last month for the first time since early 2019, while positive manufacturing data in Asia also boosted oil.
“The industrial sector is picking back up and that portends well for demand going forward,” said John  Kilduff, partner at Again Capital LLC in New York.
Investors, however, continue to worry about the economic recovery as coronavirus cases climb, with known infections reaching almost 18 million globally. More countries are imposing new restrictions or extending existing curbs in an effort to control the pandemic.
The prospect of oversupply also weighed on oil prices as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, prepare to ease oil supply cuts while U.S. shale production begins to increase.
“As weakening demand possibly intersects with rising production, a renewed supply upswing into record high territory would appear likely,” said Jim Ritterbusch of Ritterbusch Oil Associates.
OPEC+ members have been cutting output by 9.7 million barrels per day (bpd) since May. This month, cuts will taper to 7.7 million bpd until December.
Russian oil and gas condensate output increased to 9.8 million bpd over Aug. 1-2, from 9.37 million bpd in July, a source familiar with data said.

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On Friday 31, July 2020

Oil gains nearly 1%, posts third straight month of gains



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices rose on Friday and finished the month higher, benefiting from news that U.S. oil output cuts in May were the largest on record.
Brent crude was up 24 cents, or 0.7%, at $43.18 a barrel. On Thursday, Brent closed 1.9% down after touching its lowest level since July 10.
West Texas Intermediate crude futures gained 35 cents, or 0.88%, to settle at $40.27 per barrel, after dropping 3.3% in the previous session.
Brent is on track for a fourth month of gains and U.S. crude is heading for a third as both rise from depths hit in April, when much of the world was in lockdown due to the coronavirus pandemic.
U.S. crude oil production plummeted in May, falling a record 2 million barrels per day to 10 million bpd, the U.S. Energy Information Administration said in a monthly report on Friday.
“After a bad day for big oil with terrible earnings, we’re starting to see the impact in barrels,” said Phil Flynn, an analyst at Price Futures in Chicago. “This suggests that we will see a tighter market in the future, and if the economy turns around we will have trouble meeting demand.”
The dollar extended its dramatic fall on Friday and was on course for its biggest monthly drop in a decade after news on Thursday that U.S. gross domestic product collapsed at a 32.9% annualized rate - the steepest decline in output since records began in 1947.
Investors typically use dollar-denominated commodities as safe havens when the currency weakens.
“Global stimulus and a weak dollar will continue to support oil prices, as historically oil is seen as a hedge against inflation,” said Keshav Lohiya, chief executive officer of consultancy Oilytics.
Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of more than 500 economists.
Weaker refining margins around the world, lower Chinese oil demand and high crude inventories are putting further pressure on oil prices, Lohiya said.
Bjornar Tonhaugen, head of oil markets at Oslo-based Rystad Energy, said traders will next week closely monitor oil output increases by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
The group, known as OPEC+, collectively plans to increase production from Saturday, adding about 1.5 million barrels per day to global supply, after slashing output in the wake of the pandemic.

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On Thursday 30, July 2020

Oil prices slip as Covid-19 case surge dents fuel demand hopes (Morning Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices dipped on Thursday as a surge of coronavirus infections around the globe raised fears a rebound in fuel demand would stutter just as major oil producers are set to raise output in August.
U.S. West Texas Intermediate crude futures fell 76 cents, or 1.8%, to $40.51 a barrel, while Brent crude futures lost 71 cents, or 1.65%, to trade at $43.03 per barrel.
Both benchmark contracts hovered around unchanged levels after having jumped on Wednesday after the U.S. Energy Information Administration reported a sharp, unexpected 10.6 million barrel drop in crude stockpiles last week.
However, at the same time U.S. gasoline and distillate stocks, which include diesel and heating oil, both rose against expectations for inventories to fall - highlighting the patchy nature of the recovery in fuel demand.
“It wasn’t all good news, with signs that demand is still struggling to grow,” ANZ analysts said in a note.
Analysts said the mixed price moves on Thursday were due to demand concerns with COVID-19 infections increasing and raising the prospects for lockdowns to be reimposed.
“As long as we’re recording new daily cases, the risk for oil demand is just too strong,” said Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia.
Deaths from COVID-19 topped 150,000 in the United States on Wednesday, while Brazil, with the world’s second-worst outbreak, set new daily records of confirmed cases and deaths. New infections in Australia hit a record on Thursday.
“If we see lockdowns or partial lockdowns, transportation gets hit disproportionately. Transportation accounts for two-thirds of oil demand,” Dhar said.

The potential hit to the demand rebound comes just as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, are set to step up output in August, adding about 1.5 million barrels per day to global supply.

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On Wednesday 29, July 2020

Oil edges up after sharp U.S. crude inventory drop (Afternoon Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices inched up on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check.
Brent crude futures gained 45 cents to $43.67 a barrel. West Texas Intermediate crude futures were up 23 cents to $41.27.
U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, in their largest drawdown since December.
Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.
“If we are seeing a drawdown, that is a key indicator in terms of largely a market that’s starting to move more aggressively into balance,” said CHS Hedging analyst Tony Headrick.
The fall in crude stocks was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, which were agreed-upon in April, finally being realized.
A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally.
“The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,” said Stephen Brennock of oil brokerage PVM.
Six U.S. states reported one-day records for coronavirus deaths on Tuesday and Texas cases passed the 400,000 mark.
Attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid.
Indian refiners are cutting crude processing and shutting units for maintenance as fuel demand falters, officials at the companies said.

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Oil rises after surprise drop in U.S. inventories offsets demand concerns (Morning Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices rose on Wednesday after an industry report showed that crude inventories in the United States fell against expectations, giving the market a boost amid record increases of coronavirus infections in the U.S. and elsewhere.
Brent crude futures were up by 49 cents, or 1.13%, at $43.71 a barrel, after dropping 0.4% on Tuesday.
West Texas Intermediate crude futures gained 36 cents, or 0.85%, to $41.39 a barrel, having dropped 1.4% in the previous session.
Inventories of crude oil in the U.S. dropped by 6.8 million barrels last week to 531 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. [API/S]
Analysts’ expectations were for an increase of 357,000 barrels. U.S. government data is due Wednesday.
“This should temporarily alleviate some concerns about ongoing demand distress,” Stephen Innes, chief global markets strategist at AxiCorp said in a note.
The raging COVID-19 pandemic is keeping alive concerns about falling fuel demand causing an oversupplied market as record numbers of infections are reported globally, including the U.S., the world’s biggest consumer of oil.
Four U.S. states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.
Attempts to provide relief amid the outbreak were in disarray as Republicans in the U.S. disagreed over their own plan for providing $1 trillion in new coronavirus aid on Tuesday.
In Hong Kong, the government on Wednesday warned the city is on the edge of a large-scale coronavirus outbreak and urged people to stay indoors as much as possible.

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On Tuesday 28, July 2020

Oil drops more than 1% as rising Covid-19 cases spark demand fears (Afternoon Update)



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices fell around 1% on Tuesday, as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide.
Brent crude futures fell 26 cents, or 0.6%, to $43.15 a barrel, while West Texas Intermediate crude futures settled 56 cents, or 1.35%, lower at $41.04 per barrel.
U.S. Republicans unveiled a new coronavirus relief proposal on Monday, four days before millions of Americans lose expanded unemployment benefits. On Tuesday, they faced difficult talks with Democrats on how best to recover from the coronavirus pandemic.
“There’s concern with the stimulus out of Washington, which is critical to the oil complex and to supporting demand, especially for gasoline,” said John Kilduff, partner at Again Capital LLC in New York. Kilduff added that the longer the talks drag out, the more it will weigh on market sentiment.
Also a negative for prices, U.S. consumer confidence ebbed in July amid a flare-up in COVID-19 infections across the country. Cases worldwide have risen to around 16.57 million people.
Investors are awaiting the outcome of the U.S. Federal Reserve’s policy-setting panel meeting on Tuesday and Wednesday. The panel is expected to reiterate that interest rates will remain near zero for years to come.
This month, Brent crude has fallen deeper into contango , a market structure in which the future price of the commodity is higher than the spot price, encouraging a build-up of inventories.
October prices were as much as 53 cents per barrel above September levels, compared with a 1 cent difference in early July.
“This suggests that the tightening we were seeing in the market has eased somewhat, with the demand outlook more uncertain given the resurgence of COVID-19 cases in some regions,” said Warren Patterson, ING’s head of commodities strategy.

Industry data on U.S. stockpiles is due later on Tuesday. Analysts polled by Reuters expect U.S. crude oil stockpiles were likely unchanged last week, while inventories of refined products probably declined.

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Oil falls as U.S. fiscal package faces tough talks (Morning Update).



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices fell on Tuesday, as U.S. lawmakers prepared to wrangle over an economic stimulus package and investors worried about a rise in coronavirus cases worldwide.
Brent crude was down 14 cents, or 0.3%, at $43.27 a barrel, while West Texas Intermediate crude fell 43 cents, or 1%, to $41.16 a barrel.
“Oil continues to trade in a range with its supply fundamentals helping to set a floor while the economic and demand outlook is providing the cap,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
U.S. Republicans and Democrats faced difficult talks on Tuesday on how best to recover from the coronavirus pandemic, after Republicans unveiled a relief proposal four days before millions of Americans lose unemployment benefits.
Investors also awaited the outcome of the U.S. Federal Reserve’s policy-setting panel meeting on Tuesday and Wednesday. The panel is expected to reiterate that interest rates will remain near zero for years to come.
Brent crude was deeper in contango , a market structure in which the future price of the commodity is higher than the spot price, encouraging a build up of inventories.
October prices as much as 49 cents per barrel above September levels, compared to a 1 cent difference in early July.
“This suggests that the tightening we were seeing in the market has eased somewhat, with the demand outlook more uncertain given the resurgence of COVID-19 cases in some regions,” said Warren Patterson, ING’s head of commodities strategy.
U.S. inventory data may show refined product stockpiles declined last week, while crude oil stockpiles are expected to have held steady, five analysts polled by Reuters estimated.
On the downside for fuel demand, Europe’s largest low-cost airline Ryanair cut its annual passenger target on Monday by a quarter and warned that a resurgence in coronavirus infections could lower that further.

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On Monday 27, July 2020

Oil rises on stimulus hopes, but U.S.-China tensions cap gains (Afternoon Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices edged higher on Monday helped by a weak dollar and expected U.S. stimulus measures but gains were capped by rising global coronavirus cases and tensions between the United States and China.
Brent crude rose 7 cents to settle at $43.41 per barrel, while West Texas Intermediate crude settled 31 cents, or 0.75%, higher at $41.60 per barrel.
The U.S. dollar index reached its lowest since September 2018, hurt by deteriorating U.S.-China relations and domestic economic concerns as coronavirus infections showed no sign of slowing.
U.S. Senate Republicans on Monday are expected to unveil a new $1 trillion coronavirus aid package.
“Massive monetary stimulus has bullish implications for oil,” analysts from Raymond James said in a note, adding that oil prices have historically moved upwards with inflation spikes and that the current U.S. money supply increase is unprecedented.
Oil price gains were capped by escalating China-U.S. tensions following the closures of consulates in  Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16 million.
In Asia, fresh lockdowns were imposed and in Europe, Britain imposed a quarantine on travellers returning from Spain.
Brent is on track for a fourth straight monthly gain in July and WTI is set to rise for a third month. Helping are unprecedented supply cuts from the Organization of the Petroleum Exporting Countries and others including Russia.
Output has also fallen sharply in the United States although the U.S. oil rig count rose last week for the first week since March.
Oil demand has improved from the deep trough of the second quarter, although the recovery path is uneven as resumption of lockdowns in the United States and other parts of the world is capping consumption.

“Oil appears to be caught between opposing forces, crushing price volatility and ranges,” said Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA.

______________________________________________________

Oil slips on U.S.-China tensions, rising virus cases (Morning Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices edged lower on Monday, as rising coronavirus cases and tensions between the United States and China clouded the outlook for oil demand recovery.
Brent crude dipped 67 cents, or 1.55%, to $42.65 a barrel, while West Texas Intermediate crude dropped to $40.66 a barrel, down 63 cents, or 1.5%.
The fall came as investors sought safe havens, such as gold and bonds, given tensions between the world’s two biggest economies following the closures of consulates in Houston and Chengdu. Global cases of the new coronavirus, meanwhile, exceeded 16 million.
Brent is still on track for a fourth straight monthly gain in July and WTI is set to rise for a third month as supply cuts from the Organization of the Petroleum Exporting Countries and Russia provided support.
Output has fallen sharply in the United States although the U.S. oil rig count rose last week for the first week since March.
“Oil appears to be caught between opposing forces, crushing price volatility and ranges,” said Jeffrey Halley, OANDA’s senior market analyst.
Oil demand has risen after plunging in the second quarter, but the recovery is uneven as lockdowns are reimposed because of resurging infection rates.
Expectations of U.S. stimulus measures and a weak dollar, which makes dollar-denominated commodities cheaper for holders of other currencies, capped losses.
The U.S. dollar index reached its lowest since September 2018, hurt by deteriorating U.S.-China relations and domestic economic concerns.
U.S. Senate Republicans on Monday are expected to unveil a new $1 trillion coronavirus aid package.
“Massive monetary stimulus has bullish implications for oil,” analysts from Raymond James said in a note, adding that oil has historically moved upwards with inflation spikes and that the current U.S. money supply increase is unprecedented.

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On Friday 24, July 2020

Oil posts third positive week in four on demand recovery hopes (Afternoon Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices moved slightly higher on Friday supported by economic data from Europe, but gains were limited as tensions between the United States and China flared.
Brent crude futures settled 3 cents higher at $43.34 per barrel. West Texas Intermediate crude futures gained 22 cents to settle at $41.29 a barrel.
China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate.
The renewed tensions between the world’s top two oil consumers stoked worries about oil demand, which already faces headwinds including rising coronavirus cases in the United States.
The resurgent pandemic has darkened the U.S. economic outlook. Some states have reinstated restrictions to curb the latest outbreak, which is expected to decrease fuel consumption.
The number of Americans filing for unemployment benefits hit 1.416 million last week, unexpectedly rising for the first time in nearly four months.
Oil prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States, Barclays Commodities Research said.
Still, the bank lowered its oil market surplus forecast for 2020 to an average of 2.5 million barrels per day (bpd) from 3.5 million bpd previously.
In the United States, the oil and gas rig count, an early indicator of future output, fell by two to an all-time low of 251 in the week to July 24, according to data on Friday from energy services firm Baker Hughes Co. However, energy firms added one oil rig in the first weekly increase since March.
Softening Friday’s market losses, Euro zone business activity grew in July for the first time since the coronavirus pandemic hit, according to IHS Markit’s flash Composite Purchasing Managers’ Index (PMI). The index is seen as a good indicator of the bloc’s economic health.
“The economic data in Europe was much better than anticipated, which would suggest that demand destruction in recent months because of COVID-19 may not have been as bad as people thought,” said Phil Flynn, senior analyst at Price Futures group in Chicago.
Meanwhile, U.S. business activity increased to a six-month high in July. U.S. companies, however, reported a drop in new orders as new COVID-19 cases spiked across the country.

______________________________________________________

Oil prices edges up on weak dollar, U.S.-China tensions weigh (Morning Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices edged higher on Friday, supported by a weaker dollar, though tensions between the United States and China and wider economic uncertainty weighed.
Brent crude was up 10 cents at $43.41 a barrel, while West Texas Intermediate crude was up 18 cents at $41.25.
China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate.
The dollar slid to 22-month lows against a basket of currencies.
A weaker dollar usually spurs buying of commodities priced in dollars such as oil because they become cheaper for holders of other currencies.
“Without any economic fallout, like the end of the Phase One trade deal, the U.S.-China tensions aren’t going to create a major move,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
“For the last month, oil has been in a tight range capped by economic uncertainty due to the pandemic but supported by voluntary production cuts. To break out, you need a catalyst...like results from a vaccine Phase 3 trial.”
The U.S. economic outlook has darkened in the past month amid renewed lockdowns in some states to tackle surging coronavirus cases, according to economists in a Reuters poll.
The number of Americans filing for unemployment benefits hit 1.416 million last week, unexpectedly rising for the first time in nearly four months, suggesting the U.S. economic recovery is stalling amid a resurgence in COVID-19 cases.
Globally, more than 15 million people have been infected and over 620,000 have died.
While the rise in infections has fanned fears of renewed government lockdowns, worries that oil demand could be hit have been exacerbated by tensions between the United States and China - the world’s top two oil consumers.
In China, congestion at east coast oil ports is adding to costs for shippers and importers even as fuel demand stalls.
Oil prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States, Barclays Commodities Research said.
Still, the bank lowered its oil market surplus forecast for 2020 to an average of 2.5 million barrels per day (bpd) from 3.5 million bpd previously.

______________________________________________________

On Thursday 23, July 2020

Oil dips 2% as coronavirus demand concerns weigh (Afternoon Update).



Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices fell 2% on Thursday on a surge in coronavirus cases that triggered fears of a hit to demand and the latest diplomatic spat between the United States and China, outweighing the benefit of a weaker dollar.
Brent futures fell $1.01, or 2.3%, to $43.28 a barrel, while West Texas Intermediate crude settled 1.98%, or 83 cents, lower at $41.07 per barrel.
Both benchmarks earlier traded close to four-month highs hit a few days ago.
The U.S. dollar was trading at its lowest against a basket of currencies since September 2018. A weaker dollar usually spurs buying of dollar-priced commodities, like oil, because they become cheaper for holders of other currencies.
A rise in U.S. oil inventories also weighed on prices.
U.S. crude and distillate inventories rose unexpectedly and fuel demand slipped last week, the U.S. Energy Information Administration said on Wednesday.
U.S. coronavirus cases approached 4 million on Thursday, with more than 2,600 new cases every hour on average - the highest rate in the world, a Reuters tally showed.
“The oil demand outlook should struggle in the short term as geopolitical tensions put global trade relations at risk and as the coronavirus spread seems to have crippled reopening momentum,” said Edward Moya, senior market analyst at OANDA in New York.
Adding to the market uncertainty, U.S.-China relations deteriorated as Washington gave Beijing 72 hours to close its consulate in Houston after spying allegations.
The Chinese Foreign Ministry said the move had “severely harmed” relations and that China would be forced to respond.

______________________________________________________

Oil moves lower as demand fears weigh (Morning Update).



Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices moved lower on Thursday after a surprise increase in U.S. crude oil reserves as the coronavirus pandemic hit fuel consumption weighed on prices.
U.S. crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the Energy Information Administration said on Wednesday, as a sharp rise in coronavirus cases  has started to hit U.S. consumption.
Brent crude fell 20 cents, or 0.45%, to trade at $44.09 per barrel, while West Texas Intermediatecrude traded 13 cents, or 0.31%, lower at $41.77 per barrel. Prices  have been marking time since hitting a four-month high earlier in the week on hopeful news about a coronavirus vaccine.
“Normally inventories of fuel would be heavily drawn upon, but the surge in Covid-19 case numbers has stymied the recovery,” ANZ said, referring to usual demand during the peak U.S. summer driving season.
Crude inventories rose by 4.9 million barrels in the week to July 17 to 536.6 million barrels, compared with expectations in a Reuters poll for a 2.1 million-barrel drop.
Production rose to 11.1 million barrels per day, up by 100,000 barrels per day.
The United States reported more than 1,000 deaths from Covid-19 on Tuesday, according to a Reuters tally, marking the first time since June 10 the nation has surpassed that grim milestone, as California closed in on passing New York in total infections.
President Donald Trump said the outbreak would probably worsen before it got better, a shift from his previously robust emphasis on reopening the economy.
A fresh dispute between Washington and Beijing put further pressure on prices.
The United States gave China 72 hours to close its consulate in Houston amid accusations of spying, marking a dramatic deterioration in relations between the world’s two biggest economies.
Economic data from Japan, the world’s fourth-largest oil consumer, also weighed on prices. Factory activity contracted for a 15th straight month in July, indicating that lower economic activity due to the pandemic is extending into the third quarter.
The oil market is likely to take direction from consumer confidence data expected from Europe later in the day.

______________________________________________________

On Wednesday 22, July 2020

Oil prices slip as U.S. inventories and virus fears grow



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images.

Oil prices fell on Wednesday as industry data showed a bigger than expected inventory build in the United States, where a surge in coronavirus cases could further dent fuel demand in the world’s biggest oil consumer.
Brent crude fell 18 cents, or 0.4%%, to $44.15 a barrel. West Texas Intermediate crude dropped 12 cents, or 0.33%, to $41.78.
The U.S. Energy Information Administration said Wednesday that inventory for the week ending July 17 rose by 4.9 million barrels. Analysts had been expecting a draw of 575,000 barrels, according to estimates from FactSet.
“U.S. glut fears have become a permanent fixture of the oil market,” said Stephen Brennock of oil broker PVM. “This will remain the case so long as the U.S. oil demand outlook is being undermined by the country’s failure to contain the COVID pandemic.”
Global coronavirus infections surged past 15 million on Wednesday, according to a Reuters tally, with the pandemic gathering pace even as countries remain divided in their response to the crisis.
In his first pandemic press briefing in months, U.S. President Donald Trump said the outbreak would probably worsen before it gets better. His comments were a shift in strategy from his previously robust emphasis on reopening the U.S. economy.
However, the markets could soon view Trump’s words positively, said Rystad Energy’s head of oil markets, Bjornar Tonhaugen, because it was one of the administration’s most reasonable announcements on the pandemic.
“This could be a positive for oil demand prospects. Instead of an uncontrolled, disruptive second wave of lockdowns, maybe chances have now increased that the United States will eventually get the spread under control,” Tonhaugen said.
Republicans and Democrats are also struggling to come to terms over more fiscal support for the economy, contrasting with the European Union deal that lifted oil prices on Tuesday.
Rising tension between the United States and China over the coronavirus and Hong Kong also pressured prices.
China said that the United States had abruptly told it to close its consulate in Houston - a move that Beijing said it strongly condemns, threatening retaliation.
There are also signs that Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), is still not meeting its target under an OPEC-led supply pact.
Russia, meanwhile, plans to cut its oil loadings from Baltic ports and Black Sea port Novorossiisk over Aug. 1-10 by nearly a quarter compared with the corresponding period in July, according to a preliminary loading schedule and Reuters calculations, which could support prices.

______________________________________________________

Oil prices slip as U.S. inventories and virus fears grow (Morning Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices fell on Wednesday as industry data showed a bigger than expected inventory build in the United States, where a surge in coronavirus cases could further dent fuel demand in the world’s biggest oil consumer.

Brent crude fell 52 cents, or 1.17%, to $43.80 a barrel. U.S. West Texas Intermediate crude dropped 56 cents, or 1.34%, to $41.36.
The American Petroleum Institute (API) industry group reported U.S. crude inventories rose last week by 7.5 million barrels, against expectations for a draw of 2.1 million barrels.
The U.S. Energy Information Administration (EIA) releases official oil data later on Wednesday.
“U.S. glut fears have become a permanent fixture of the oil market,” said Stephen Brennock of oil broker PVM. “This will remain the case so long as the U.S. oil demand outlook is being undermined by the country’s failure to contain the COVID pandemic.”
Global coronavirus infections surged past 15 million on Wednesday, according to a Reuters tally, with the pandemic gathering pace even as countries remain divided in their response to the crisis.
In his first pandemic press briefing in months, U.S. President Donald Trump said the outbreak would probably worsen before it gets better. His comments were a shift in strategy from his previously robust emphasis on reopening the U.S. economy.
However, the markets could soon view Trump’s words positively, said Rystad Energy’s head of oil markets, Bjornar Tonhaugen, because it was one of the administration’s most reasonable announcements on the pandemic.
“This could be a positive for oil demand prospects. Instead of an uncontrolled, disruptive second wave of lockdowns, maybe chances have now increased that the United States will eventually get the spread under control,” Tonhaugen said.
Republicans and Democrats are also struggling to come to terms over more fiscal support for the economy, contrasting with the European Union deal that lifted oil prices on Tuesday.
Rising tension between the United States and China over the coronavirus and Hong Kong also pressured prices.
China said that the United States had abruptly told it to close its consulate in Houston - a move that Beijing said it strongly condemns, threatening retaliation.
There are also signs that Iraq, the second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), is still not meeting its target under an OPEC-led supply pact.

Russia, meanwhile, plans to cut its oil loadings from Baltic ports and Black Sea port Novorossiisk over Aug. 1-10 by nearly a quarter compared with the corresponding period in July, according to a preliminary loading schedule and Reuters calculations, which could support prices.

______________________________________________________

On Tuesday 21, July 2020

Oil jumps nearly 3% to highest level since March on vaccine hopes, EU deal (Afternoon Update



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters.

Oil rose on Tuesday, helped by positive news about vaccine trials and an EU stimulus deal, taking prices to levels last seen when an oil price war erupted in early March between Russia and Saudi Arabia.

Benchmark Brent crude was up $1.37, or 3.17%, at $44.65, on track for its biggest daily rise since mid-June. West Texas Intermediate crude gained 2.82%, or $1.15, to settle at $41.96 per barrel, the highest level since March.

Prices were buoyed by an agreement among European Union leaders on a 750 billion euro ($859 billion) fund to prop up their coronavirus-hit economies, lifting prospects for fuel demand.
In other financial markets, world shares and the euro also hit their highest in several months on Tuesday. The dollar, in which most oil contracts are priced, fell to its lowest since March against a basket of currencies.

The EU deal allows the European Commission to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.
Oil prices were also supported by promising coronavirus vaccine data released on Monday, raising confidence that a vaccine may be created even if a global rollout will take time.
In China, some cinemas reopened on Monday after a six-month closure, another sign of recovery in the world’s second-largest economy.

Countries from the United States to India are reporting record numbers of coronavirus infections, while others such as Spain and Australia are battling new outbreaks.
In the first big energy deal since the coronavirus crushed fuel demand, Chevron Corp said it would buy Noble Energy Inc for about $5 billion in stock.

U.S. crude oil stockpiles were seen falling last week, while inventories of refined products are also likely to have dropped, a preliminary Reuters poll showed on Monday.
Industry-compiled U.S. crude stockpile data is due at 2030 GMT, while government data is due on Wednesday.

______________________________________________________

Oil prices up at levels last seen in March on vaccine hopes, EU deal (Morning Update).



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices rose on Tuesday, helped by positive news about vaccine trials and a European Union stimulus deal reaching levels last seen when an oil price war erupted in early March between Russia and Saudi Arabia.
Benchmark Brent crude was up $1.17 cents at $44.45, on track for its biggest daily rise since mid-June at around 2.7%. West Texas Intermediate gained 19 cents to $41.00, its highest daily rise in a month at around 2.6%.

The prices were buoyed by an agreement among European Union leaders on a 750 billion euro ($859 billion) fund to prop up their coronavirus-throttled economies, lifting prospects for fuel demand.
In other markets, world shares and the euro also hit their strongest levels since March on Tuesday.
The deal allows the European Commission to raise billions of euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of European integration.
Oil prices were also supported by promising virus vaccine data released on Monday, raising confidence that a vaccine may be created even if a global rollout will take time.

In China, some cinemas reopened on Monday after a six-month closure, another sign of recovery in the world’s second-largest economy.
Countries from the United States to India are posting record numbers of infections, while some nations such as Spain and Australia are battling new outbreaks.
In the first big energy deal since the coronavirus crushed fuel demand, Chevron Corp said it would buy Noble Energy Inc for about $5 billion in stock.

______________________________________________________

On Monday 20, July 2020

Oil rises as hopes for Covid-19 vaccine lends support (Afternoon Update).



An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.
An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.
JOHANNES EISELE | AFP via Getty Images.

Oil prices were little changed on Monday as coronavirus cases increased in many countries, though a flurry of announcements about a potential COVID-19 vaccine and ongoing talks over a European Union fund to revive economies hit by the pandemic curbed losses.
Brent crude was up 15 cents, or 0.35%, at $43.29 per barrel, while West Texas Intermediate rose 22 cents, or 0.54%, to settle at $40.81 per barrel.
“As things stand, prices are not likely to produce any sizeable gains very soon, until a signal that the pandemic slows down,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.
“Even though in Europe the virus has been cornered, the Americas and some Asian states still have a long way to go.”
More than 14.5 million people have been infected by the novel coronavirus globally and more than 604,000 have died of COVID-19, the disease caused by the pathogen, according to a Reuters tally.
Prices found support after three groups said their potential vaccines showed promising results.
An experimental coronavirus vaccine being developed by AstraZeneca and Britain’s University of Oxford was safe and produced an immune response in early-stage clinical trials, data showed, keeping alive the hope it could be in use by the end of the year.
More than 150 possible vaccines are in various stages of development with U.S. drugmaker Pfizer and China’s CanSino Biologics also reporting positive responses for their candidates on Monday.
Investors are also looking to the EU summit for trading cues, with leaders showing the first signs of compromise over carving up a proposed 750 billion euro ($858.3 billion) recovery fund to revive economies.
“Over the past few weeks, crude oil prices have actually been uncharacteristically quiet, suggesting a potentially sharp move could be on the cards soon,” said Fawad Razaqzada, market analyst with ThinkMarkets.
“If the recovery in demand turns out to be quicker and more robust than expected, the supply surplus could diminish fast given the ongoing supply restrictions by the OPEC+ group. This should mean higher oil prices, everything else being equal.”
While fuel demand has recovered from a 30% drop in April after many countries imposed strict lockdowns, usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections rise.
Rising tension between China and the United States also put pressure on prices.
China’s embassy in Myanmar on Sunday accused the United States of “outrageously smearing” the country and driving a wedge between it and its Southeast Asian neighbours over the contested South China Sea and Hong Kong.
Saudi Arabia’s 84-year-old ruler, King Salman bin Abdulaziz, has been admitted to hospital, suffering from inflammation of the gall bladder. The king has ruled the world’s largest crude oil exporter and close U.S. ally since 2015.

______________________________________________________

Oil eases amid rising coronavirus cases worldwide (Morning Update).



An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.
An aerial view of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.
JOHANNES EISELE | AFP via Getty Images.

Oil prices fell on Monday, unnerved by the prospect that a recovery in fuel demand could be derailed by a rise in the pace of coronavirus infections around the world.

Brent crude was down 34 cents, or 0.8%, at $42.80 a barrel, after dropping slightly last week. U.S. oil was off by 34 cents, or 0.84%, at $40.25 a barrel, after gaining 4 cents last week.

More than 14.5 million people have been infected by the novel coronavirus globally and more than 604,000 have died of COVID-19, the disease caused by the pathogen, according to a Reuters tally.
“The risks of a second COVID-19 torpedo to world growth grow increasingly likely by the day,” said Jeffrey Halley, senior market analyst at OANDA.

While fuel demand has recovered from a 30% drop in April after countries around the world imposed strict lockdowns, usage is still below pre-pandemic levels. U.S. retail gasoline demand is falling again as infections rise.

Japan’s oil imports fell 14.7 percent in June from the same month a year earlier, official figures showed on Monday. The drop was not as pronounced as in May when they fell 25%, year on year.
Still, exports from the world’s third-largest economy slumped by a double-digit decline for the fourth month in a row as the coronavirus pandemic took a heavy toll on global demand.
In the U.S., energy drillers cut the number of oil and natural gas rigs operating to a record for an 11th week in a row, data showed on Friday.

The market largely shrugged off the news that Saudi Arabia’s 84-year-old ruler, King Salman bin Abdulaziz, has been admitted to hospital, suffering from inflammation of the gall bladder.
The king has ruled the world’s largest crude oil exporter and close U.S. ally since 2015. Saudi Arabia has been leading efforts to cut production since the coronavirus outbreak evaporated demand for fuel.

______________________________________________________

On Friday 17, July 2020

Oil moves lower amid uncertainty over fuel demand, easing supply curbs (Afternoon Update)



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images.

Oil prices were broadly stable on Friday in early U.S. trading, as expectations of more economic stimulus programmes balanced concerns about the recovery in fuel demand as coronavirus cases surge and major crude-producing nations ready increases in output.
Brent crude futures fell 24 cents to $43.13 a barrel. West Texas Intermediate crude settled 16 cents lower at $40.59 per barrel.

The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.

Lawmakers in the United States and the European Union are set to debate the next tranches of stimulus programmes over the coming days.

“While virus cases remain on the rise in providing an upside price limiter, expectations for some additional Congressionally driven stimulus appear to be offering support to equities that is spilling into the oil space,” said Jim Ritterbusch of U.S.-based energy consultants Ritterbusch and Associates.
Benchmark crudes fell 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August.

“With more production coming online from August, a dip in demand can really play a pivotal role in pushing recovering prices back to lower levels,” said Rystad oil markets analyst Louise Dickson.
The actual production increase will be closer to 1 million bpd because Iraq and other countries, which produced more than their quota from May to July, are expected to make extra cuts in August and September, said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.

______________________________________________________

Oil prices slip amid uncertainty over fuel demand, easing supply curbs (Morning Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images.

Oil prices slipped on Friday amid growing uncertainty about the global recovery in fuel demand as coronavirus cases surged in several countries, while major producers were set to ease output curbs.
Brent crude futures fell 25 cents to $43.12 a barrel. West Texas Intermediate crude dropped 22 cents to $40.53.

The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.

Surges in coronavirus infections are slowing a recovery in fuel use and raising concern that it could be years before consumption rebounds from the impact of the pandemic.
The two benchmark crudes fell 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim their record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August.

The actual rise would be closer to 1 million bpd, as Iraq and other countries, which produced more than their quota from May to July, make extra cuts in August and September, said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.

Analysts expect prices to remain in the $40 to $45 range, kept in check by the return of some U.S. supply and uncertainty about the impact of new lockdowns on fuel demand.
“The problem with the market right now is prices have got to a level where we’re concerned U.S. supply is going to come back,” Dhar said.

______________________________________________________

On Thursday 16, July 2020

Oil drops 1% OPEC+ agrees to ease output curbs (Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices fell on Thursday after OPEC and other producers including Russia agreed to ease record supply curbs from August, though the drop was cushioned by tightening global inventories as economic activity picks up.

Brent crude fell 45 cents, or 1%, to $43.35 per barrel. West Texas Intermediate crude settled 45 cents, or 1.09%, lower at $40.75 per barrel.

Both contracts rose 2% the previous day after a sharp drop in U.S. crude inventories.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August.
They will reduce their cuts to 7.7 million barrels per day through December from the 9.7 million bpd cuts in place since May.

“Things are getting back to normal on the oil market,” said Norbert Rücker, head of economics research at Julius Baer.

“The petro-nations announced the partial lifting of their production restrictions as oil demand rebounds and signs of an easing supply glut emerge... The economic recovery puts demand above supply.”
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said production cuts in August and September would end up amounting to about 8.1 million-8.3 million bpd, more than the headline number.

That is because countries in the grouping which over-produced earlier this year would compensate with extra August-September cuts, he said.

In a sign of the recovery, China’s refinery daily crude oil throughput in June climbed 9% from a year earlier, reaching its highest level on record amid rising gasoline and diesel consumption.

Analysts at Dutch bank ING expect the oil market to remain in a supply deficit for this year and throughout 2021 with Brent forecast to average $40 per barrel in the third quarter of 2020 and $50 in the fourth quarter.

International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are slowly rebalancing, with prices of about $40 per barrel expected in coming months.

______________________________________________________

Oil prices slip after OPEC, allies agree to loosen oil supply curbs (Morning Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices slid on Thursday after OPEC and allies such as Russia agreed to ease record supply curbs from August, though the drop was cushioned by hopes for a swift U.S. demand pick-up after a bigger-than-expected drawdown from the country’s crude stocks.
Brent crude fell 32 cents, or 0.73%, to $43.47 per barrel, and U.S. West Texas Intermediate crude dropped 42 cents, or 1%, to $40.77 a barrel. They rose 2% the previous day, helped by the U.S. crude inventories drop.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August as the global economy slowly recovers from the coronavirus pandemic.
OPEC+ has been cutting output since May by 9.7 million barrels per day, or 10% of global supply, but from August, cuts will officially taper to 7.7 million bpd until December.
“Some investors took profits after the OPEC+ decision, but a big draw in U.S. crude provided some support,” Kazuhiko Saito, chief analyst at Fujitomi Co said.
Data from the Energy Information Administration showed U.S. crude inventories fell 7.5 million barrels last week, shrinking much more than the 2.1 million-barrel drop expected by analysts in a Reuters poll.
Despite the official OPEC+ accord, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said production cuts in August and September would end up amounting to about 8.1 million-8.3 million bpd, more than the headline number. That’s because countries in the grouping which over-produced earlier this year would compensate by making extra August-September cuts, the minister said.
Still, oil prices are expected to remain static as an increase in crude processed by refineries is likely to offset higher supply volumes, Rystad Energy said in a note.
“We find that prices will have to stay where they are for the rest of 2020 as any uptick will hurt already struggling refining margins and negatively impact the most-needed recovery in refinery runs,” it said.
Elsewhere, International Energy Agency Executive Director Fatih Birol said on Wednesday that global oil markets are slowly rebalancing after the shocks seen during the coronavirus lockdown, with prices expected at about $40/barrel in the coming months.

______________________________________________________

On Wednesday 15, July 2020

Oil jumps more than 2% on surprise U.S. inventory draw (Afternoon Update).



Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices rose more than 2% on Wednesday, supported by a sharp drop in U.S. crude inventories, but further gains were limited as OPEC and its allies are set to ease supply curbs from August as the global economy gradually recovers from the coronavirus pandemic.

Brent crude was up 75 cents, or 1.75%, at $43.65 a barrel, and West Texas Intermediate crude rose 91 cents, or 2.26%, to settle at $41.20 per barrel.
Prices were boosted after data from the Energy Information Administration showed U.S. crude inventories fell 7.5 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.

“The story of the report is we will see more draws in the coming weeks,” said Phil Flynn, analyst at Price Futures Group.

“We will see tightening of supplies and the market is signalling that we are going to need more oil pretty soon, probably by August.”

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have been cutting output since May by 9.7 million barrels per day (bpd), or 10% of global supply, after the virus destroyed a third of global demand.

After July, the record cuts are due to taper to 7.7 million bpd until December.

Saudi Arabia’s energy minister Prince Abdulaziz bin Salman said OPEC+ was moving to the next phase of its oil cut pact when the group is expected to ease their reductions as oil demand recovers.
Russian Energy Minister Alexander Novak said a partial restoration of production would benefit the market and that Russia would raise oil output by around 400,000 bpd from August.

“OPEC+ managed to orchestrate the greatest balancing act ever seen in oil market history. But now, the alliance is ready to start concluding the show,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez-Masiu.

On Tuesday, OPEC said it saw demand recovering by 7 million bpd in 2021 after falling by 9 million bpd this year.

The global benchmark Brent has recovered to about $43 a barrel from a 21-year low below $16 in April. The rebound in prices has allowed some U.S. producers to resume suspended production, a move that is set to weigh on OPEC’s decision on Wednesday.

Prices were also supported by promising early data for a potential COVID-19 vaccine, but the resurgence of the coronavirus in the United States and other countries still kept traders on edge.
“Although the demand for crude has jumped in recent weeks, rising coronavirus cases in the United States along with some cities in other major economies reimposing shutdowns have the potential to hit demand,” Lukman Otunuga, Senior Research Analyst at FXTM.

______________________________________________________

Oil rises after U.S. crude stocks drop, focus on OPEC+ meeting (Morning Update).



Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images.

Oil prices rose on Wednesday after a sharp drop in U.S. crude inventories, with the market waiting for more direction from a meeting later in the day on the future level of production by OPEC and its allies.

Brent crude futures were up 56 cents, or 1.3%, at $43.46 a barrel, and U.S. West Texas Intermediate crude futures rose 63 cents, or 1.6%, to $40.93 a barrel.

In a sign of improving demand despite the coronavirus pandemic, U.S. crude inventories fell by 8.3 million barrels in the week to July 10, beating analysts’ expectations for a decline of 2.1 million barrels, according to data from industry group the American Petroleum Institute.
Official data from the U.S. Department of Energy’s Energy Information Administration (EIA) is due on Wednesday.

On supply, the market will be closely watching the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) later on Wednesday.
Key members of OPEC and allies including Russia, a group known as OPEC+, are set to decide whether to extend output cuts of 9.7 million barrels per day (bpd) that end in July or ease them to 7.7 million bpd.

“OPEC+ decision on production cut tapering will set the tone for the oil market,” ANZ Research said in a note.
In June, OPEC and its allies delivered compliance of 107% with their agreed oil output cuts, an OPEC+ source said on Tuesday.

Meanwhile, OPEC said in its monthly report that global oil demand would soar by a record 7 million bpd in 2021 as the global economy recovers from the coronavirus pandemic although it would stay below 2019 levels.

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On Tuesday 14, July 2020

Oil rises slightly ahead of OPEC+ meeting (Afternoon Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images.

Oil prices rose slightly on Tuesday as OPEC and its allies cut production by more than agreed to in June, although demand concerns lingered due to increased cases of COVID-19 in the United States.
Brent crude futures gained 18 cents, or 0.42%, to settle at $42.90 per barrel, after moving lower earlier in the session. West Texas Intermediate crude futures settled 19 cents, or 0.47%, higher at $40.29 per barrel.
The Organization of the Petroleum Exporting Countries and its allies led by Russia, collectively known as OPEC+, have delivered compliance of 107% with their agreed oil output cuts in June, an OPEC+ source said on Tuesday.
The market are keenly awaiting news from OPEC+ on the next level of production cuts. OPEC’s Joint Technical Committee meets on Tuesday, with the Joint Ministerial Monitoring Committee due to meet on Wednesday.
Under the existing supply pact, OPEC+ is set to taper its record production cut of 9.7 million barrels per day (bpd) to 7.7 million bpd from August through December.
“OPEC+ speculation had weighed the market down, and now the compliance data came out, and that’s supportive,” said John Kilduff, a partner at Again Capital Management in New York.
Still, the market remained cautious on concerns that states could increase lock-down measures as California did on Monday, following similar moves in other states, such as Florida and Texas.
New restrictions were also introduced in Asia and Australia.
The oil market is moving closer to balance as demand gradually rises, OPEC’s secretary general said on Monday.
OPEC’s monthly report said it expected global oil demand to grow by a record 7 million bpd next year, but that demand will still be weaker than pre-COVID.
China’s June crude oil imports hit both daily and monthly highs, data showed.
However, Citi analysts said the looming supply increase could weigh on prices given demand uncertainties. Morgan Stanley said oil demand is unlikely to exceed pre-COVID levels until late 2021.
The market will also be watching for fuel consumption data due on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration.
Analysts estimate that U.S. gasoline stockpiles fell by 900,000 barrels and crude oil inventories by 2.3 million barrels last week, a preliminary Reuters poll showed.

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Oil steady despite demand recovery fears amid U.S. virus surge (Morning Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images.

Oil prices reversed early losses and turned positive on Tuesday, despite worries that new clampdowns on businesses to stem surging coronavirus cases in California and other U.S. states could threaten the nascent recovery in fuel demand.

West Texas Intermediate crude futures gained 34 cents, or 0.85%, to trade at $40.44 per barrel, while Brent crude futures rose 42 cents, or 1%, to $43.14 per barrel.
Both benchmark contracts lost just over 1% on Monday.

California’s governor on Monday ordered bars to shut and restaurants, movie theatres, zoos and museums in the country’s most populous state to cease indoor operations as coronavirus cases and hospitalizations soared.

The state’s two largest school districts, in Los Angeles and San Diego, also said they would teach only online when school resumes in August.
California’s moves follow the recent reinstatement of some restrictions in other states, such as Florida and Texas.
“With the California soft lockdown now framing the picture, July could be an even more challenging month for oil than expected with even more demand woes emanating from coronavirus-linked uncertainty,” AxiCorp market strategist Stephen Innes, market strategist said in a note.
The market will be closely watching data on fuel consumption due later on Tuesday from the American Petroleum Institute industry group and on Wednesday from the U.S. Energy Information Administration.

Analysts estimate U.S. gasoline stockpiles fell by 900,000 barrels and crude oil inventories fell by 2.3 million barrels in the week to July 10, a preliminary Reuters poll showed.

With fuel demand growth hampered, the market will also be eyeing the next move from the Organization of Petroleum Exporting Countries and its allies, together known as OPEC+, whose market monitoring panel is set to meet on Tuesday and Wednesday.

Under their existing agreement, OPEC+ is set to taper its record supply cut of 9.7 million barrels per day to 7.7 million bpd from August through December.

Citi analysts said implementing the 2 million bpd increase in output from August could weigh on the market given the demand uncertainties, along with the potential for increased Libyan output, a return of 20% to 30% of curbed North American production and an end to China’s crude buying spree.


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On Monday 13, July 2020

Oil falls 1% ahead of OPEC meeting as spike in Covid-19 cases weighs (Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices were modestly lower on Monday as the market waits for direction from an OPEC meeting later this week that is expected to recommend an increase in output.
Weighing on prices were concerns that demand could take a hit if some governments reverse lockdowns after global coronavirus cases rose by a record daily amount.
The World Health Organization reported a record daily increase in global coronavirus cases on Sunday, with the total up by more than 230,000.
In the United States, infections surged over the weekend as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state.
Brent futures fell 1 cent to $43.23 a barrel, while West Texas Intermediate crude fell 45 cents, or 1.1%, to settle at $40.10 per barrel.
Oil traders remained on edge as the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet on Tuesday and Wednesday to recommend levels for future supply cuts.
OPEC and allies including Russia, a group known as OPEC+, are expected to ease their production cuts to 7.7 million barrels per day (bpd) after a recovery in global oil demand.
“That seems a quite risky option, with the safer being a one month extension ... It may be time to brace for volatility once again,” said Edward Moya, senior market analyst at OANDA in New York, noting “The (OPEC+) cut was crucial to stabilizing oil prices.”
OPEC+ cut output by a record 9.7 million bpd for May, June and July.
A gradual rise in oil demand as countries ease coronavirus lockdowns and record supply cuts by OPEC+ are bringing the oil market closer to balance, OPEC Secretary General Mohammad Barkindo said on Monday.
Libya, meanwhile, re-imposed force majeure on all oil exports on Sunday because of a renewed blockade by eastern forces. The move comes only two days after Libya exported its first crude cargo in six months.

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Oil slips as traders eye supply cut easing at OPEC meeting (Morning Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil slipped in early Asian trade on Monday as traders eyed an OPEC technical meeting this week which is expected to recommend an easing in supply cuts that have been propping up crude prices.
Brent crude fell 25 cents to $42.99 a barrel while West Texas Intermediate crude was at $40.34 a barrel, down 21 cents.

Oil was little changed last week as a resurgence of coronavirus cases prompted several U.S. states to impose tighter travel restrictions that could dampen oil demand recovery at the world’s largest consumer.

However, prices rose more than 2% on Friday after an upward revision by the International Energy Agency in its 2020 oil demand by 400,000 barrels per day.
Oil prices have recovered sharply from multi-decade lows in April after the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, cut output by a record 9.7 million barrels per day for three months since May.
OPEC’s Joint Ministerial Monitoring Committee (JMMC) will meet on Tuesday and Wednesday to recommend the next level of cuts.

OPEC and Russia were expected to ease their supply cuts as global oil demand has recovered and prices have bounced back.
“The planned easing of OPEC+ production cuts next month ... and a potential rebound in U.S. production could add pressure on the supply side of the equation,” Stephen Innes, chief global markets strategist at AxiCorp said in a note.
Libya exported its first crude cargo in six months on Friday after a blockade by eastern forces, but then re-imposed force majeure on all oil exports on Sunday.
Its National Oil Corp accused the United Arab Emirates of instructing the eastern forces in Libya’s civil war to reimpose the blockade.

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On Friday 10, July 2020

Oil rises more than 2% on improved forecast for demand recovery (Afternoon Update)



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices climbed more than 2% on Friday after the International Energy Agency (IEA) bumped up its 2020 demand forecast but record-breaking new coronavirus cases in the United States tempered expectations for a fast recovery in fuel consumption.
Brent crude was up 90 cents, or 2.2%, at $43.25 a barrel, and U.S. oil settled up 93 cents, or 2.3%, to $40.55 a barrel.
Brent was little changed on the week while U.S crude is set for a weekly fall of about 1%.
The Paris-based IEA raised its demand forecast to 92.1 million barrels per day (bpd), up 400,000 bpd from its outlook last month, citing a smaller-than-expected second-quarter decline.
Still, more than 60,500 new COVID-19 cases were reported in the United States on Thursday, setting a daily record. The tally was also the highest daily count yet for any country since the pathogen emerged in China late last year.
“While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control,” the IEA said.
Prices dropped early in the session after Libya National Oil Corporation announced it had lifted its force majeure on all oil exports after a half-year blockade by eastern forces.
“The expected re-start of Libyan exports will only add to the vulnerability of the OPEC+ production restraint in keeping the energy complex heavily reliant upon a renewed expansion in risk appetite for any advances back to around this week’s highs,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Meanwhile, oil inventories remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.
“If we take a bigger picture view of the market, what stands out to us is that we have not yet seen much of a decline on the global inventory front,” JBC said.
U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure. The rising tension between the United States and China also put pressure on prices. China said on Friday it would impose reciprocal measures in response to U.S. sanctions on Chinese officials over alleged human rights abuses against the Uighur Muslim minority.

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Oil steadies on resurgence of virus cases (Morning Update).



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters.

Oil prices steadied on Friday but were still set for weekly declines as inventories rose and record-breaking new coronavirus cases in the United States stoked concern about the pace of economic recovery and fuel demand.
Brent crude was up by 1 cent, or 0.02%, at $42.36 a barrel, and U.S. oil was up 4 cents, or 0.1%, to $39.66 a barrel.
Brent was set for a weekly decline of almost 1% and U.S. crude for a fall of almost 2%.
More than 60,500 new COVID-19 cases were reported in the United States on Thursday, setting a daily record. The tally was also the highest daily count yet for any country since the pathogen emerged in China late last year.
“Further job losses are on the horizon as several states reimpose lockdown restrictions. America is still in the throes of the pandemic and this spells bad news for the oil demand outlook,” said Stephen Brennock of oil broker PVM.
The International Energy Agency (IEA) bumped up its 2020 oil demand forecast on Friday, but warned that the spread of COVID-19 posed a risk to the outlook.
“While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control,” the IEA said.
Prices also dropped after Libya National Oil Corporation announced it had lifted its force majeure on all oil exports after a half-year blockade by eastern forces.
Meanwhile, oil inventories remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.
“If we take a bigger picture view of the market, what stands out to us is that we have not yet seen much of a decline on the global inventory front,” JBC said.
U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure. The rising tension between the United States and China also put pressure on prices. China said on Friday it would impose reciprocal measures in response to U.S. sanctions on Chinese officials over alleged human rights abuses against the Uighur Muslim minority.

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On Thursday 9, July 2020

Oil drops 3% as rising Covid-19 cases spur demand fears (Afternoon Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images.

Concerns about renewed coronavirus lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand on Thursday to keep a lid on oil prices.
The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Brent crude futures were down 90 cents, or 2%, at $42.39 per barrel, after gaining 0.5% on Wednesday. West Texas Intermediate crude futures slipped $1.28, or 3.13%, to settle at $39.62 per barrel, after rising 0.7% the previous day.
“Support will disappear after this week as coronavirus cases are surging in several U.S. states,” Tamas Varga at PVM Oil Associates said, adding that a fall in prices was likely.
Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.
But a spike in coronavirus cases across several U.S. states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand.
That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
U.S. gasoline demand was falling in areas where lockdowns were being reinstated, although on the East Coast, where coronavirus infections were under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said.
The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day.
Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.

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Oil dips as coronavirus fears offset gasoline recovery signs (Morning Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images.

Concerns about renewed coronavirus lockdowns in the United States outweighed signs of a recovery in U.S. gasoline demand on Thursday to keep a lid on oil prices.
The market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.

Brent crude futures were down $1.03, or 2.4%, to trade at $42.25 per barrel, after gaining 0.5% on Wednesday, while West Texas Intermediate crude futures slipped $1.32, or 3.2% to trade at $39.58 per barrel, after rising 0.7% the previous day.
“Support will disappear after this week as coronavirus cases are surging in several U.S. states,” Tamas Varga at PVM Oil Associates said, adding that a fall in prices was likely.
Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.

But a spike in coronavirus cases across several U.S. states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand.
That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.

U.S. gasoline demand was falling in areas where lockdowns were being reinstated, although on the East Coast, where coronavirus infections were under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said.

The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day.
Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.

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On Wednesday 8, July 2020

Oil moves between gains and losses, surprise U.S. inventory build weighs (Afternoon Update).



A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images

Oil prices moved between gains and losses on Wednesday as easing lockdowns encouraged investors, while a surprise build in U.S. inventories pressured prices.
Brent crude futures gained 21 cents to trade at $43.29 per barrel. West Texas Intermediate crude futures traded 25 cents lower at $40.87 per barrel.
The U.S. Energy Information Administration said Wednesday that for the week ending July 3 U.S. stockpiles rose by 5.7 million barrels. Analysts polled by FactSet had been expecting a draw of 3.2 million barrels.

Both benchmarks are set for a fourth session of daily percentage changes of less 1% in either direction.

The U.S. coronavirus outbreak crossed a grim milestone of over 3 million confirmed cases on Tuesday as more states reported record numbers of new infections.

U.S. crude oil stockpiles rose last week, although gasoline and distillate inventories fell more than expected, data from industry group the American Petroleum Institute showed.

“Yesterday’s lull in price action in the oil market is continuing this morning even as sentiment is sullied by renewed U.S. glut fears,” said PVM analysts in a note. “The search continues for a catalyst to break oil out of its range.”

The U.S. Energy Information Administration (EIA) said on Tuesday that U.S. crude oil production is expected to fall by 600,000 barrels per day (bpd) in 2020, a smaller decline than the 670,000 bpd it forecast previously.

Key ministers in the OPEC+ grouping of oil exporters are due to hold talks next week about the future of their record output cut deal, which is due to taper off from next month.
Abu Dhabi National Oil Co (ADNOC) plans to boost oil exports in August, the first signal that OPEC+ countries are preparing to ease output cuts, three sources familiar with the development told Reuters.

Meanwhile, Libya’s National Oil Corporation said a forced shutdown in production since January was expected to result in output dropping to 650,000 bpd in 2022 from about 1.2 million bpd achieved at the start of 2020

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On Tuesday 7, July 2020

Oil moves lower as Covid-19 cases spark demand fears (Afternoon Update)



A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images.

Oil prices fell on Tuesday amid concerns that a surge in new coronavirus cases, especially in the United States, will hamper any recovery in fuel demand.
Brent crude futures declined by 24 cents, or 0.56%, to $42.86. West Texas Intermediate crude futures fell 1 cent, or 0.02%, to settle at $40.62 per barrel.

“Oil prices are lower today on concerns that the surge in coronavirus cases in the U.S. will limit a recovery in fuel demand,” RBC said.

Sixteen U.S. states have reported record increases in new COVID-19 cases in the first five days of July, according to a Reuters tally.

Florida is re-introducing some limits on economic reopenings to grapple with rising cases. California and Texas, two of the most populous and economically important U.S. states, are also reporting high infection rates as a percentage of diagnostic tests conducted over the past week.

Other parts of the world, such as Australia, have also been hit by a resurgence in new infections.
Saudi Arabia raised its August crude official selling prices on Monday in a sign it sees demand picking up. But some analysts said the move could weigh on already poor margins for refiners.
“While record output cuts from the Saudis and the rest of OPEC+ support the idea of stronger differentials, this again will not be welcome news for refiners, doing little to help their margins, which are already under significant pressure,” bank ING said.

The U.S. crude market faces some uncertainties from a court decision on Monday ordering the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to the Midwest and Gulf Coast regions, due to environmental concerns.
Market sources in the Bakken said the closure of the 570,000-bpd pipeline, while an environmental impact statement is completed, will likely divert some oil flows to transportation by rail.

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Oil prices inch higher on output cut support, but U.S. coronavirus spike caps gains (Morning Update).



A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
A woman wearing face mask walks on the ocean front while Oil tankers are seen anchored off the coast of Long Beach, California, after sunset on April 25, 2020.
Apu Gomes | AFP | Getty Images.

Oil prices cautiously rose in early trade on Tuesday with major producers sticking to supply cuts, but gains were capped as U.S. coronavirus cases surged, potentially hampering a recovery in fuel demand.

West Texas Intermediate crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel, recouping a 2 cent loss from Monday.
Brent crude futures rose 18 cents, or 0.4%, to $43.28, adding to a 0.7% gain on Monday.
The market is still being supported by a bigger-than-expected drawdown in U.S. crude stockpiles reported last week and by record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, AxiCorp strategist Stephen Innes said.
However, traders are also closely watching prospects for U.S. fuel demand, with 16 states reporting record increases in new cases of COVID-19 in the first five days of July, according to a Reuters tally. Florida confirmed a record 11,000 cases in a single day, more than any European country reported in one day at the height of the crisis.

“Summer driving demand in the U.S. is low, keeping gasoline demand subdued, and a reintroduction of lockdowns is a major headwind,” ANZ said in a note.
Data from the American Petroleum Institute industry group later on Tuesday and the U.S. Energy Information Administration on Wednesday are expected to show a 100,000 barrel rise in gasoline stockpiles, six analysts polled by Reuters estimated.
Meanwhile a U.S. court on Monday ordered the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to Midwest and Gulf Coast regions, over environmental concerns.

Market sources in the Bakken said the closure of the 570,000 barrels per day (bpd) pipeline while a thorough environmental impact statement is completed will likely divert some oil flows to transportation by rail.

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On Monday 6, July 2020

Oil up on tighter supply, expectations for positive data (Afternoon Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Oil prices rose on Monday, supported by tighter supplies and a string of data expected to show economic recovery across the globe and despite a spike in coronavirus cases in the United States and other countries.
Brent crude was up 73 cents, or 1.7%, to $43.53 per barrel by 0808 GMT. U.S. West Texas Intermediate (WTI) crude was up 28 cents, or 0.7%, at $40.93.
“The market appears to be shrugging off the surge in COVID-19 cases in the United States,” ING said, adding that data for several cities in affected states did not show a significant reduction in road traffic week on week.
Market sentiment was also positive as investors expected a string of improving economic data. In China, the economy is recovering while its capital markets are attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial on Monday.
Traders were also keeping an eye on U.S. non-manufacturing activity, German industrial orders for May, and retail sales for the eurozone, all due on Monday and all expected to be positive.
The implied volatility for Brent crude has dropped to its lowest level since prices started collapsing in March as markets remain focused on tightening supplies as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest in decades.
OPEC and other producers including Russia, collectively known as OPEC+, have agreed to lower output by a record 9.7 million barrels per day (bpd) for a third month in July.
“While risks on the demand side are weighing on prices, the good discipline with OPEC+ is lending support,” Commerzbank analyst Eugen Weinberg said. Saudi Arabian oil producer Aramco raised August official selling prices (OSPs) for its Arab light crude.

U.S. production, the world’s largest, is also falling. The number of operating U.S. oil and natural gas rigs fell for a ninth week, although the reductions have slowed as higher oil prices prompt some producers to start drilling again.

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Oil up on tighter supply, expectations for positive data (Morning Update).



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images.

Oil prices rose on Monday, supported by tighter supplies and a string of data expected to show economic recovery across the globe and despite a spike in coronavirus cases in the United States and other countries.

Brent crude was up 73 cents, or 1.7%, to $43.53 per barrel by 0808 GMT. U.S. West Texas Intermediate (WTI) crude was up 28 cents, or 0.7%, at $40.93.
“The market appears to be shrugging off the surge in COVID-19 cases in the United States,” ING said, adding that data for several cities in affected states did not show a significant reduction in road traffic week on week.

Market sentiment was also positive as investors expected a string of improving economic data. In China, the economy is recovering while its capital markets are attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial on Monday.
Traders were also keeping an eye on U.S. non-manufacturing activity, German industrial orders for May, and retail sales for the eurozone, all due on Monday and all expected to be positive.
The implied volatility for Brent crude has dropped to its lowest level since prices started collapsing in March as markets remain focused on tightening supplies as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest in decades.
OPEC and other producers including Russia, collectively known as OPEC+, have agreed to lower output by a record 9.7 million barrels per day (bpd) for a third month in July.
“While risks on the demand side are weighing on prices, the good discipline with OPEC+ is lending support,” Commerzbank analyst Eugen Weinberg said. Saudi Arabian oil producer Aramco raised August official selling prices (OSPs) for its Arab light crude.

U.S. production, the world’s largest, is also falling. The number of operating U.S. oil and natural gas rigs fell for a ninth week, although the reductions have slowed as higher oil prices prompt some producers to start drilling again.

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On Friday 3, July 2020

Oil falls as growing coronavirus cases stoke fuel demand worries (Morning Update)



South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
South Belridge Oil Field is the fourth-largest oil field in California and one of the most productive in the U.S.
David McNew | Getty Images

Crude prices fell on Friday as the resurgence of the coronavirus globally and in the United States, the world’s largest oil consumer, dimmed the prospects of fuel demand recovery.
Brent crude futures were down 37 cents, or 0.9%, at $42.77 a barrel as of 0042 GMT, and U.S. West Texas Intermediate (WTI) crude futures fell 34 cents, or 0.8%, to $40.31 a barrel.
Both benchmarks rose more than 2% on Thursday, buoyed by stronger-than-expect ed U.S. jobs data and a fall in U.S. crude inventories. For the week, Brent is up 4.3% and WTI is up 4.7%.
Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New U.S. COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.
“The market has become increasingly confident that easing restrictions on travel and business would boost demand for crude oil, but the pandemic’s progress threatens to derail this recovery,” ANZ Research said in a note.
“The recovery in gasoline demand will plateau until the U.S. economy improves,” it said.
Gasoline demand will be closely watched as the United States heads into its July 4 holiday weekend as many Americans are expected to hit the road.

U.S. gasoline stocks rose by 1.2 million barrels in the week to June 26, according to data from the Energy Information Administration released on Wednesday.

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On Thursday 2, July 2020

Oil jumps 2% on U.S. economic data, posts second weekly gain in three (Afternoon Update).



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Thursday after data showed a fall in U.S. unemployment and a sharp drop in crude stockpiles, although concerns that a spike in U.S. coronavirus infections could stall a recovery in fuel demand kept gains in check.
U.S. non-farm payrolls increased by 4.8 million in June, the Labor Department reported on Thursday, beating expectations.
Brent crude futures gained $1.11, or 2.64%, to settle at $43.14 per barrel, after rising 1.8% in the previous session.
West Texas Intermediate crude futures gained 83 cents, or 2.08%, to settle at $40.65 per barrel, adding to a 1.4% rise on Wednesday.
U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, U.S. Energy Information Administration data showed, as refiners ramped up production and imports eased.
“Oil prices have remained rangebound as OPEC has done its job on the supply side, and the key uncertainty now remains on demand recovery,” Harry Tchilinguirian, head of commodity research at BNP Paribas, said.
“Crude exceeded expectations of a draw but gasoline stocks rose, which means the recovery has at least paused for a week.”
New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic.
California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures.
Gasoline stockpiles were higher, confounding expectations of a fall. Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline.

Attention will be on U.S. driving activity over the upcoming July 4 holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.

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Oil prices rise on drop in U.S. unemployment, crude stockpiles (Morning Update).



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Thursday after data showed a fall in U.S. unemployment and a sharp drop in crude stockpiles, although concerns that a spike in U.S. coronavirus infections could stall a recovery in fuel demand kept gains in check.
U.S. non-farm payrolls increased by 4.8 million in June, the Labor Department reported on Thursday, beating expectations.
Brent crude futures were up 31 cents or 0.76% at $42.35 per barrel, after rising 1.8% in the previous session.
West Texas Intermediate crude futures rose 9 cents, or 0.2%, to $39.90 a barrel, adding to a 1.4% rise on Wednesday.
U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, U.S. Energy Information Administration data showed, as refiners ramped up production and imports eased.
“Oil prices have remained rangebound as OPEC has done its job on the supply side, and the key uncertainty now remains on demand recovery,” Harry Tchilinguirian, head of commodity research at BNP Paribas, said.
“Crude exceeded expectations of a draw but gasoline stocks rose, which means the recovery has at least paused for a week.”
New COVID-19 cases in the United States rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic.
California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures.
Gasoline stockpiles were higher, confounding expectations of a fall. Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline.

Attention will be on U.S. driving activity over the upcoming July 4 holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.

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On Wednesday 1, July 2020

Oil rises after sharp drop in U.S. crude inventories (Morning Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices rose on Wednesday on a string of positive manufacturing data and a drawdown in U.S. crude inventories, both indicating an economic recovery, however, fears of a surging coronavirus infections capped the gains.
Brent crude was up 33 cents, or 0.8%, at $41.60 a barrel, and U.S. crude was up 13 cents, or 0.3%, at $39.45 a barrel. Both contracts rose $1 earlier in the session.
The U.S. Energy Information Administration said Wednesday that stockpiles for the week ending June 26 decreased by 7.2 million barrels. Analysts polled by FactSet had forecast a build of 200,000 barrels.
“The market’s main concern is demand and how COVID-19 affects it, so any hint that demand is recovering is welcomed with a price boost,” said Rystad Energy analyst Louise Dickson.
Sentiment was also boosted by improving economic data around the world. In China, the manufacturing purchasing managers’ index (PMI) showed factories slowly gathered steam in June after the government eased lockdowns.
Germany’s manufacturing sector contracted at a slower pace in June, while French factory activity rebounded into growth.
However, a surge in infections in the United States and warning from the government’s top infectious disease expert that the number could soon double took the shine off the positive data.
Figures on U.S. manufacturing activity and private payrolls for June are due later in the day, followed by the Labor Department’s closely watched nonfarm payrolls report on Thursday.
Prices were also supported by a drop in output from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, following an agreement to curb supplies.
“Although there is still the danger of demand outages in view of increased new cases of COVID-19, OPEC+ seems to have the market under control at the moment,” said Commerzbank analyst Eugen Weinberg.
OPEC produced an average of 22.62 million barrels per day (bpd) in June, a Reuters survey found, down 1.92 million bpd from May’s revised figure.
Iraq’s oil exports in June fell to 2.8 million bpd from 3.21 million bpd in May, the oil ministry said.
Fuel demand around the world is recovering as lockdowns ease. Tens of millions of barrels of crude and oil products stored on tankers at sea are being sold, shipping sources say.
In India, state-refiners’ gasoline and gasoil sales rose in June compared with May, continuing with a gradual recovery.

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On Tuesday 30, June 2020

Oil slips 1% on demand worries, but posts best quarter in nearly three decades (Afternoon Update).



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices slipped on Tuesday amid rising COVID-19 cases and a possible return of Libyan oil production, which has slowed to a trickle since the start of the year.
The more-active September contract for Brent fell 0.3% to $41.70 a barrel, paring Monday’s 92-cent gain. The August contract, which expires on Tuesday, fell 51 cents, or 1.2%, to $41.20.
West Texas Intermediate, the U.S. oil benchmark, slid 1.08%, or 43 cents, to settle at $39.27 per barrel.
Coronavirus cases continue to rise in southern and southwestern U.S. states. Northeastern states like New York and New Jersey doubled the number of states from which travelers face quarantine restrictions.

Fuel demand has recovered from the worst weeks of the outbreak in April and early May, but there is a risk that the rebound is cut off by the resurgence in virus cases.
“Sustaining the independent show of gasoline strength will be challenged by coronavirus headlines where news has seen a definite negative shift in recent weeks,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.

Investors will be looking for signs of demand recovery in weekly inventory data due on Tuesday from the American Petroleum Institute industry group and from the U.S. government on Wednesday.
Libya is trying to resume exports, which have been almost entirely blockaded since January amid the country’s civil war. The state’s oil company is hoping that talks will put an end to a blockade by eastern-based forces in the country’s civil war.

“If we do finally see a resumption in Libyan output, this would make the job of OPEC+ a little bit more difficult,” said Dutch bank ING.
A Reuters poll of analysts showed expectations that oil prices will consolidate at around $40 a barrel this year, with a recovery gaining steam in the fourth quarter.

______________________________________________________

Oil prices slip on demand worries, prospect of Libyan supply return (Morning Update).


Oil prices slipped on Tuesday amid rising COVID-19 cases and a possible return of Libyan oil production, which has been down to a trickle since the start of the year.
The more-active September contract for Brent fell 60 cents, or 1.43%, to $41.25 a barrel, paring Monday’s 92 cent gain. The August contract, which expires on Tuesday, fell 52 cents to $41.19 per barrel.
U.S. crude was down 2 cents, or 1.59% at $39.68 per barrel.
“Attempts to push prices higher are capped by growing concerns about the second cycle of the coronavirus or the inability to contain the current one,” Tamas Varga of oil brokerage PVM said.
Coronavirus cases continue to rise in southern and southwestern U.S. states. Investors are watching to see whether Libya is able to resume exports, which have been almost entirely blockaded since January amid the country’s civil war.
“If we do finally see a resumption in Libyan output, this would make the job of OPEC+ a little bit more difficult, as Libya pumped at around 1 million barrels per day (bpd) prior to the disruptions.” ING said.
Investors will also be looking for signs of demand recovery in data due on Tuesday from the American Petroleum Institute industry group and from the U.S. government on Wednesday.
A preliminary Reuters poll showed analysts expect U.S. crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.
Royal Dutch Shell, the world’s largest fuel retailer, said it expects a 40% drop in fuel sales in the second quarter from a year earlier to 4 million bpd.
Stronger-than-expected Chinese factory data, and a drop in Iraq’s June oil exports helped cap bigger losses.
Oil prices will consolidate at around $40 a barrel this year, with a recovery gaining steam in the fourth quarter and into 2021, a Reuters poll showed on Tuesday.

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On Monday 29, June 2020

Oil rises 3% on improving economic data (Afternoon Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices rose about $1 a barrel on Monday, after bullish data from Asia and Europe, but investors are wary about sharp spikes in new coronavirus infections around the world.
Brent crude rose 74 cents, or 1.8%, to $41.76 a barrel. U.S. crude gained $1.21, or 3.1%, to $39.70 a barrel.
The recovery of economic sentiment in the euro zone intensified in June with improvements across all sectors, European Commission data showed on Monday. Overall sentiment rose to 75.7 points in June from 67.5 in May, though still short of expectations.
In China, profits at industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction.
But fears of a second wave of the pandemic are keeping prices from going higher. The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally.
Some states in the United States have reimposed restrictions after jumps in cases. California ordered bars to close on Sunday following similar moves in Texas and Florida. Washington state and the city of San Francisco have paused their reopening plans.
“Whilst these localised measures on their own are unlikely to see any major immediate impact on demand, they do highlight the significant risk to gasoline demand,” JBC Energy said.
Brent is set to end June with a third consecutive monthly gain after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, extended its 9.7 million barrels-per-day (bpd) supply cut agreement into July.
“OPEC+ supply cuts have been helping keep the oil price afloat, and after the stellar nearly 90% compliance in May, in the next few days we will be getting data clues on June compliance,” said Louise Dickson, Rystad Energy’s oil markets analyst.
OPEC has cut oil output in June by 1.25 million bpd from May levels, according to estimates from tanker-tracking company Petro-Logistics.

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Oil mixed on improving economic data, uptick in virus cases (Morning Update)



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices were mixed on Monday, supported by improving economic data and supply cuts by major producers, but held in check by sharp spikes in new coronavirus infections around the world that have forced some countries to re-impose partial lockdowns.
Brent crude fell 2 cents, or 0.1%, to $41.00 a barrel, and U.S. crude was up 12 cents, or 0.3%, at $38.61.
Crude prices found some support as profits at China’s industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction.
The recovery of economic sentiment in the euro zone also intensified in June after a modest pick-up in May, with improvements across all sectors and a much more buoyant sense of future business, European Commission data showed.
However, fears of a second wave of the pandemic took the shine off the improving economic data. The death toll from COVID-19 surpassed half a million people on Sunday, according to a Reuters tally.
“Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil) which will inevitably remain under pressure,” said Stephen Brennock of broker PVM.
In the United States, California ordered bars to close on Sunday following similar moves in Texas and Florida after a jump in cases. Washington state and the city of San Francisco have paused their reopening plans.
“Whilst these localised measures on their own are unlikely to see any major immediate impact on demand, they do highlight the significant risk to gasoline demand,” JBC Energy said.
Oil also found some support from the dollar’s weakness. Oil prices tend to move inversely to the U.S. currency.
Brent is set to end June with a third consecutive monthly gain after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, extended an unprecedented 9.7 million barrels per day (bpd) supply cut agreement into July.
OPEC has cut oil output in June by 1.25 million bpd from May levels, according to estimates from tanker-tracking company Petro-Logistics.

Iraq’s oil exports have fallen by almost 9% or 310,000 bpd in June, loading data and industry sources showed, suggesting OPEC’s second-largest producer has delivered about three-fifths of its pledge under the deal.

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On Friday 26, June 2020

Oil dips on rise in coronavirus cases, posts second negative week in three (Afternoon Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices dipped on Friday, erasing earlier gains, as new coronavirus cases spiked in the United States and China, and on growing concerns about rising U.S. output ticking up while crude stockpiles sat at record highs.
Brent crude futures were 14 cents lower at $40.9. West Texas Intermediate crude futures fell 23 cents, or 0.6% to settle at $38.49 per barrel.
Brent was on track for a weekly decline of 3.1% and U.S. crude was headed for a weekly drop of 3.6%, after record U.S. crude inventory data dragged prices down on Wednesday.
Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading on fears that spiking COVID-19 infections in large gasoline-consuming U.S. states could stall the demand recovery. Cases have risen sharply in California, Texas and Florida, the three most populous U.S. states.
Friday morning, Texas Governor Greg Abbott reversed the state’s reopening plan, ordering most bars to close due to the surge in cases.
That could undermine the steady increase in refining output, with U.S. refiners now operating at nearly 75% of their capacity, per official government data.
“Employers are delaying the return of their employees back to the office and that will impact the return of gasoline demand,” said Andrew Lipow, president of Lipow Oil Associates.
The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession under way is expected to be deeper than earlier predicted.
A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.
U.S. and Canadian energy firms cut the number of oil and natural gas rigs operating to a record low again this week, according to data from Baker Hughes.

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Oil prices erase gains in early U.S. trade, set for weekly fall (Morning Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices dipped on Friday, erasing earlier gains, as concerns about rising new coronavirus cases in the United States and China and expectations of U.S. output ticking up while crude stockpiles linger at record highs.
Brent crude futures were 37 cents lower at $40.68. West Texas Intermediate crude futures were 64 cents, or 1.76%, lower at $38.04, erasing previous gains.
The contracts are on track for weekly falls of around 3% and 3.5%, respectively, after record U.S. crude inventory data dragged prices down on Wednesday.
Earlier gains, supported by some optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading.
“Markets have got ahead of themselves and with the coronavirus pandemic still doing the rounds, there remains plenty of volatility on the horizon,” PVM analysts said.
Fears linger that a spike in COVID-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.
The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession underway is expected to be deeper than earlier predicted.
The prospect of increased U.S. crude production also kept a lid on gains on Friday.
A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.
U.S. rig count data is due on Friday.

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On Thursday 25, June 2020

Oil climbs nearly 2% as U.S. economic data lends support (Afternoon Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices rose about 2% in a volatile session on Thursday, buoyed by signs of a marginal improvement in the U.S. economy and a tepid rise in fuel demand, but price gains were limited by rising cases of COVID-19 in some U.S. states.
Brent crude rose 74 cents, or 1.8%, to $41.05, after trading as low as $39.47. The global benchmark dropped 5.4% on Wednesday. West Texas Intermediate crude settled 71 cents, or 1.87%, higher at $38.72 per barrel.
Road traffic in some of the world’s major cities in June had returned to 2019 levels, data provided to Reuters by location technology company TomTom showed.
Oil prices fell early, then found support as data showed fewer Americans filed for unemployment benefits last week and orders for key capital goods rebounded in May.
Still, the decline in jobless claims was less than analysts expected and other data supported expectations that second-quarter GDP could shrink at as much as a 40% annualized rate.
To kick-start the world economy devastated by coronavirus, central banks have unleashed trillions of dollars in stimulus.
“Part of the rebound here is the idea that all the stimulus measures that central banks and the world’s governments are pumping into the economy is going to have a positive impact on economic activity and that it will be supportive to demand,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
“The only roadblock is if the number of COVID-19 cases picks up and we have to reimpose shelter in place measures but I don’t think we can conclude that it’s in the cards yet.”
New infections have surged in U.S. states including Oklahoma, Texas and Florida. Australia posted its biggest daily rise in two months.
Despite recent regional increases in U.S. infections, “vehicle traffic continues to improve, international flights re-gain ground, employees phase back to work and discretionary activity picks up,” said Michael Tran, managing director of energy strategy at RBC Capital Markets in New York.
Still, investor worries about oil demand persisted a day after the International Monetary Fund predicted a deeper global recession than previously thought.
A record crude supply cut by the Organization of the Petroleum Exporting Countries and allies has kept the oil market much stronger than in April, when Brent hit a 21-year low below $16 a barrel and U.S. crude turned negative.
Investors are waiting to see if the producers, known as OPEC+, extend their record cut beyond July.

______________________________________________________

Oil prices climb as U.S. economic data lends support (Morning Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices edged higher in a volatile session on Thursday, finding support from signs of a marginal improvement in the U.S. economy but rising cases of COVID-19 in some states capped gains.
Brent crude rose 24 cents, or 0.6%, to $40.55, after trading as low as $39.47. The global benchmark dropped 5.4% on Wednesday. West Texas Intermediate crude rose 22 cents, or 0.6%, to $38.23.
Oil found some support after declining earlier as the number of Americans filing claims for unemployment benefits fell last week and orders for key capital goods rebounded in May.
Still, the decline in jobless claims was less than analysts expected and other data support economists’ expectations that GDP could shrink at as much as a 40% annualized rate in the second quarter.
To kick-start the world economy devastated by coronavirus, central banks have delved deep into their toolboxes and unleashed trillions of dollars in stimulus.
“Part of the rebound here is the idea that all the stimulus measures that central banks and the world’s governments are pumping into the economy is gonna have a positive impact on economic activity and that it will be supportive to demand,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
“The only roadblock is if the number of COVID-19 cases picks up and we have to reimpose shelter in place measures but I don’t think we can conclude that it’s on the cards yet.”
New infections have surged in U.S. states including California, Texas and Florida, while Australia posted its biggest daily rise in cases in two months.
“Despite the recent increase in the COVID-19 infection rate across large regions throughout the U.S., our real time geolocation data has, to this point, not suggested a material change in broad societal behavior as vehicle traffic continues to improve, international flights re-gain ground, employees phase back to work and discretionary activity picks up,” said Michael Tran, managing director of energy strategy at RBC Capital Markets in New York.
Still, the International Monetary Fund’s prediction on Wednesday of a deeper global recession than previously thought has added to market concerns of weakened oil demand.
A record supply cut by the Organization of the Petroleum Exporting Countries and allies has supported the oil market, which is much stronger compared with April, when Brent hit a 21-year low below $16 a barrel and U.S. crude turned negative.
Investors are waiting to see if the producers, known as OPEC+, extend their record cut beyond July.

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On Wednesday 24, June 2020

Oil drops nearly 6% on record U.S. crude inventories, pandemic resurgence fears (Afternoon Update).



Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil prices fell  nearly 6% on Wednesday after U.S. crude storage hit another record and coronavirus cases rebound in countries like Germany and surge in heavily populated areas of the United States.
Mounting coronavirus cases in the United States, which had its second-largest rise in new infections since the crisis began, China, Latin America and India have unnerved investors and pressured oil prices.
“These are all important oil demand centers. A second wave of infections and lockdowns will derail the global economic recovery and with it, oil demand and prices,” said Stephen Brennock of broker PVM.
Brent crude was down $2.29, or 5.5%, to $40.29 a barrel, a day after hitting its highest levels since early March, just before the pandemic and Saudi-Russia price war hit the markets. West Texas Intermediate crude settled $2.36, or 5.85%, lower at $38.01 per barrel.
U.S. crude oil inventories swelled last week by 1.4 million barrels, exceeding analysts’ expectations in a Reuters poll for a 299,000-barrel rise, the Energy Information Administration said, citing rising production.
That marked the third straight record for crude in U.S. storage.
“The thing I was most concerned about was the rebound in domestic production and it was up - as a standalone it was capable of doing some damage to the market,” said Bob Yawger, director of energy futures at Mizuho.
The International Monetary Fund said the coronavirus is causing wider and deeper damage to economic activity than first thought, and it slashed its 2020 global output forecasts further.
India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases.
China, the world’s top crude importer, is also expected to slow imports in the third quarter, after record purchases in recent months.
______________________________________________________
Oil down 6% as U.S. crude inventories swell, pandemic resurgence feared (Morning Update)



Oil pumping jacks, also known as "nodding donkeys", operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Oil pumping jacks, also known as “nodding donkeys”, operate in an oilfield near Almetyevsk, Tatarstan, Russia, on Wednesday, March 11, 2020.
Andrey Rudakov | Bloomberg via Getty Images

Oil prices fell $2 a barrel on Wednesday, as investors worried about record high crude inventories and feared that a second wave of the coronavirus pandemic could stall the reopening of global economies and cut fuel demand.
Brent crude was down $2.75, or 6.4%, to $39.90 a barrel, a day after hitting its highest since prices started plunging in March. West Texas Intermediate crude fell $2.74, or 6.7%, to $37.67 a barrel.
U.S. crude oil inventories swelled last week by 1.4 million barrels, far exceeding analysts’ expectations in a Reuters poll for a 299,000-barrel rise, the Energy Information Administration said, citing rising production.
U.S. gasoline stocks fell by 1.7 million barrels to 255 million barrels, the EIA said.​
“Because of the increase in production and the increase in crude supplies, we’re going negative,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “But if you want to look for the silver lining in the report then it’s definitely gasoline demand is coming back.”
Mounting coronavirus cases in the United States, China, Latin America and India have unnerved investors and pressured oil prices.
“These are all important oil demand centers. A second wave of infections and lockdowns will derail the global economic recovery and with it, oil demand and prices,” said Stephen Brennock of broker PVM.
Upbeat European manufacturing surveys offered some support, but European Central Bank chief economist Philip Lane cautioned that the euro zone economy still needed a long time to recover.
India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases.
China, the world’s top crude importer, is also expected to slow crude imports in the third quarter, after record purchases in recent months.

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On Tuesday 23, June 2020

Oil drops nearly 1% as demand concerns weigh (Afternoon Update).



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices fell on Tuesday as a rising number of Covid-19 cases sparked demand fears, although losses were capped after U.S. President Donald Trump soothed jangled nerves over U.S.-China trade.
Trump wrote in a tweet late Monday that the trade agreement was “fully intact.” Markets had been unsettled by surprise comments from White House trade adviser Peter Navarro who said the hard-won deal with China was “over”.
“Oil prices need a healthy relationship between the U.S. and China,” said Edward Moya, senior market analyst at OANDA in New York. He also noted that crude prices pared gains when traders were unimpressed by a U.S. purchasing managers report.
Brent futures fell 45 cents, or 1%, to settle at $42.63 per barrel. West Texas Intermediate crude settled 36 cents, or 0.88%, lower at $40.37 per barrel. On Monday, the contract settled at its highest level since early March.
Prices pared early gains after the U.S. Purchasing Managers’ Index (PMI) showed the country’s rebound from coronavirus depressed levels was not as sharp as in Europe.
“Looking at the strength of the physical market and recovering global oil demand, we think that the crude oil price is still on its way higher,” Nordic bank SEB said in a note.

Bank of America (BofA) Global Research has lifted its oil price forecast for this year. It now expects Brent crude to average $43.70 a barrel in 2020, up from a previous estimate of $37.

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Oil rises after Trump assurance on China trade deal (Morning Update)



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images.

Oil prices rose on Tuesday after a volatile session sparked by confusion over the status of the U.S.-China trade deal.

Markets were unsettled by surprise comments from White House trade adviser Peter Navarro, who said the hard-won deal was “over”, though U.S. President Donald Trump later soothed jangled nerves with an assurance that the agreement was fully intact.
Brent crude rose 49 cents, or 1.14%, to $43.57 a barrel, having skidded to a session low of $42.21. West Texas Intermediate was up 45 cents, or 1.1%, at $41.17 a barrel after touching a low of $39.76.
U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Trump and his administration have repeatedly accused Beijing of not being transparent about the outbreak.

Oil prices were also supported by data showing that the historic downturn in the euro zone economy eased again this month as businesses resumed activity across the region.
“Looking at the strength of the physical market and recovering global oil demand, we think that the crude oil price is still on its way higher,” Nordic bank SEB said in a note.
On the supply side, U.S. and Canadian oil and gas drillers have cut the number of rigs they are operating to a record low, complicating any efforts to raise output, even with the encouragement of higher prices.

“U.S. onshore production has now given up two full years of (volume) gains,” said Stephen Innes, chief global markets strategist at AxiCorp.
U.S. oil rigs contracted for drilling dropped by 10 to 189 last week, their lowest since June 2009, according to weekly data from energy services company Baker Hughes.
Bank of America (BofA) Global Research has lifted its oil price forecast for this year. It now expects Brent crude to average $43.70 a barrel in 2020, up from a previous estimate of $37.

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On Monday 22, June 2020

Oil jumps more than 1%, settles above $40 for first time since March (Afternoon Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil rose more than 1% on Monday on tighter supplies from major producers and as coronavirus lockdowns continued to ease, but gains were capped by worries that a worldwide rise in new infections might stall a fuel demand recovery.
Brent crude settled 89 cents, or 2.11%, higher at $43.08 per barrel. The West Texas Intermediate crude contract for August, the day’s more active contract, gained 71 cents, or 1.79%, to settle at $40.46 per barrel.
Prices were boosted by the plummeting U.S. and Canadian oil rig count, an indicator of future supply, said Andy Lipow, president of consultants Lipow Oil Associates.
“The continued reopening of economies around the world is also helping to bring back demand, perhaps not at pre-COVID levels, but it is helping to eat into the surplus of oil,” Lipow said.
Both Brent and U.S. contracts rose about 9% last week, supported by a recovery in fuel demand as lockdowns eased and economic activity resumed.
However, ballooning virus cases in the United States and elsewhere kept prices from moving higher.
South Korea said on Monday for the first time that it was in the midst of a second wave of the coronavirus. The World Health Organization reported a record rise in global cases on Sunday, with the biggest gains from North and South America.
Bank of America (BofA) Global Research has lifted its oil price forecast for this year and next as demand recovers while the OPEC+ output cut deal curtails supply and producers reduce capital expenditure.
OPEC and allies such as Russia, a group known as OPEC+, has yet to decide whether to extend a record supply cut of 9.7 million barrels per day (bpd) into a fourth month, so it runs to the end of August.
Russia said that $40 to $50 a barrel is a fair price.

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Oil steady as a rise in virus cases counters tighter supplies (Morning Update).




An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices were steady on Monday, supported by tighter supplies from major producers but held in check by concerns about a record rise in global coronavirus infections that could stall a recovery in fuel demand.
Brent crude rose 14 cents to trade at $42.33 per barrel. The West Texas Intermediate crude contract for August, which became the day’s more active contract, gained 4 cents to trade at $39.79 per barrel.
South Korea on Monday said for the first time it was in the midst of a second wave of the coronavirus. The World Health Organization reported a record rise in global cases on Sunday, with the biggest increase coming from North and South America.

“Infections are rising in key markets around the world and there are valid concerns that the world is in for a prolonged period of dealing with its consequences,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

Oil prices have been supported by a recovery in fuel demand globally as nations resume economic activity after easing lockdowns.

Signalling a recovery in global markets and tighter supplies, Brent has moved into backwardation, where oil for immediate delivery costs more than supply later.
Both Brent and U.S. contracts rose about 9% last week. But, after weeks of rising, prices of physical oil have begun to ease as the rally succumbs to the reality of poor refinery margins and brimming inventories, traders and analysts say.

“I find it more difficult for oil to move higher at this point, especially with the growing concern about second-wave contagion,” said Howie Lee, an economist at Singapore’s OCBC Bank.
In Canada and the United States, the number of operating oil and natural gas rigs fell to a record low last week, even as higher oil prices prompt some producers to resume drilling.
The Organization of the Petroleum Exporting Countries and allies such as Russia, a group known as OPEC+, has yet to decide whether to extend a record supply cut of 9.7 million barrels per day (bpd) into a fourth month, so it runs to the end of August.

Russia said $40 to $50 a barrel was a fair price.

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On Friday 19, June 2020

Oil jumps 2%, posts seventh positive week in eight on supply cut optimism (Afternoon Update).



Oil pumps at sunset, industrial oil pumps equipment.
Oil pumps at sunset, industrial oil pumps equipment.
Pramote Polyamate

Oil prices rose on Friday but pulled back sharply from early highs on concerns that continued spread of the novel coronavirus could stall the United States’ economic rebound.
Crude benchmarks followed other assets lower, pulling back from session highs after Boston Federal Reserve President Eric Rosengren said more fiscal and monetary support for the U.S. economy will likely be needed.
Rosengren repeated his view that the U.S. unemployment rate will likely be “at double-digit levels” at the end of 2020 and cautioned against reopening the economy too quickly after the end of lockdowns aimed at containing the virus.
Heightening fears, Apple announced that it would re-close certain stores as the virus spread further.
“It’s spooked everyone in North and South Carolina,” said John Kilduff, partner at energy hedge fund Again Capital in New York.
Brent crude rose 61 cents to $42.12 a barrel, after trading up to $42.92 a barrel and then briefly turning negative. West Texas Intermediate crude futures gained 2.34%, or 91 cents, to settle at $39.75 per barrel.
The highs early in the session came after Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
In a further sign of market recovery, Brent on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March.
A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn down.
U.S. crude stockpiles hit another record this week, but fuel inventories fell.
The U.S. oil and gas rig count, an early indicator of future output, fell to a record low for a seventh week in a row, dropping by 13 to 266 this week, according to data from energy services firm Baker Hughes Co going back to 1940.

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Oil rises as OPEC+ laggards pledge better compliance (Morning Update)


Oil rose to above $42 a barrel on Friday, adding to gains in the previous session, after OPEC producers and allies promised to meet supply cuts and signs of demand, hit by the coronavirus crisis, recovering.
Iraq and Kazakhstan, during a meeting of an OPEC+ panel on Thursday, pledged to comply better with oil cuts, sources said. This means curbs by the Organization of Petroleum Exporting Countries and allies, known as OPEC+, could deepen in July.
“There is enthusiasm in the market that oil supply is still under control,” said Paola Rodriguez Masiu,  analyst at Rystad Energy. “A positive OPEC+ meeting does that and yesterday’s session helped renew confidence.”
Brent crude was up 80 cents, or 1.9%, at $42.31 after hitting $42.89, its highest since June 8. West Texas Intermediate crude climbed 99 cents, or 2.5%, to $39.83 per barrel.
“The key takeaway is that OPEC+ compliance will improve in the coming months,” said Stephen Brennock of broker PVM.
Both contracts rose about 2% on Thursday and are heading for weekly gains of more than 9%.
Brent has more than doubled since hitting a 21-year low in April, helped by record OPEC+ supply cuts of 9.7 million barrels per day (bpd), or 10% of world demand, and an easing of government lockdowns imposed to control the coronavirus.
Fuel demand in Europe is staging a gradual recovery after the height of the lockdowns in April but remains well below normal, data from several countries shows.
In a further sign of market recovery, Brent on Thursday moved into backwardation, where oil for immediate delivery costs more than supply later, for the first time since March.
A premium for oil for immediate delivery usually indicates tightening supply and encourages storage to be drawn down.

U.S. crude stocks hit another record this week, but fuel inventories fell.

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On Thursday 18, June 2020

Oil gains 2% on OPEC+ output cut compliance (Afternoon Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images.

Oil prices rose on Thursday as a panel of OPEC and its allies met to review record oil supply cuts, even as the market remained concerned about additional coronavirus cases reported in parts of the United States and China.

Brent crude futures were up 78 cents at $41.48 a barrel and West Texas Intermediate crude futures gained 88 cents, or 2.32%, to settle at $38.84 per barrel.
“You’re going to see more OPEC compliance,” said Phil Flynn, senior oil analyst at Price Futures Group in Chicago. “I think we’d be a lot higher if it weren’t for these coronavirus fears.”
An OPEC+ ministerial panel met on Thursday to review record oil supply cuts and plans by countries  such as Iraq and Kazakhstan to improve compliance with quotas to support oil prices battered as demand plunged by up to a third during the pandemic.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have been cutting output by a record 9.7 million barrels per day (bpd) or 10% of global supply since May 1.
Thursday’s discussion was unlikely to recommend an extension of record cuts into August, sources said. OPEC+ compliance with production cut commitments in May was 87%, two OPEC+ sources said on Wednesday.

Worries about fuel demand rose after a surge in coronavirus cases led Beijing to cancel flights and shut schools while several U.S. states, including Texas, Florida and California, reported sharp increases in new cases.

A second straight weekly rise in U.S. crude stockpiles to a record high also weighed on sentiment, but U.S. government data showed lower inventories of gasoline and distillates, indicating higher demand.

OPEC warned in a monthly report that the market would remain in surplus in the second half even as demand improves, saying it now expects supply from outside the group to be about 300,000 bpd higher than previously thought.

____________________]_________________________________

Oil prices tick up amid mixed signals from U.S. data (Morning Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices ticked up on Thursday after U.S. oil product stocks shrank, providing bulls with ammunition ahead of a meeting between OPEC producers and their allies to discuss their future output strategy.
Brent crude futures were up 46 cents at $41.17 a barrel. West Texas Intermediate crude futures rose 29 cents to $38.25 a barrel.
Both benchmarks were down about 2% earlier in the session.
Worries about fuel demand rose after a surge in coronavirus cases led Beijing to cancel flights and shut schools and several U.S. states, including Texas, Florida and California, reported sharp increases in new cases.
A rise in U.S. crude stockpiles to a record high for a second week in a row weighed on sentiment, but U.S. government data showed lower inventories of gasoline and distillates, which includes diesel and heating oil, indicating higher demand.
“Gasoline and distillates both fell unexpectedly... Add to that that oil producers are still feeling the impact of the rout from March and April as (U.S.) crude oil output is now down at 10.5 (million barrels per day) and you might conclude that bulls have a case in point,” PVM oil analysts said in a note.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, are expected to hold an online meeting later on Thursday to discuss the future of a record 9.7 million barrels per day (bpd) output cut.
OPEC+ compliance with crude production cut commitments in May was 87%, two OPEC+ sources said on Wednesday.
Iraq and Kazakhstan are expected to present their plans for production cuts and compensation for overproduction to a meeting of the OPEC+ ministerial committee, known as the JMMC, on Thursday, one OPEC+ source said.
OPEC warned in a monthly report the market would remain in surplus in the second half of 2020 even as demand improves, as it now expects supply from outside the group to be about 300,000 bpd higher than previously thought.

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On Wednesday 17, June 2020

Oil dips 1% as oversupply fears grow (Afternoon Update)



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices edged lower on Wednesday as a drawdown in U.S. distillate stockpiles for the first time since March and a sharp drop in U.S. crude production faced concerns over fuel demand due to fresh outbreaks of COVID-19.
Brent crude was down 35 cents, or 0.85%, at $40.61 a barrel. West Texas Intermediate fell 42 cents, or 1.09%, to settle at $37.96 per barrel.

U.S. crude inventories rose to a record high last week for a second week in a row, but distillate stockpiles fell following weeks of significant builds as refiners continued to blend jet fuel into their distillate pool, government data showed.

“That snapped a 10-week streak of builds, and the market needed that,” said Bob Yawger, director of energy futures at Mizuho in New York.
U.S. crude production fell by 600,000 barrels per day last week to 10.5 million bpd, its lowest since March 2018. Some of that was due to Storm Cristobal, which shut more than one-third of U.S. offshore output.

U.S. shale producers were expected to restore roughly half a million bpd of crude output by the end of June, according to crude buyers and analysts.
The World Health Organization said it would update its guidelines after results showed the corticosteroid medication dexamethasone cut death rates by about a third among the most severely ill COVID-19 patients.
However, the virus is spreading in parts of the United States, while flights were cancelled and schools were shut in Beijing to head off a new virus outbreak in the Chinese capital.
“We think the oil market is not currently pricing in a significant probability of either second waves of coronavirus cases in key consumers and the associated lockdowns, or anything less than a rapid return to economic business-as-usual,” Standard Chartered analysts said.

Weak economic activity is still weighing on demand. U.S. fuel demand, as measured by product supplied, is down 20% over the past four weeks, compared with the year-ago period, the government said.

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Oil slumps as U.S. crude stocks build amid virus resurgence fears (Morning Update)



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices fell on Wednesday as data showed an increase in U.S. crude and fuel inventories, raising the prospect of oversupply as a potential second wave of the coronavirus pandemic threatened to halt any recovery of demand.
Brent crude futures were down 89 cents, or 2.2%, at $40.07 a barrel as of 0348 GMT, and U.S. West Texas Intermediate (WTI) futures fell $1.13, or 2.9%, to $37.25 a barrel.
Both benchmarks rose more than 3% on Tuesday, after the International Energy Agency (IEA) raised its 2020 oil demand forecast to 91.7 million barrels per day (bpd) and U.S. retail sales posted a record jump in May.
The rise in U.S. crude and fuel inventories, however, stoked concerns about a surplus and pressured oil prices, as the number of coronavirus infections surpassed 8 million globally and several U.S. states saw their case numbers spike.
“API data showed a build in crude inventories, and rising new coronavirus cases in the United States and China have dampened expectations of improving fuel demand in the world’s top two oil consumers,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.
U.S. crude oil inventories rose by 3.9 million barrels in the week to June 12 to 543.2 million barrels, according to data from industry group the American Petroleum Institute, countering expectations for a fall of 152,000 barrels.
Gasoline stocks rose by 4.3 million barrels and distillate fuels, which include diesel and heating oil, rose 919,000 barrels.
Official data from the U.S. Department of Energy’s Energy Information Administration is due later on Wednesday.
An OPEC-led panel will meet on Thursday to further discuss ways to strengthen and review compliance with producers’ commitment to curb oil output.
Iraq reduced its oil exports by 8%, or 300,000 bpd, so far in June, indicating OPEC’s second-largest producer is stepping up efforts to adhere to its pledged cut.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed to cut output by 9.7 million bpd — about 10% of pre-pandemic demand — to the end of July.

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On Tuesday 16, June 2020

Oil jumps 3% on supply cuts, improving demand (Afternoon Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices rose on Tuesday, with Brent crude rising above $40 a barrel, as the IEA increased its oil demand forecast for 2020 and as record supply cuts supported.
Brent crude rose $1.20, or 3%, to trade at $40.92 per barrel. West Texas Intermediate crude settled $1.26, or 3.39%, higher at $38.38 per barrel.
In its monthly report on Tuesday, the International Energy Agency (IEA) forecast oil demand at 91.7 million barrels per day in 2020, 500,000 bpd higher than its estimate in May’s report, citing higher than expected consumption during the lockdowns.
But the agency warned that a fall in flying due to the coronavirus means the world will not return to pre-pandemic demand levels before 2022.
Oil supplies in May, the IEA said, plunged by nearly 12 million bpd, with the Organization of the Petroleum Exporting Countries and its allies including Russia - a grouping known as OPEC+ - reducing their output by 9.4 million bpd.
This means OPEC+ hit 89% compliance with their agreed cuts in May, the IEA said.
OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July. They also called on members that have not been complying to make up their commitments with extra cuts later.
Iraq, which had one of the worst compliance rates among the major producers, has already made deep cuts to its crude supplies to Asia in July.
Elsewhere U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.
Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.
But concerns about a second wave of lockdowns from rising infection rates weighed on the market.
Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks. But some observers said they didn’t expect to see any return to the stringent lockdowns seen at the start of the year.
“If the world treats a second COVID-19 wave like in the first half of the year, then we are in for a demand reduction that was not in the initial planning,” Head of Oil Markets at Rystad Energy Bjornar Tonhaugen said.

______________________________________________________

Oil prices rise on supply cuts, improving demand (Morning Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices rose on Tuesday, with Brent crude rising above $40 a barrel, as the IEA increased its oil demand forecast for 2020 and as record supply cuts supported.
Brent crude rose 83 cents, or 2.1%, to trade at $40.54 per barrel. West Texas Intermediate crude gained 72 cents, or 1.9%, to trade at $37.84 per barrel.
In its monthly report on Tuesday, the International Energy Agency (IEA) forecast oil demand at 91.7 million barrels per day in 2020, 500,000 bpd higher than its estimate in May’s report, citing higher than expected consumption during the lockdowns.
But the agency warned that a fall in flying due to the coronavirus means the world will not return to pre-pandemic demand levels before 2022.
Oil supplies in May, the IEA said, plunged by nearly 12 million bpd, with the Organization of the Petroleum Exporting Countries and its allies including Russia - a grouping known as OPEC+ - reducing their output by 9.4 million bpd.
This means OPEC+ hit 89% compliance with their agreed cuts in May, the IEA said.
OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July. They also called on members that have not been complying to make up their commitments with extra cuts later.
Iraq, which had one of the worst compliance rates among the major producers, has already made deep cuts to its crude supplies to Asia in July.
Elsewhere U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.
Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.
But concerns about a second wave of lockdowns from rising infection rates weighed on the market.
Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks. But some observers said they didn’t expect to see any return to the stringent lockdowns seen at the start of the year.
“If the world treats a second COVID-19 wave like in the first half of the year, then we are in for a demand reduction that was not in the initial planning,” Head of Oil Markets at Rystad Energy Bjornar Tonhaugen said.

______________________________________________________

On Monday 15, June 2020

Oil jumps 2% on optimism around OPEC+ output pact (Afternoon Update).



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices rose on Monday as signs fuel demand was recovering while OPEC+ members were complying with a production cut deal outweighed fears that new coronavirus infections could further slow the global economy.

West Texas Intermediate crude rose 86 cents, or 2.37%, to settle at $37.12 per barrel. Brent crude rose 96 cents, or 2.5%, to trade at $39.73 per barrel.

Prices rebounded from early losses after the energy minister of the United Arab Emirates voiced confidence that OPEC+ countries with poor compliance to agreed cuts would meet their commitments and reported signs oil demand was picking up.

“That seemed to take away some of the market’s negativity,” said Phil Flynn, senior analyst at Price Futures Group. “It’s fear about the coronavirus versus the reality of what’s happening on the ground.”
An OPEC-led monitoring panel will meet Thursday to discuss whether countries have delivered their share of output reductions.

Iraq agreed with its major oil companies to cut crude production further in June, Iraqi officials working at the country’s giant southern oilfields told Reuters on Sunday.
Saudi Arabia has also reduced the volume of July-loading crude it will supply to at least five buyers in Asia, sources said.

Also positive for prices, China’s crude oil throughput in May rose 8.2% from a year earlier as independent refiners increased processing to meet the recovery in fuel demand following the easing of lockdowns.

Still, fuel demand concerns have weighed on market sentiment. More than 25,000 new coronavirus cases were reported on Saturday in the United States, where more than 2 million people have been infected, about a quarter of the cases worldwide.

After nearly two months with no new infections, Beijing officials reported 79 coronavirus cases over the past four days, sparking fears of an outbreak in one of the world’s most populous cities.
Economic data from China suggested the world’s second-biggest economy was struggling to get back on track. Industrial output in May expanded 4.4% from a year earlier, less than expected.
Germany’s economic output will also fall further in the second quarter, its economy ministry said on Monday.

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Oil falls on growing fears of a second wave of coronavirus (MorningUpdate)



An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
An aerial view shows pumpjacks in the South Belridge Oil Field on April 24, 2020 near McKittrick, California.
David McNew | Getty Images

Oil prices fell on Monday as new coronavirus infections hit China, Japan and the United States, adding to concerns that a resurgence of the virus could weigh on the recovery of fuel demand.
West Texas Intermediate crude traded 17 cents lower at $36.09 per barrel. Brent crude gained 15 cents to trade at $38.88 per barrel.
“The recovery in oil demand is already set to be a lengthy process, and a fresh wave of cases will certainly raise worries that a recovery in demand may take even longer than initially thought,” ING’s head of commodities strategy Warren Patterson said.
After nearly two months with no new infections, Beijing officials have reported 79 cases of the coronavirus over the past four days.
U.S. coronavirus cases also started increasing. More than 25,000 new U.S. cases were reported on Saturday alone as more states reported new infections and hospitalisations.
Economic data from China were also not promising. China’s industrial output expanded 4.4% in May from a year earlier but the gain was less than expected, suggesting the world’s second-biggest economy is still struggling to get back on track.
Still, Chinese refineries’ throughput in May rose by 8.2% from the same period a year earlier to about 13.6 million barrels per day (bpd).
“Overall, with oil supply flowing in a more or less expected path, demand will now be the key price mover,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.
An OPEC-led monitoring panel will meet on Thursday to discuss ongoing record production cuts and see whether countries have delivered their share of the reductions.
Iraq, one of the laggards in complying with the curbs, agreed with its major oil companies to cut crude production further in June, Iraqi officials working at the country’s giant southern oilfields told Reuters on Sunday.

______________________________________________________

On Friday 12, June 2020

Oil posts worst week since April, snaps 6-week winning streak (Afternoon Update).



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil was little changed on Friday and headed for a first weekly fall since April as new U.S. coronavirus cases spiked, stoking fears of a second wave of the virus hitting fuel demand.
West Texas Intermediate settled 8 cents lower at $36.26 per barrel, while Brent crude gained 18 cents to settle at $38.73.
The oil benchmarks were heading for weekly declines of around 8%, their first after six weeks of gains that have lifted prices off April lows.
Fears that the coronavirus pandemic may be far from over has brought the rally to a halt, with about half a dozen U.S. states reporting spikes in new infections.
“We definitely have an explosion of cases in areas that were not really affected before,” said Bob Yawger, director of energy futures at Mizuho. “That ultimately leads to less people driving, less demand for gasoline.”
At the same time, U.S. crude oil inventories have risen to a record 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the country.
The build happened despite producers from the United States, and the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, cutting supply.
The number of crude oil drilling rigs in the United States, an indicator of future supply, fell by seven to 199 this week, data from oil services firm Baker Hughes showed.
OPEC+ slashed supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand, and agreed last weekend to extend the reduction.
“While a bullish argument can still be made as production continues to decline with demand still showing improvement, we look for the down trend in output to begin slowing appreciably while demand recovery could be downsized if the coronavirus continues to ramp up,” said Jim Ritterbusch of Ritterbusch and Associates.

______________________________________________________

Oil extends slump as prospect of second viral wave in U.S. ends rally (Morning Update)



An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia.
Simon Dawson | Bloomberg | Getty Images

Oil prices fell on Friday, extending heavy overnight losses as a surge in U.S. coronavirus cases this week raised the prospect of a second wave of the Covid-19 outbreak hitting demand in the world’s biggest consumer of crude and fuel.
West Texas Intermediate was down 65 cents, or nearly 2%, at $35.69 a barrel by 0358 GMT, after slumping more than 8% on Thursday. Brent crude was down 58 cents, or 1.5%, at $37.97 a barrel, having dropped nearly 8% the previous session.
A rally that raised oil off April lows has come to a shuddering halt this week as the market faced the reality that the coronavirus pandemic may be far from over, with cases in the United States alone passing 2 million.
The oil benchmarks are heading for their first weekly declines in seven, with Brent dropping about 10% and U.S. crude also down around 10%.
“Oil prices have rebounded sharply ... helped by positive surprises in incoming data on demand and continued OPEC+ restraint,” Barclays said in a note.
“But we expect the pace of price recovery to slow down along with rebalancing,” it said.
Producers from the United States, as well as from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, have been cutting supply, some by record amounts.
Still, U.S. crude and gasoline stockpiles grew last week, according to government data. U.S. crude oil inventories rose to a record 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the  country.
That gave rise to worries about a continuing supply-demand imbalance, as states including Texas and Arizona are seeing their coronavirus infections jump and are struggling to cope with a growing number of patients filling hospital beds.
In Houston, Lina Hidalgo, senior official for the county that includes the city at the heart of the U.S. oil industry, said “we may be approaching the precipice of a disaster”.
More than 7.43 million people have been infected by the novel coronavirus around the world and more than 400,000 have died, according to a Reuters tally.

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On Thursday 11, June 2020

Oil drops more than 8% as fears over second wave of coronavirus cases hit the market (Afternoon Update).

Pippa Stevens


A derrick man secures a length of drill pipe during drilling on a natural gas drill rig near Montrose, Pennsylvania, U.S., on Monday, April 5, 2010.
A derrick man secures a length of drill pipe during drilling on a natural gas drill rig near Montrose, Pennsylvania, U.S., on Monday, April 5, 2010.
Daniel Acker | Bloomberg | Getty Images

Oil prices dropped more than 8% on Thursday amid a broader market sell-off as fears over a second wave of coronavirus cases led to investors shedding assets.
West Texas Intermediate crude futures, the U.S. oil benchmark, fell 8.2%, or $3.26, to settle at $36.34 per barrel. Earlier in the session WTI traded as low as $35.41. International benchmark Brent crude slid 7.7%, or $3.22, to trade at $38.51 per barrel.
Oil has been rallying on the back of an uptick in demand paired with record supply cuts, but data on Wednesday from the U.S. Energy Information Administration showed a surprise build in inventory, suggesting that the demand recovery may have stalled.
For the week ending June 5, inventory rose by 5.7 million barrels to a record high of 538.1 million barrels.
Another key driver of WTI’s recent recovery, which has seen prices jump more than 50% in the last month, has been producers curbing output. Over the weekend, OPEC and its oil-producing allies agreed to extend its record production curb — equivalent to about 10% of pre-coronavirus global demand — through the end of July.
In the U.S., production has pulled back from a record of over 13 million barrels per day in March as historically low prices prompted companies to reduce output.
But with oil moving higher in recent weeks, some producers have begun to open the taps once again, which could send prices lower.
“The higher price levels that we experienced lately have motivated producers to restart some of their shut-down production, in effect reversing a bit the positive price effect that lower production had created,” said Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy.
“How prices develop further will depend a lot [on] how much and how quickly this shut production will come back to business,” she added.
The broader market was also sharply lower on Thursday, with the Dow Jones Industrial Average dropping more than 800 points and the S&P 500 dipping 2.5%. Stocks most sensitive to the economy’s reopening dragged markets lower as Covid-19 cases in the U.S. surpassed two million. Hospitalizations rose to a record level for a third straight day on Wednesday in Texas, one of the states in the phase one reopening plan, prompting fears that a second wave of cases could be coming.
“The global economy is still in a precarious position,” noted Cailin Birch, global economist at The Economist Intelligence Unit. “The dip in oil prices in recent days most likely reflects the end of the price boost that came from the initial economic re-opening. The global economy is now settling in for a long, slow recovery process, which we only expect to pick up in late 2021, assuming a Covid-19 vaccine becomes available then,” she added.

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Oil prices hit by record U.S. crude inventories, bearish Fed (Morning Update)



Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices fell on Thursday, hit by another record build-up in U.S. crude inventories and the U.S. Federal Reserve’s projections that the world’s biggest economy would shrink 6.5% this year.
Brent crude futures erased Wednesday’s gains, falling 3.5%, or $1.44, to $40.27 a barrel. West Texas Intermediate crude dropped 4.1%, or $1.62, to $37.98 a barrel.
With demand risks back at the forefront, both benchmarks are set for their worst daily drop in two weeks.
U.S. crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels - a record - as imports were boosted by the arrival of supplies bought by refiners when Saudi Arabia flooded the market in March and April, Energy Information Administration (EIA) data showed.
It also showed gasoline stockpiles grew more than expected to 258.7 million barrels. Distillate stockpiles, which include diesel and heating oil, rose by 1.6 million barrels, although the increase was smaller than in previous weeks.
Adding pressure to prices, the U.S. Federal Reserve said U.S. unemployment was set to reach 9.3% at the end of 2020 and said it would take years to fall back, while interest rates were expected to stay near zero at least through next year.
Total U.S. coronavirus cases topped 2 million on Wednesday, with new infections rising slightly after five weeks of declines, according to a Reuters analysis.

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On Wednesday 10, June 2020

Oil rises nearly 2% to 3-month high, despite surprise inventory build (Afternoon Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil recovered its earlier losses on Wednesday, even as U.S. data showed crude inventories rose to a record high, reviving worries of a persistent glut due to weak demand.
Crude stocks rose by 5.7 million barrels in the week to June 5 to 538.1 million barrels, according to a U.S. Energy Information Administration report.
“As with the broader economy we are seeing a rebound but not one that puts us where we were a year ago,” said Matt Smith, director of commodity research at Clipper Data.
Brent crude rose 34 cents to $41.52 a barrel. West Texas Intermediate gained 66 cents, or 1.7%, to settle at $39.60 per barrel after falling more than 2% in the session.
The U.S. Energy Department said on Wednesday that it had purchased 126,000 barrels of crude for the U.S. strategic reserve, supporting prices.
The inventory build exceeded analysts’ expectations and was built on the third consecutive week of big imports from Saudi Arabia, which came to more than 1.5 million bpd. During a price war between Saudi Arabia and Russia in March and April, the kingdom boosted exports.
Brent has more than doubled since falling to a 21-year low below $16 in April, but some analysts think prices have risen too far with the pandemic still cutting demand.
“The macro factor that has supported the energy complex for more than a month could subside significantly as the strong advance in the equities is beginning to appear overcooked,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
Prices have been supported as the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+, slashed oil supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand. OPEC+ agreed on Saturday to extend the record supply cut for another month until the end of July.

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Oil falls as U.S. inventory rise revives glut worries (Morning Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil fell more than 2% towards $40 a barrel on Wednesday after a report showed a rise in crude inventories in the United States, reviving concerns about oversupply and weak demand due to the coronavirus crisis.
The report from the American Petroleum Institute, an industry group, said crude stocks rose by 8.4 million barrels, rather than falling as analysts forecast. The U.S. government’s official stocks figures are due out later on Wednesday.
“Indications from the American Petroleum Institute show that stocks built quite a lot,” said Bjornar Tonhaugen of Rystad Energy. Given the development, “what else can you do as a trader but rush to sell?”
Brent crude was down 82 cents, or 2%, to trade at $40.36 per barrel. West Texas Intermediate dropped 99 cents, or 2.5%, to trade at $37.95 per barrel.
Both benchmarks had hit three-month highs on Monday. Brent has more than doubled since falling to a 21-year low below $16 in April. But some analysts think the market has risen too far as the coronavirus pandemic continues.
“With equity markets edging lower, and a vast amount of good news baked into oil prices at these levels, it was no surprise that the oil market’s confidence wavered slightly,” said Jeffrey Halley, senior market analyst at OANDA.
Official government figures on U.S. stockpiles from the Energy Information Administration are due later on Wednesday.
Prices have been supported by a record oil supply cut of 9.7 million barrels per day (bpd), about 10% of pre-coronavirus daily demand, by the Organization of the Petroleum Exporting Countries (OPEC), Russia and others, a group known as OPEC+.

A gradual easing of government lockdowns that sought to limit the spread of the virus has revived demand by boosting travel and economic activity, also supporting the market.
OPEC+ agreed on Saturday to extend the record cut for another month until the end of July.
While this helped prices, the market came under pressure after Saudi Arabia, Kuwait and the United Arab Emirates decided not to extend their extra voluntary supply reductions.

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On Tuesday 9, June 2020

Oil jumps 2% on supply cut optimism (Afternoon Update)



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices rose on Tuesday, as traders said concerns about a resurgence in coronavirus cases were offset by recent commitments from major oil producers to curb production.
Brent crudegained 27 cents, or 0.66%, to trade at $41.11 per barrel. West Texas Intermediate crude gained 75 cents, or 1.96%, to settle at $38.94 per barrel.
Fuel demand has recovered from April’s collapse brought on by lockdowns to control the pandemic. Analysts have said, however, that the oil market’s rapid surge to more than $40 a barrel may be banking an overly optimistic view of consumption.
“A second wave of the pandemic isn’t such a distant possibility any more and if it is realized, oil demand, which has slowly been recovering, might plunge back to lockdown levels,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.
The coronavirus has killed more than 400,000 people worldwide, and the number of new daily cases hit a record on Sunday as the pandemic has yet to peak in central America, the World Health Organization (WHO) said on Monday.
Goldman Sachs raised its 2020 forecast for Brent to $40.40 a barrel and WTI to $36 but warned that prices are likely to pull back in the coming weeks because of demand uncertainty and inventory overhang.
U.S. crude inventories have been growing as the pandemic curbs demand, but were forecast to have declined last week, ahead of weekly reports by industry group the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT), and the government on Wednesday.
Supportive for the market, Libya said it declared force majeure on some exports from its Sharara oilfield on Tuesday, after production was briefly halted by an armed group just days after output had resumed following a blockade that had lasted months.
Oil has dropped despite OPEC+ nations agreeing to extend output cuts as Saudi Arabia, Kuwait and the United Arab Emirates said they would not maintain supplemental reductions that amount to more than a million barrels of daily supply.

The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, on Saturday agreed to extend record cuts of 9.7 million barrels per day (bpd) until the end of July.

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Oil prices rise as easing of lockdowns spurs fuel demand hopes (Morning Update).



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices climbed on Tuesday as the easing of coronavirus lockdown measures across the globe lifted trader hopes for a swift recovery in demand, though gains were capped by the specter of persistent oversupply in the market.
Brent crude futures rose 0.3%, or 14 cents, by 0435 GMT to $40.94 a barrel. The benchmark contract had fallen $1.50 on Monday, snapping a seven-day streak of gains.
U.S. West Texas Intermediate (WTI) crude futures rose 0.7%, or 26 cents, to $38.45 a barrel, after dropping by $1.36 on Monday.
“With Brent holding very nicely above $40, there’s talk among traders that WTI will test that level soon,” said Michael McCarthy, chief market strategist at CMC Markets.
Goldman Sachs has also raised its 2020 oil price forecasts, with Brent now seen at $40.40 a barrel and WTI at $36 a barrel.
Tuesday’s gains came as New York, the U.S. city hardest hit by the novel coronavirus outbreak, began reopening on Monday after about three months, potentially spurring fuel demand.
U.S. crude and gasoline inventories are estimated to have fallen by 1.5 million barrels and about 100,000 barrels respectively in the week to June 5, a preliminary Reuters poll showed ahead of a report from the American Petroleum Institute industry group later on Tuesday.
However distillate inventories, which include diesel and heating oil, were seen rising by 2.9 million barrels.
“You’ve got demand recovering gradually but steadily,” said Lachlan Shaw, head of commodity research at National Australia Bank. “However there’s still massive excess supply, so OPEC and friends need to control barrels coming into the market.”
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, a grouping known as OPEC+, on Saturday agreed a one-month extension through July of a record 9.7 million barrels per day output cut.
However, Saudi Arabia said on Monday the kingdom and its allies Kuwait and the United Arab Emirates would not extend an additional 1.18 million bpd in cuts on top of the OPEC+ cuts in July.
Meanwhile Libya’s National Oil Corporation (NOC) told employees to shut its Sharara oil field just hours after maintenance operations started as an “armed force” had entered the site.
“It seems pricing in consistent Libya production might be premature,” said Edward Moya of OANDA. “The oil market ... could easily go back into deeply oversupplied territory, so any threats to production should help stabilise prices.”

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On Tuesday 9, June 2020

Oil drops 3% as Saudi Arabia says it won't extend voluntary cuts (Afternoon Update).



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil fell more than 3% on Monday after Saudi Arabia said an extension of output cuts by OPEC+ nations would not include additional voluntary reductions by a trio of Gulf producers.
After rising for seven consecutive session, Brent oil futures fell $1.30, or 3.1%, to $41.00 a barrel. West Texas Intermediate crude, meanwhile, fell $1.36, or 3.44%, to settle at $38.19 per barrel.
Both benchmarks rose to their highest since March earlier in the session with WTI topping $40 a barrel.
The Organization of the Petroleum Exporting Countries, Russia and other producers - a group known as OPEC+ - agreed in April to cut supply by 9.7 million barrels per day (bpd) in May and June in an effort to prop up prices as coronavirus travel restrictions caused demand to collapse.
The OPEC+ producers agreed on Saturday to sustain those cuts, equal to about 10% of global supply, through July.
After the extension was agreed, top exporter Saudi Arabia increased its monthly crude prices for July.
However, Saudi Energy Minister Prince Abdulaziz bin Salman told a news conference on Monday that the kingdom and Gulf allies Kuwait and the United Arab Emirates would not cut by an extra 1.18 million bpd in July as they are doing this month.
Those cuts were in addition to the 9.7 million bpd OPEC+ plan.
“It would be too good to be true to have a total of nearly 11 million bpd in voluntary cuts extended for a month at times when we see supply deficits,” said Bjornar Tonhaugen at Rystad Energy.
Low prices have prompted Chinese buyers to boost imports, with purchases by the world’s largest crude importer hitting a record high of 11.3 million bpd in May.
Analysts said higher oil prices could discourage buying and undercut the fragile recovery demand while prompting U.S. shale drillers to return to reopen wells.

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Oil prices inch higher, 1-month supply cut extension falls short of market hopes (Morning Update).



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil crept higher on Monday, but gave up big early gains as optimism over major crude producers’ deal to extend record output cuts gave way to disappointment that the accord didn’t extend beyond the end of July.
Brent crude had climbed as high as $43.41 a barrel but later was trading up just 13 cents, or 0.3%, at $42.43. U.S. West Texas Intermediate (WTI) crude fell 9 cents to trade at $39.46 per barrel, after earlier touching $40.44 earlier. Both hit their highest since March 6.
Since the start of April Brent has nearly doubled, propped up by the unprecedented production cut of 9.7 million barrels per day — nearly 10% of global supplies — agreed in April by the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, collectively known as OPEC+.
On Saturday OPEC+ agreed to extend the deal by a third month through end-July. Following the deal, world’s top exporter Saudi Arabia sharply raised its monthly crude prices for July.
But Howie Lee, economist at Singapore bank OCBC, said the one-month extension had fallen short of market hopes for a three-month deal. He said both benchmarks would require stronger bullish factors to propel prices back to where they were before March 6, when prices crashed after OPEC and Russia initially failed to reach an agreement to extend output cuts into April.
“It’s a big gap there. You need a strong conviction to go from $43 to pre-crash levels,” Lee said, referring to Brent being above $50 a barrel before the March crash.
Still, the current deal is expected to lead the market into a supply deficit by October, underpinning prices in the longer run, he added.
Compliance with the agreement among OPEC members such as Iraq and Nigeria also remains an issue.
“While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
“The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.”
In southwestern Libya, two major oilfields have reopened after months of a blockade that shut off most of the country’s production.
Even as oil prices recovered, they are still well below the costs of most U.S. shale producers, leading to shutdowns, layoffs and cost-cutting in the world’s largest producer.
The number of operating U.S. oil and natural gas rigs fell to a record low for a fifth week in a row in the week to June 5, according to data from Baker Hughes.
Nearly 30% of U.S. offshore oil output was also shut on Friday as tropical storm Cristobal entered the Gulf of Mexico.
Higher oil prices could invite the reinstatement of supply, notably U.S. shale, that was planned to be shut-in in June and July, BNP Paribas’ Harry Tchilingurian said.
“OPEC+ faces a catch-22 situation,” he said. “The resumption of output ... may moderate the pace of rebalancing of the oil market.”

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On Friday 5, June 2020

Oil climbs more than 5% to 3-month high ahead of OPEC+ meeting (AfternoonUpdate).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday after an unexpected fall in the May U.S. jobless rate and OPEC’s decision to bring forward to Saturday discussions on whether to extend record production cuts.
Brent crude futures were up $2.07, or 5.2%, at $42.07 a barrel, while West Texas Intermediate crude futures gained $2.14, or 5.7%, to settle at $39.55 per barrel.
The U.S. Labor Department reported a surprise fall in the jobless rate to 13.3% last month from 14.7% in April.
Brent has risen 17% since Friday to reach a three-month high, in a range more comfortable for producers like Russia. The contract has more than doubled since crashing as low as $15.98 a barrel on April 22. WTI is up 11%.
Both benchmarks were headed for a sixth week of gains, lifted by the output cuts and signs of improving fuel demand as countries ease lockdowns imposed to fight the new coronavirus outbreak.
“OPEC and the U.S. jobless drop boosted the market,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “If we see jet fuel demand recover, that may give us hope that we can look ahead to a day where these supplies can dwindle down,” said Flynn, pointing to American Airlines Group Inc’s announcement Thursday that it would increase U.S. flights in July.
Russia’s energy ministry said a video conference of a group of leading oil producers, known as OPEC+, would be held on Saturday.
The market was hopeful that some laggard countries may have agreed to align with the deal.
OPEC+ had said it would bring forward the meeting, which had been scheduled for next week, should Iraq and others agree to boost adherence to supply cuts.
Two OPEC+ sources said Saudi Arabia and Russia had agreed to extend deeper cuts until the end of July but said Riyadh was also pushing to extend them until the end of August.
If OPEC+ fails to agree to roll over the output curbs, the cut could drop back to 7.7 million bpd from July through December as previously agreed.
Adding support was the first tropical storm of the season in the U.S. Gulf of Mexico. Storm Cristobal was expected to enter the central Gulf this week, an area rich with offshore platforms, and could make landfall along Louisiana’s refinery row on Sunday.

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Oil jumps 5% as traders await OPEC+ meeting on extending supply cuts (Morning Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday after OPEC decided to move up discussions on whether to extend record production cuts to Saturday, indicating that some laggard countries may have agreed to align themselves with the deal.
Brent crude futures were up $2.12, or 5.2%, to trade at $41.`` per barrel, while West Texas Intermediate traded $1.74, or 4.65%, higher at $39.15 per barrel.
Brent has risen 16% since Friday to reach a three-month high, settling in a range more comfortable for producers like Russia. The contract has more than doubled since it crashed to as little as $15.98 a barrel on April 22.
WTI is up nearly 14% from Friday’s close, leaving benchmarks on track for a sixth week of gains, lifted by the output cuts and signs of improving fuel demand as countries ease lockdown measures imposed to prevent the spread of the new coronavirus.
Russia’s energy ministry said on Friday a video conference of a group of leading oil producers, known as OPEC+, would be held on Saturday.
OPEC and its allies had said they would bring forward the meeting, which had been scheduled for next week, should Iraq and others agree to boost their adherence to existing supply cuts.
“Prices are up with the meeting scheduled for tomorrow. There was lots of confusion... so it looks like they found a way forward,” Olivier Jakob at Petromatrix consultancy said.
Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend output cuts of 9.7 million barrels per day (bpd) into July.
If OPEC+ fails to agree to roll over the current output curbs, that would mean the cut could drop back to 7.7 million bpd from July through December as previously agreed.
“The growing fear is that not only will a deal to extend the deep cuts not be reached, but (some) producers may even relax their current over-compliance. This would ultimately see output rise in coming weeks,” ANZ Research said in a note.
Adding support was the first tropical storm of the season in the U.S. Gulf of Mexico. Storm Cristobal is expected to enter the central Gulf this week, an area rich with offshore platforms, and could see landfall along Louisiana’s refinery row on Sunday.

U.S. energy companies have already closed some production. “It’s not big, but there will be some shut-ins,” Jakob said.

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On Thursday 4, June 2020

Oil rises slightly as traders await clarity on OPEC+ cuts (Afternoon Update).



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images.

Oil prices were little changed on Thursday as investors awaited a decision from top crude producers on whether to extend record output cuts.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, are debating when to hold ministerial talks to discuss a possible extension of the existing cuts.
Brent crude futures were up 6 cents, or 0.2%, at $39.85 a barrel. West Texas Intermediate crude futures gained 12 cents to settle at $37.41 per barrel.
Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend cuts of 9.7 million barrels per day (bpd) that major producers agreed to in April. But a suggestion by OPEC president Algeria to meet on Thursday was delayed amid talks about poor compliance by some producers.
Saudi Arabia, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating that crude supply could rise next month regardless of any OPEC+ decision.
“OPEC appears ‘damned if they do and damned if they don’t’ with regard to extended near term production reductions,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
“Any decision to forgo any extension of current cuts would easily unleash a near term selling spree while an agreement to extend cuts beyond next month would have longer term bearish implications as  upward adjustments to third quarter shale production forecasts would likely be required.”
Concerns about a resurgence of U.S. shale production, which is already showing signs of revival, was one reason Moscow and Russia only backed prolonging cuts into July rather than agreeing a longer extension, sources briefed on OPEC+ talks have said.
Meanwhile, U.S. government data on Wednesday showed large increases in fuel inventories as demand remains impaired due to the coronavirus pandemic.
“Large oil inventory builds across the U.S., Europe and Japan last week are weighing on oil prices,” UBS analyst Giovanni Staunovo said.

“Also the uncertainty if OPEC+ solves the impasse with countries with a weak compliance level is not helping.”
Striking a bullish note, however, Russia’s Energy Minister said the oil market in July could face a shortage of 3-5 million bpd, Interfax news agency reported.

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Oil drops on U.S. inventories and doubts over output cuts (Morning Update



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices dropped on Thursday on doubts over the ability of crude producers to agree to extend record output cuts, heightened by worries over a build in U.S. fuel inventories.
Brent crude futures eased by 29 cents to $39.50 a barrel, heading for its first fall in six sessions. U.S. West Texas Intermediate crude futures dropped 58 cents to $36.71.
Saudi Arabia and Russia, two of the world’s biggest oil producers, have agreed to support an extension into July of the 9.7 million barrels per day (bpd) supply cuts backed in April by the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and other major producers.
But they failed to agree on holding an OPEC+ meeting on Thursday to discuss the cuts, with OPEC sources saying it would be conditional a deepening of cuts by countries that have not complied with their targets so far.
Saudi Arabia, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating that crude supply could rise next month regardless of any OPEC+ decision.
“Whilst the production group’s laggards were given two more weeks to prove that they are willing to share the burden that comes with lower output levels, the market was given the same amount of time to keep pondering. One thing that is guaranteed for the next few weeks is volatility,” PVM analysts said.
Also weighing on prices, official U.S. data showed that gasoline stocks rose by 2.8 million barrels, nearly triple what analysts had expected. Distillate stocks rose by 9.9 million barrels, nearly four times more than expected.
In Asia, the volume of oil products traded during S&P Global Platts’ Market-on-Close process plunged 74% in May from a year earlier, data analysed by Reuters showed.
Ringing a bullish note, however, Russia’s Energy Minister said that the oil market in July could face a shortage of 3-5 million bpd, Interfax news agency reported.

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On Wednesday 3, June 2020

Oil falls as doubts emerge over next step on OPEC cuts (Afternoon Update).



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil fell on Wednesday after jumping for awhile above $40 a barrel, the highest since March, then retreating as doubts emerged about the timing and scale of a potential extension to the pact between OPEC and its allies to cut crude supplies.
Oil prices were also were pressured as U.S. refined product inventories surged in the week, raising concerns about demand.
“As product demand remains subdued, gasoline inventories showed a solid build, while distillates showed a mammoth one - despite refinery runs being over 3.6 million barrels per day below year-ago levels,” said Matt Smith, director of commodity research at ClipperData.
Saudi Arabia and Russia have a deal to extend oil output cuts by a month, but a policy meeting on Thursday rather than later in June is unlikely, sources said. Earlier in the session, oil fell when Bloomberg reported the Thursday meeting was in doubt.
“Prices were firm so far this week on the news that the meeting was earlier,” said Olivier Jakob, oil analyst at Petromatrix. “The retracement today is definitely due to the latest headlines on OPEC.”
Brent crude futures for August were down 53 cents, or 1.3%, at $39.04. The session high of $40.53 was the highest since March 6. West Texas Intermediate crude for July fell 53 cents, or 1.36%, to $36.31.
Both benchmarks have surged in recent weeks, with Brent more than doubling after hitting a 21-year low below $16 in April, when U.S. crude turned negative.
The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, is cutting output by 9.7 million barrels per day (bpd) in May and June, equal to about 10% of global output before the coronavirus crisis.
The talks have been focusing on keeping the current level of cuts beyond June. But a one-month extension would be shorter than some sources have said was under consideration.
Oil also weakened on reports that Gulf OPEC producers are not discussing extensions to their deeper voluntary production cuts beyond June.

Pointing to demand recovery, the services sector in China, the world’s second-biggest oil consumer, returned to growth last month, a survey showed.

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Oil mixed as doubts emerge over next step on OPEC cuts (Morning Update)


An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil was little changed on Wednesday in a volatile trading session, after jumping for awhile above $40 a barrel, the highest since March, then retreating as doubts emerged about the timing and scale of a potential extension to the pact between OPEC and its allies to cut crude supplies.
Oil prices were also were pressured as U.S. refined product inventories surged in the week, raising concerns about demand.
“As product demand remains subdued, gasoline inventories showed a solid build, while distillates showed a mammoth one - despite refinery runs being over 3.6 million barrels per day below year-ago levels,” said Matt Smith, director of commodity research at ClipperData.
Saudi Arabia and Russia have a deal to extend oil output cuts by a month, but a policy meeting on Thursday rather than later in June is unlikely, sources said. Earlier in the session, oil fell when Bloomberg reported the Thursday meeting was in doubt.
“Prices were firm so far this week on the news that the meeting was earlier,” said Olivier Jakob, oil analyst at Petromatrix. “The retracement today is definitely due to the latest headlines on OPEC.”
Brent crude futures for August were down 10 cents, or 0.3%, at $39.45 per barrel. The session high of $40.53 was the highest since March 6. West Texas Intermediate crude for July gained 12 cents to trade at $36.93 per barrel.
Both benchmarks have surged in recent weeks, with Brent more than doubling after hitting a 21-year low below $16 in April, when U.S. crude turned negative.
The OPEC+ group, comprising the Organization of the Petroleum Exporting Countries and allies including Russia, is cutting output by 9.7 million barrels per day (bpd) in May and June, equal to about 10% of global output before the coronavirus crisis.
The talks have been focusing on keeping the current level of cuts beyond June. But a one-month extension would be shorter than some sources have said was under consideration.
Oil also weakened on reports that Gulf OPEC producers are not discussing extensions to their deeper voluntary production cuts beyond June.
Pointing to demand recovery, the services sector in China, the world’s second-biggest oil consumer, returned to growth last month, a survey showed.

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On Tuesday 2, June 2020

Oil rises nearly 4% ahead of OPEC+ meeting, easing lockdowns



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices were up about $1 a barrel on Tuesday on expectations that major producers will agree to extend output cuts during a video conference likely to be held this week and as countries and U.S. states begin to restart after coronavirus lockdowns.
West Texas Intermediate crude climbed $1.37, or 3.87%, to settle at $36.81 per barrel. Brent crude rose 2.7%, or $1.04, to $39.36 a barrel.
The Organization of the Petroleum Exporting Countries and others including Russia, a grouping known as OPEC+, are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10% of global production, into July or August, at a meeting expected to be held on June 4.
“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
The gradual reopening of businesses in a growing number of U.S. states and countries around the world after shelter-in-place mandates caused by the coronavirus pandemic also oil boosted prices.
“As the economy opens up, there’s more and more people on the road. That’s going to be good, obviously, for crude oil,” said Bob Yawger, director of energy futures at Mizuho in New York.
Steadily increasing gasoline demand in the United States and falling crude inventories at the nation’s oil storage hub in Cushing, Oklahoma, has also supported prices, Yawger said.
Industry group American Petroleum Institute will release its weekly oil inventory report later in the day, with official data following on Wednesday.

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Oil prices rise before OPEC+ meeting about extending output cuts ( Morning Update)



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose on Tuesday on expectations that major producers would agree to extend output cuts that have shored up prices, during a video conference likely to be held this week.
Benchmark Brent crude rose 2.5%, or 99 cents, to trade at $39.27 a barrel. U.S. West Texas Intermediate (WTI) crude climbed 2.3%, or 83 cents, to $36.27 a barrel.
Brent has doubled in the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia, a grouping known as OPEC+.
But oil prices are still 40% down so far this year.
OPEC+ producers are considering extending their production cuts of 9.7 million barrels per day (bpd), equivalent to about 10% of global production, into July or August, at an online meeting likely to be held on June 4.
“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
“An agreement to extend would buy the OPEC+ group some time to actually fully comply with the initial supply cut of 9.7 million bpd before decreasing output curtailment to 7.7 million bpd for the balance of the year,” BNP Paribas Global Head of Commodity Markets Strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
Price gains have been capped by trade tension between China and the United States over Beijing’s security legislation in Hong Kong, as well as manufacturing data on Monday showing the world’s factories were still struggling.

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On Monday 1, June 2020

Oil moves lower as U.S.-China tensions weigh ( Afternoon Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images
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Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from reports that OPEC and Russia were close to a deal extending output cuts.
Brent futures rose 28 cents, or 0.7%, to trade at $38.12 per barrel. U.S. crude fell 5 cents, or 0.14%, to settle at $35.44 per barrel.
Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.
China has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special U.S. treatment for Hong Kong to punish Beijing.
“The possibility of heightened tensions does pose a risk for the recent rally in oil prices,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
Economic concerns and questions about fuel demand recovery also weighed on oil futures. Manufacturing data on Monday showed that Asian and European factories were struggling as government-imposed lockdowns tempered demand.
Prices found some support after news that the Organization of the Petroleum Exporting Countries and Russia, known as OPEC+, were moving closer to a compromise on extending oil output cuts and were discussing rolling over the curbs one to two months.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10.
Stockpiles at Cushing, Oklahoma, fell to 54.3 million barrels in the week to May 29, traders said, citing a Genscape report on Monday.
Bank of America said Monday it believed that North American oil shut-ins peaked in May.
“Oil prices have strengthened to levels where shutting-in no longer makes sense and should actually encourage producers to quickly restore production,” according to a BofA Global Research report.

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Oil falls as U.S.-China tension escalates (Morning Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil fell on Monday on worries about renewed tensions between the United States and China, although reports that OPEC and Russia were closer to a deal on extending oil output cuts lent some support to prices.
Benchmark Brent crude was down 46 cents, or 1.2%, at $37.38 a barrel, while U.S. crude fell $1.04, or 2.9%, to $34.45 a barrel.
Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.
Beijing has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two sources said. China could expand the order to include additional U.S. farm goods if Washington took further action, sources said.
“The possibility of heightened tensions does pose a risk for the recent rally in oil prices,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
U.S. President Donald Trump’s directive to begin the process of eliminating special treatment for Hong Kong is likely to create a new driver of volatility in global markets as tensions between Washington and Beijing climb again.
Manufacturing data has also showed that Asian and European factories were struggling as lockdowns due to the coronavirus pandemic kept demand in check.
Prices found some support, however, after a news that the Organization of the Petroleum Exporting Countries and Russia, part of a group known as OPEC+, were moving closer to a compromise on the duration for extending oil output cuts and were discussing rolling over the curbs one to two months.
“The fact that crude ... prices have not reacted much to the news of the potential cut extension can be seen as a sign that the market has already priced in a lot of optimism,” JBC Energy analysts said in a note.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10. Russia has said it has no objection to meeting sooner.

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On Friday 29, May 2020

Oil jumps nearly 90% in May to $35, registering best month on record (Afternoon Update)

Pippa Stevens

Oil jumped more than 5% on Friday, the last trading day of the month, capping off its best month in history as an uptick in demand as well as record supply cuts pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, finished May with a gain of 88%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%.
But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In other words, WTI at $35 per barrel is hardly something to celebrate.
“It certainly doesn’t feel like it was oil’s best month ever,” said Regina Mayor, KPMG’s global head of energy. “Low $30s for WTI is clearly better than where we were at the end of April, but it’s not sufficient enough to bring the bulk of production back online,” she added.
In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract’s imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed.
Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019′s number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma — the main delivery point for WTI — decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet.
On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts.
In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March’s record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output.
The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting.
Doubts over whether or not the the deeper cuts will be extended sent some jitters through the oil market this week, although WTI still on track for its fifth straight week of gains. On Friday the contract gained $1.78, or 5.28%, to settle at $35.49 per barrel. Earlier in the session it traded as low as $32.36 per barrel as geopolitical tensions weighed on sentiment. International benchmark Brent crude gained 4 cents, or 0.11%, to settle at $35.33 per barrel.
Of course, crude’s record month is partially due to the fact that after falling to such low levels, a smaller price move now accounts for a much larger percentage move. WTI is still 4% below its recent high of $65.65 from January. Additionally, oil contracts roll on a monthly basis, but the roll doesn’t align with the standard calendar meaning that evaluating price on a standard monthly basis — rather than the duration of the month-long contract — can be somewhat arbitrary.
Mayor, who is based in Houston, said the market is more positive than those who are on the ground in oil country feel. “I think it’s too early for the level of optimism we’re seeing in the market, and to be frank, I think it’s a bit inexplicable,” she said. “I don’t think demand fundamentals are the key driver of the optimism. I think it’s more quick on supply, which means to me that there’s downside risk to the current elevated price.”
Still, others are more positive on oil’s outlook. In a recent note to clients, Morgan Stanley said that the rally looks like it can continue in the coming months, while also acknowledging that many unknowns remain in the market.
Meanwhile, Rystad Energy said that wild price swings are now in the rearview mirror. “Supply developments and other geopolitical tensions that could affect demand are priced in...Now, waiting for the next OPEC+ meeting, the market is also comfortable in a relative calmness,” said Bjornar Tonhaugen, Rystad’s head of oil markets.

- CNBC’s Michael Bloom and Patti Domm contributed reporting.

______________________________________________________

Oil is on track for its best month ever (Morning Update)

Pippa Stevens

Oil came under pressure on Friday, the last trading day of month, but it’s still on pace to post its best month in history as an uptick in demand as well as record supply cuts have pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, is on track to finish May with a gain of 74%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%.
But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In other words, WTI at $33 per barrel is hardly something to celebrate.
“It certainly doesn’t feel like it was oil’s best month ever,” said Regina Mayor, KPMG’s global head of energy. “Low $30s for WTI is clearly better than where we were at the end of April, but it’s not sufficient enough to bring the bulk of production back online,” she added.
In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract’s imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed.
Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019′s number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma — the main delivery point for WTI — decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet.
On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts.
In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March’s record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output.
The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting.
Doubts over whether or not the the deeper cuts will be extended sent some jitters through the oil market this week, and WTI was on track to snap a four-week winning streak. On Friday the contract slid 70 cents, or 2%, to trade at $33.01 as geopolitical tensions weighed on sentiment. International benchmark Brent crude slid 72 cents, or 2%, to trade at $34.57 per barrel.
Of course, crude’s record month is partially due to the fact that after falling to such low levels, a smaller price move now accounts for a much larger percentage move. WTI is still 50% below its recent high of $65.65 from January. Additionally, oil contracts roll on a monthly basis, but the roll doesn’t align with the standard calendar meaning that evaluating price on a standard monthly basis — rather than the duration of the month-long contract — can be somewhat arbitrary.
Mayor, who is based in Houston, said the market is more positive than those who are on the ground in oil country feel. “I think it’s too early for the level of optimism we’re seeing in the market, and to be frank, I think it’s a bit inexplicable,” she said. “I don’t think demand fundamentals are the key driver of the optimism. I think it’s more quick on supply, which means to me that there’s downside risk to the current elevated price.”
Still, others are more positive on oil’s outlook. In a recent note to clients, Morgan Stanley said that the rally looks like it can continue in the coming months, while also acknowledging that many unknowns remain in the market.
Meanwhile, Rystad Energy said that wild price swings are now in the rearview mirror. “Supply developments and other geopolitical tensions that could affect demand are priced in...Now, waiting for the next OPEC+ meeting, the market is also comfortable in a relative calmness,” said Bjornar Tonhaugen, Rystad’s head of oil markets.

- CNBC’s Michael Bloom and Patti Domm contributed reporting.

______________________________________________________

On Thursday 28, May 2020

Oil jumps more than 2% to reverse early losses on higher U.S. gasoline demand, refinery runs (Afternoon Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Thursday, erasing earlier losses, on signs U.S. gasoline demand is rising despite a big surprise build in crude inventories and worries that China’s new Hong Kong security law could result in trade sanctions.
The U.S. Energy Information Administration (EIA) said crude inventories rose 7.9 million barrels in the latest week, exceeding expectations, due to a big increase in imports. Gasoline stockpiles fell unexpectedly, but refiners boosted output.
“Even though we got the big increase in crude supplies, there’s optimism in the numbers because of the uptick in refinery runs and because of the uptick in gasoline demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely.
On its second to last day as the front-month, Brent futures for July delivery rose 55 cents, or 1.6%, to settle at $35.29 a barrel. West Texas Intermediate crude rose 90 cents, or 2.7%, to settle at $33.17 per barrel.
Uncertainty about Russia’s commitment to continuing deep output cuts kept the price gain in check. Saudi Arabia and other OPEC producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group dubbed OPEC+, meets on June 9 to discuss continuing the April supply deal that cut 9.7 million bpd from the  market.

Markets are also concerned that Washington could slap trade sanctions on China due to Beijing’s move to impose a new security law on Hong Kong. The United States and other nations said this would threaten freedom and breach a 1984 Sino-British agreement on the autonomy of the former UK-colony.

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Oil prices steady, awaiting confirmation of surprise U.S. inventory build (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures steadied on Thursday as the market awaited confirmation of industry data that showed a surprise increase in U.S. crude stocks, which offset hopes for a demand recovery as coronavirus lockdowns ease.
After tumbling on Wednesday, Brent crude futures were down 0.3%, or 11 cents, at $34.63 a barrel after dropping by more than $1 to $33.62 in early trading.
West Texas Intermediate crude futures were down 0.55%, or 18 cents, at $32.63. U.S. futures earlier slipped as much as 5% to a low of $31.14.
“All in all oil is pretty much flat after the price correction yesterday. The market opened lower after the shock API numbers, but it is now treading water until EIA statistics are released,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
Data from industry group API showed U.S. crude stocks rose 8.7 million barrels in the week to May 22, against analyst expectations for a 1.9 million-barrel draw.
Also weighing on prices was uncertainty about Russia’s commitment to continuing deep output cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, a grouping dubbed OPEC+.
Saudi Arabia and some other OPEC oil producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed during a telephone call on further “close coordination” on output restrictions, the Kremlin said on Wednesday.
With WTI holding above $30 a barrel, OPEC+ will be watching to see whether U.S. shale oil producers, who have breakeven prices in the high $20 to low $30 range, step up production, said National Australia Bank’s head of commodity research, Lachlan Shaw.

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On Wednesday 27, May 2020

Oil falls on U.S.-China tensions over Hong Kong (Afternoon Update)




An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong.
A potential deterioration in relations between the world’s two biggest economies could ratchet up the pressure on global businesses and oil demand already weakened by the coronavirus pandemic.
Brent crude fell $1, or 2.6%, to trade at $35.17 per barrel, while West Texas Intermediate crude was down $1.02, or 2.9%, to trade at $33.32 per barrel.
“As much as oil fundamentals are improving, there are still several flies in the bullish ointment. They include the latest uptick in U.S.-China tensions,” said Stephen Brennock of oil broker PVM.
“The threat of a fresh U.S.-China trade war is no longer just a tail risk and could spell disaster for risk assets.”
Gloomy forecasts over the economic impact of the pandemic also weighed on crude prices. The euro zone economy is likely to shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning that a mild scenario was already outdated and the outcome would be between medium and severe.
Traders were also paying attention to early signals on a meeting between the Organization of the Petroleum Exporting Countries and its allies in less than two weeks.
The group, known as OPEC+, is cutting output by nearly 10 million barrels per day (bpd) in May and June, but the question is whether it will continue to do so as demand recovers after the easing of coronavirus lockdowns in many countries.
“Stock builds are falling and the market will be balanced in June, so who wants to willingly forego millions of crude barrels in sales if he’s able to sell it in a recovering market,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.

In another sign of weak fuel demand, Japan’s refineries operated at only 56.1% of capacity last week, the lowest rate since at least 2005.

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Oil slips on demand worries, Hong Kong tensions (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries, while U.S.-China tensions added to negative sentiment.
Brent crude futures fell 21 cents, or 0.6%, to $35.96 by 0120 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.9%, at $34.04 a barrel.
The Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, are cutting their output by nearly 10 million barrels per day in May-June to buttress prices as measures to rein in the coronavirus pandemic have slashed fuel demand.
In the United States, where some states are opening up after lockdowns, optimism about an increase in demand has supported sentiment, but the recovery is fragile, analysts caution. The Memorial Day holiday just passed typically heralds the start of the peak U.S. demand season.
“Early estimates suggest gasoline demand is down by as much as 30% from last year as people stay close to home,” ANZ Research said in a note.
Some analysts and banks are predicting a balanced oil market as soon as June, but that could be too optimistic, according to Eurasia Group. 
There is ... a significant risk of repeat outbreaks and lockdowns. Even without them, some restrictions — especially on aviation — will remain in place,” it said in a note.
Still as U.S. demand picks up, however slowly, there are signs that inventories are falling. U.S. crude inventories are forecast to have fallen for a third week last week, according a Reuters poll of analysts. 
Prices were also under pressure after U.S. President Donald Trump’s economic adviser, Larry Kudlow, said China was making “a big mistake” with national security legislation on Hong Kong. 
Beijing’s proposed security law would reduce the territory’s separate legal status. China’s parliament is expected to approve it by Thursday.

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On Tuesday 26, May 2020

Oil jumps more than 3% as faith in supply cuts grows (Afternoon Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures gained 64 cents, or 1.8%, to settle at $36.17 per barrel. West Texas Intermediate crude futures gained $1.10, or 3.3%, to settle at $34.35 per barrel.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.

Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.

The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.

On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.

“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the U.S. rig count hit a record low of 318 last week.

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Oil prices rise on supply cut hopes, easing of coronavirus lockdowns (Morning Update)



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices climbed on Tuesday, boosted by increasing faith in the market that producers will to stick to commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns are eased around the world.
U.S. West Texas Intermediate (WTI) crude futures gained 3.2%, or $1.06, to $34.31 a barrel as of 0429 GMT, just off an intra-day high of $34.33. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday.
Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading.
The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5 million barrels per day (bpd) for May and June under its supply cut deal with the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers, a grouping known as OPEC+.
“There’s definitely a feeling those cuts have come through as well as you could expect,” said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.
OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down around 45% since the start of the year. The big producers agreed in April to cut output by nearly 10 million bpd for May and June.
Russia’s energy ministry on Monday quoted minister Alexander Novak as saying a rise in fuel demand should help cut the current global surplus of around 7-12 million bpd by June or July.
“With economies restarting, the focus definitely is on the improvement in the fundamentals, rather than what seemed like a complete collapse in demand only a few weeks ago,” said strategist Hynes.
Meanwhile data from energy services firm Baker Hughes showed the United States’ rig count hitting a record low of 318 in the week to May 22, also indicating lower output in the future

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On Monday 25, May 2020

Oil falls as U.S.-China tensions take toll ( Morning Update)



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices eased on Monday on concerns over rising tensions between the United States and China over Beijing’s plans to impose security laws on Hong Kong and the possibility of sanctions from Washington.
Oil prices have risen sharply in recent weeks as an easing of coronavirus restrictions has led to increased demand, but the tensions between the United States and China are beginning to weigh on sentiment.
Brent was down 19 cents, or 0.5%, at $34.94 a barrel by 0152 GMT. U.S. oil was down by 6 cents, or 0.2%, at $33.19 a barrel. Both contracts have risen for the past four weeks, although prices are still down around 45% so far this year.
Hong Kong police used tear gas and water cannons on Sunday to disperse thousands of people rallying against Beijing’s plan to impose national security laws on the city.
“The HK security legislation packs on a hefty amount (of) trade war risk premium,” said Stephen Innes, chief market strategist at AxiCorp, noting that it added to market worries last week about the level of Chinese policy stimulus.
Ties between Washington and Beijing have soured since the outbreak of the new coronavirus. President Donald Trump and President Xi Jinping have traded barbs over the outbreak, including accusations of cover-ups and lack of transparency.
Clashes between the superpowers have included Hong Kong, human rights, trade and U.S. support for Chinese-claimed Taiwan.

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On Friday 22, May 2020

Oil drops after China abandons target for 2020 GDP amid coronavirus outbreak (Afternoon Update).



Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices slumped on Friday after China’s decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user.
Brent crude fell $1.06, or 2.9%, to $34.97 a barrel, after gaining nearly 1% on Thursday. West Texas Intermediate crude dropped by 98 cents, or 2.9%, to trade at $32.94 per barrel, having gained more than 1% in the last session.
China’s National People’s Congress (NPC) kicked off a week-long meeting on Friday with the government saying it omitted the 2020 target, while pledging to issue 1 trillion yuan ($140 billion) of special treasury bonds to support companies and regions hit by the pandemic.
Abandoning the growth target “could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil,” said Stephen Innes, chief global market strategist at AxiCorp.
“The commodity market, in general, was looking for a bigger infrastructure pump from the NPC so there is bound to be an element of disappointment,” he said.
Still, both Brent and WTI are heading for a fourth week of gains as more evidence emerged that fuel demand is recovering as countries ease business and social restrictions imposed to counter the coronavirus pandemic.
Gasoline demand is returning with traffic congestion in some of the world’s capitals recovering to year-earlier levels after the lifting of coronavirus, data prepared for Reuters shows.
Traffic flows in Berlin and Tokyo have rebounded, according to the data, while in the United States the easing of restrictions in many states has supported demand for gasoline. The upcoming Memorial Day holiday weekend typically kicks off the U.S. summer driving season.

______________________________________________________

Oil drops after China abandons target for 2020 GDP amid coronavirus outbreak (Morning Update)



Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices slumped on Friday after China’s decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user.
Brent crude fell $1.70, or 4.7%, to $34.36 a barrel, after gaining nearly 1% on Thursday. West Texas Intermediate crude dropped by $1.91, or 5.6%, to $32.01 a barrel, having gained more than 1% in the last session.
China’s National People’s Congress (NPC) kicked off a week-long meeting on Friday with the government saying it omitted the 2020 target, while pledging to issue 1 trillion yuan ($140 billion) of special treasury bonds to support companies and regions hit by the pandemic.
Abandoning the growth target “could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil,” said Stephen Innes, chief global market strategist at AxiCorp.
“The commodity market, in general, was looking for a bigger infrastructure pump from the NPC so there is bound to be an element of disappointment,” he said.
Still, both Brent and WTI are heading for a fourth week of gains as more evidence emerged that fuel demand is recovering as countries ease business and social restrictions imposed to counter the coronavirus pandemic.
Gasoline demand is returning with traffic congestion in some of the world’s capitals recovering to year-earlier levels after the lifting of coronavirus, data prepared for Reuters shows.

Traffic flows in Berlin and Tokyo have rebounded, according to the data, while in the United States the easing of restrictions in many states has supported demand for gasoline. The upcoming Memorial Day holiday weekend typically kicks off the U.S. summer driving season.

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On Thursday 21, May 2020

Oil at highest since March on lower U.S. inventories, recovering demand (Afternoon Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose to the highest level since March on Thursday, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions imposed on people’s movements due to the coronavirus crisis.
Crude prices have slumped in 2020, with Brent hitting a 21-year low below $16 a barrel in April as demand collapsed. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled.
Brent rose 23 cents, or 0.6%, to $35.98 per barrel, while West Texas Intermediate crude rose 23 cents, or 0.7%, to $33.76.
“Global supply has been curtailed to a great degree,” said Rystad Energy analyst Paola Rodriguez Masiu. “We are on a clear path to a gradual recovery now.”
In the latest sign the supply glut is easing, U.S. crude inventories fell 5 million barrels last week. Analysts had expected an increase.
“The rally in the crude futures is beginning to approach levels in which U.S. shale production declines will begin to slow and possibly reverse as low cost producers attempt to generate revenue,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
At the same time, there is evidence of recovering fuel use.
Top U.S. airlines and Air Canada (AC.TO) on Tuesday reported slower ticket cancellations and an improvement in bookings on some routes, though executives said overall demand remained weak.
The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, agreed to cut supply by a record 9.7 million barrels per day from May 1.
So far in May, OPEC+ has cut oil exports by about 6 million bpd, according to companies that track the flows, suggesting a strong start in complying with the deal. OPEC says the market has responded well.

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Oil prices rise to highest since March after U.S. stock drawdown (Morning Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose on Thursday to their highest since March, as a drawdown of U.S. crude inventories and output cuts by major producers helped ease concerns about a supply glut, offsetting fears over the economic fallout from the Covid-19 epidemic.
Brent crude futures for July delivery were trading up 62 cents, or 1.7%, at $36.37 per barrel at 0550 GMT, rising for a second day.
U.S. West Texas Intermediate (WTI) crude futures for July were up 61 cents, or 1.8%, at $34.10 a barrel, extending its gains into a sixth straight session.
Both prices are at their highest since March 11.
U.S. crude inventories fell by 5 million barrels last week, against expectations in a Reuters poll for a 1.2 million-barrel rise, Energy Information Administration (EIA) data showed, while stocks at the Cushing, Oklahoma, delivery hub dropped by 5.6 million barrels.
“While signs that WTI storage pressures are abating is positive for prices, the latest report shows that the fall in stocks owes more to supply factors than growing product demand,” Capital Economics said in a note issued on Wednesday.
Prices have been boosted lately by shipping data showing the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, a group known as OPEC+, are complying with their pledge to cut 9.7 million barrels per day (bpd).
OPEC itself is encouraged by the rally in prices and strong adherence to output cut pledges, its secretary general said, although sources say the group has not ruled out further steps to support the market.
“With supply being managed through the compliance among OPEC+ and demand recovering in North Asia, particularly in China, things are moving in the right direction in terms of supporting oil prices,” said Victor Shum, vice president of Energy Consulting at IHS Markit.
“If there is no surprise in a second or third wave in the virus attack and key members of OPEC+, Saudi Arabia in particular, are doing more cuts, we expect a gradual recovery will continue in the second half,” he said.
Physical crude markets are signalling a rapid shift from an enormous over-supply at the height of the coronavirus lockdowns in April towards an expected under-supply in the second half of the year.
Still, concerns about the lasting economic impact from the pandemic, especially in the United States, the world’s biggest oil consumer, have applied some downward pressure on prices.
Federal Reserve policymakers repeated a vow to take all steps necessary to shore up the U.S. economy, minutes from the U.S. central bank’s April 28-29 policy meeting released on Wednesday showed. 

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On Wednesday 20, May 2020

Oil rises on signs of firmer demand, fall in U.S. crude stocks (Afternoon Update).



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
West Texas Intermediate July crude futures were up $1.36, or 4.2%, to trade at $33.32 per barrel. Brent crude futures rose $1.04, or 3%, to trade at $35.69 per barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
Data from the U.S. Energy Information Administration showed that for the week ending May 15 inventory dropped by 5 million barrels. According to estimates from FactSet, analysts had been expecting a build of 1.8 million barrels.
“Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.
“We would need to see strength in refinery margins in order to persuade refiners to increase utilisation rates, but at current levels there seems little incentive for them to do so, with many regions still seeing negative margins,” the bank added.
Refiners are pinning hope on easing of lockdowns boosting gasoline demand.
Lingering concerns about the economic fallout from the coronavirus pandemic, especially in the United States which is the world’s biggest oil consumer, kept a lid on further gains.
U.S. Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.

U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.

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Oil rises on signs of firmer demand, fall in U.S. crude stocks ( Morning Update)



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
Brent crude futures were up $1.29, or 3.7%, at $35.94 per barrel. West Texas Intermediate July crude futures were up $1.13, or 3.5%, to trade at $33.13 per barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
Official data from the Energy Information Administration (EIA) is due later on Wednesday.
“Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.
“We would need to see strength in refinery margins in order to persuade refiners to increase utilisation rates, but at current levels there seems little incentive for them to do so, with many regions still seeing negative margins,” the bank added.
Refiners are pinning hope on easing of lockdowns boosting gasoline demand.
Lingering concerns about the economic fallout from the coronavirus pandemic, especially in the United States which is the world’s biggest oil consumer, kept a lid on further gains.
U.S. Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.

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On Tuesday 19, May 2020

Oil moves between gains and losses, output cuts and demand hopes in focus (Afternoon Update)



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices moved between gains and losses on Tuesday, assigns that producers are cutting output as promised and on signs of increasing demand as more countries ease out of curbs imposed to counter the coronavirus pandemic.
The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, gained 66 cents, or 2.1%, to trade at $32.50 per barrel. The July contract, which was trading at vastly higher volumes, traded slightly lower at $31.50 per barrel. International benchmark Brent crude shed 13 cents, or 0.34%, to trade at $34.69 per barrel.
“The market sees both forces aligning: the cuts OPEC+ promised are materialising and other non-member production shut-downs are also really helping to limit the oversupply,” said Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy.
“Meanwhile, lockdown measures are removed globally and the economy needs fuel to restart.”
But global demand recovery is expected to be slow as some restrictions remain and there is a significant risk of repeat outbreaks and lockdowns.
Consultants the Eurasia Group urged caution on expectations for higher oil consumption, citing “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”.
But amid signs of rising demand for crude and fuels, there was little sign of a repeat of the historic plunge below zero seen a month ago on the eve of the May contract’s expiry.
The market was boosted earlier by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries and others including Russia, a group known as OPEC+, are being implemented.
OPEC+ cut its oil exports sharply in the first half of May, companies that track shipments said, suggesting a strong start in complying with their latest pact to curb output.
U.S. production is also falling, with crude output from seven major shale formations expected to fall to 7.822 million barrels per day in June, the lowest since August 2018, according to the U.S. Energy Information Administration.

A recovery in fuel demand in India also gathered momentum in the first half of May.

______________________________________________________

Oil steady on signs of output cuts ( Morning Update)



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images.

Oil prices were steady on Tuesday amid signs that producers are cutting output as promised while traders awaited more clarity on the demand picture as some countries ease out of lockdowns.
Benchmark Brent crude rose 43 cents, or 1.26%, to trade at $35.25 per barrel. The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, was up $1.27, or 4%, at $33.09 per barrel.
The July contract, which was trading at vastly higher volumes, was up one cent at $31.75 a barrel.
“A powerful cocktail made of bullish ingredients have been supporting the oil market for a month ... Demand is improving, supply is decreasing,” said oil broker PVM’s Tamas Varga.
“This improvement in sentiment, however, is expected to be relatively short-lived ... economic output  will grow compared to the current quarter but will be well below the levels expected at the beginning of the year,” Varga added.
Global demand recovery is expected to be slow as some restrictions remain and there is a significant risk of repeat outbreaks and lockdowns.
The Eurasia group urged caution on oil consumption, citing “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”.
There was little sign of a repeat of the historic plunge below zero seen last month ago on the eve of the May contract’s expiry amid signs of rising demand for crude and fuels.
The market was boosted earlier by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia, a group known as OPEC+, are being implemented.
OPEC+ cut its oil exports sharply in the first half of May, companies that track shipments said, suggesting a strong start in complying with their latest pact to curb output.
U.S. production is also falling, with crude output from seven major shale formations expected to fall to 7.822 million barrels per day in June, the lowest since August 2018, according to the U.S. Energy Information Administration.
A recovery in fuel demand in India also gathered momentum in the first half of May.

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On Monday 18, May 2020

Oil retreats from earlier 12% gain as June futures contract nears expiration (Afternoon Update).

Pippa Stevens


Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

West Texas Intermediate for June delivery jumped more than 12% at the session high on Monday, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices.
“Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.”
WTI, the U.S. benchmark, rose $2.20, or 7.4%, to trade at $31.62 per barrel. Earlier in the session it had been up more than 12%, touching a session high of $33.32. International benchmark Brent crude, which has already rolled to the July contract, traded 7.5% higher at $34.92 per barrel.
Monday’s jump is in sharp contrast to just one month ago when, on the day before the contract for May delivery expired, prices plunged below zero and into negative territory for the first time in history. With much of the world still on lockdown and storage rapidly filling, people were worried that there would be nowhere to put the oil. The contract holders were left scrambling and ultimately would do anything — in this case, even pay to have it taken off their hands.
Since then, demand has begun to recover, and worldwide suppliers have reduced output in an effort to support the market. OPEC and its oil-producing allies took 9.7 million barrels per day offline beginning on May 1, and Saudi Arabia, Kuwait and UAE are among the group’s nations that have said they will voluntarily cut production further. Beginning in June OPEC de facto leader Saudi Arabia said it would take an additional 1 million bpd offline.
In the U.S., data from the Energy Information Administration last week showed that production has dropped 1.5 million bpd below March’s all-time high level of 13.1 million bpd. Gasoline demand has also started to show signs of recovery as states begin to reopen economies.
The more actively traded WTI contract for July delivery jumped 8% to trade at $31.89, while the contract for August delivery traded 7.4% higher at $32.33.
“Almost half a year into the outbreak of the coronavirus pandemic, which has seen an unprecedented shock to oil consumption as most the world’s population has been locked in at home to slow the spread of the deadly Covid-19 illness caused by the virus, oil markets are reaching a turning point,” Eurasia Group’s Henning Gloystein said in a note to clients Sunday.
Oil is coming off its third straight week of gains, but prices are still well below January’s high, when WTI traded above $60 per barrel.
Gloystein noted that for prices to maintain their upward trajectory, producers will have to maintain supply cuts into 2021.
Some are less optimistic that the oil market will be able to bounce back. Mizuho’s Paul Sankey said Sunday that 2019 could have been the peak in terms of demand for oil. “Behavior changes are widely expected, particularly lower ongoing jet demand,” he said in a note to clients.
U.S. producer Whiting Petroleum is among the companies in the oil patch that have filed for bankruptcy as producers struggle to breakeven with oil trading at depressed levels.
“With Oil around $30, U.S. shale remains under pressure and we expect further bankruptcy filings as smaller companies struggle to service debt,” S&P Global Platts’ head of analytics Chris Midgley said.

— CNBC’s Michael Bloom contributed reporting.

______________________________________________________

Oil jumps 12% to $33 as June futures contract nears expiration (Morning Update)

Pippa Stevens


Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

West Texas Intermediate for June delivery jumped more than 12% on Monday to a two-month high, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices.
“Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.”
WTI, the U.S. benchmark, surged 12.5%, or $3.67, to trade at $33.10 per barrel. International benchmark Brent crude, which has already rolled to the July contract, traded 9.2% higher at $35.49 per barrel.
Monday’s jump is in sharp contrast to just one month ago when, on the day before the contract for May delivery expired, prices plunged below zero and into negative territory for the first time in history. With much of the world still on lockdown and storage rapidly filling, people were worried that there would be nowhere to put the oil. The contract holders were left scrambling and ultimately would do anything — in this case, even pay to have it taken off their hands.
Since then, demand has begun to recover, and worldwide suppliers have reduced output in an effort to support the market. OPEC and its oil-producing allies took 9.7 million barrels per day offline beginning on May 1, and Saudi Arabia, Kuwait and UAE are among the group’s nations that have said they will voluntarily cut production further. Beginning in June OPEC de facto leader Saudi Arabia said it would take an additional 1 million bpd offline.
In the U.S., data from the Energy Information Administration last week showed that production has dropped 1.5 million bpd below March’s all-time high level of 13.1 million bpd. Gasoline demand has also started to show signs of recovery as states begin to reopen economies.
The more actively traded WTI contract for July delivery jumped 8% to trade at $31.89, while the contract for August delivery traded 7.4% higher at $32.33.
“Almost half a year into the outbreak of the coronavirus pandemic, which has seen an unprecedented shock to oil consumption as most the world’s population has been locked in at home to slow the spread of the deadly Covid-19 illness caused by the virus, oil markets are reaching a turning point,” Eurasia Group’s Henning Gloystein said in a note to clients Sunday.
Oil is coming off its third straight week of gains, but prices are still well below January’s high, when WTI traded above $60 per barrel.
Gloystein noted that for prices to maintain their upward trajectory, producers will have to maintain supply cuts into 2021.
Some are less optimistic that the oil market will be able to bounce back. Mizuho’s Paul Sankey said Sunday that 2019 could have been the peak in terms of demand for oil. “Behavior changes are widely expected, particularly lower ongoing jet demand,” he said in a note to clients.
U.S. producer Whiting Petroleum is among the companies in the oil patch that have filed for bankruptcy as producers struggle to breakeven with oil trading at depressed levels.
“With Oil around $30, U.S. shale remains under pressure and we expect further bankruptcy filings as smaller companies struggle to service debt,” S&P Global Platts’ head of analytics Chris Midgley said.

— CNBC’s Michael Bloom contributed reporting.

______________________________________________________

On Friday 15, May 2020

Oil jumps 6%, posts third week of gains amid signs of demand pickup (Afternoon Update).

3-4 minutes - Source: CNBC



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday, posting their third week of gains, as data showed demand for crude picking up in China after the easing of curbs to stem the coronavirus outbreak, boosting hopes that the global supply overhang may start to fade.
Brent crude was up $1.14, or 3.66%, to trade at $32.27 per barrel, while West Texas Intermediate settled up 5.9% to trade at $29.52 per barrel, having jumped 9% in the previous session.
Amid supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, bright spots are also emerging on the demand side. Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations.
Still the market mood remains far from euphoric, with the coronavirus pandemic far from over and new clusters emerging in some countries where lockdowns have been eased.
“The fundamentals in the market are clearly improving,” ING Research analysts said in a note. “But we still believe that in the near term, the upside is limited given that we are still in a surplus environment ... There is plenty of inventory for the market to digest.”
There is optimism that stockpiles may be on the wane.
The International Energy Agency said it expects crude inventories to fall by about 5.5 million barrels per day (bpd) in the second half of this year.
Meanwhile U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday.
Output cuts will boost the trend towards lower inventories, but U.S. crude is unlikely to see strong gains.
“WTI crude will struggle to break above the $30 level until both the economic outlook improves for the U.S. and some of the downside risks ease,” said Edward Moya, senior market analyst at OANDA.
On the production side, OPEC and associated producers — collectively known as OPEC+ — had already agreed to cut output by a record of nearly 10 million bpd before Saudi Arabia this week extended its planned reductions for June, pledging to lower supply by nearly 5 million bpd.
Saudi Aramco, the world’s largest oil exporter, reduced the volume of crude it will supply to at least three buyers in Asia by as much as 30% for June, three sources with knowledge of the matter told Reuters on Thursday.
OPEC+ now wants to extend overall production cuts beyond May and June when the group next meets, sources told Reuters earlier this week. 

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Oil extends gains amid signs of China demand pickup, global supply overhang fading (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday, extending day-earlier gains, as data showed demand for crude picking up in China after the easing of curbs to stem the coronavirus outbreak, boosting hopes that the global supply overhang may start to fade.
Brent crude was up 31 cents, or 1% at $31.47 per barrel, after rising nearly 7% on Thursday. The global benchmark is heading for a 1.8% gain on the week after rising for the previous two weeks.
West Texas Intermediate was up 21 cents, or 0.76%, at $27.77 per barrel, having jumped 9% in the previous session. WTI is heading for a third weekly increase, up more than 12%.
Amid supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, bright spots are also emerging on the demand side. Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations.
Still the market mood remains far from euphoric, with the coronavirus pandemic far from over and new clusters emerging in some countries where lockdowns have been eased.
“The fundamentals in the market are clearly improving,” ING Research analysts said in a note. “But we still believe that in the near term, the upside is limited given that we are still in a surplus environment ... There is plenty of inventory for the market to digest.”
There is optimism that stockpiles may be on the wane.
The International Energy Agency said it expects crude inventories to fall by about 5.5 million barrels per day (bpd) in the second half of this year.
Meanwhile U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday.
Output cuts will boost the trend towards lower inventories, but U.S. crude is unlikely to see strong gains.
“WTI crude will struggle to break above the $30 level until both the economic outlook improves for the U.S. and some of the downside risks ease,” said Edward Moya, senior market analyst at OANDA.
On the production side, OPEC and associated producers — collectively known as OPEC+ — had already agreed to cut output by a record of nearly 10 million bpd before Saudi Arabia this week extended its planned reductions for June, pledging to lower supply by nearly 5 million bpd.
Saudi Aramco, the world’s largest oil exporter, reduced the volume of crude it will supply to at least three buyers in Asia by as much as 30% for June, three sources with knowledge of the matter told Reuters on Thursday.
OPEC+ now wants to extend overall production cuts beyond May and June when the group next meets, sources told Reuters earlier this week. 

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On Thursday 14, May 2020

Oil jumps 9% on dip in U.S. crude stockpiles, IEA data (Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices surged on Thursday after the International Energy Agency forecast lower global stockpiles in the second half of 2020, even as worries remain over a second surge in coronavirus infections in coming months.
Crude prices have ticked up in the last two weeks as some countries relaxed coronavirus restrictions and lockdowns to allow factories and shops to reopen.
West Texas Intermediate crude futures surged 8.98%, or $2.27, to settle at $27.56 per barrel, while Brent crude futures rose $1.87, or 6.4%, to trade at $31.06 per barrel.
The market rebounded from Wednesday’s losses built on a glum forecast for the economy from U.S. Federal Reserve Chairman Jerome Powell, who warned of an “extended period” of weak economic growth. That offset an unexpected drop in U.S. stockpiles.
Initial claims for state unemployment benefits totaled a seasonally adjusted 2.98 million for the week ended May 9, the U.S. Labor Department said on Thursday. While that was down from 3.18 million in the prior week and marked the sixth straight weekly drop, claims remain astoundingly high.
“Gasoline demand correlates pretty well with the employment level, and it’s hard to see gasoline demand come back much more than it already has,” said John Kilduff, partner at Again Capital LLC in New York.
U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday, with a fall in U.S. crude stockpiles of 745,000 barrels to 531.5 million barrels in the week to May 8.
On Thursday, the IEA again forecast a record drop in demand in 2020, although it trimmed its estimate for the fall, citing measures to ease lockdowns.
As demand increases, the IEA expects crude stockpiles to shrink by about 5.5 million barrels per day in the second half.
“While these supply and demand dynamics are certainly capable of boosting prices near term, a potential record level of global crude supply will remain as a force to be reckoned with,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
The Organization of the Petroleum Exporting Countries said on Wednesday it expected 2020 global oil demand to shrink by 9.07 million bpd, a deeper contraction than its previous forecast of 6.85 million bpd.
It said it expected the second quarter to see the steepest decline. In response, Saudi Arabia deepened its planned cuts for June, reducing output by nearly 5 million barrels per day.

“The Saudis going from market wreckers to market makers again and leading by example has sent a very supportive message,” Kilduff said.
The U.S. Commodities Futures Trading Commission warned exchanges and brokerages on Thursday that they should be prepared for volatility and possible negative pricing for certain contracts as expiration approaches next week.

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Oil prices rise on dip in US crude stockpiles, IEA data  (Morning Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Thursday after a drop in U.S. crude stocks and an IEA forecast for lower global stockpiles in the second half, but the Brent benchmark still hovered around $30 a barrel as a weak demand picture curbed gains.
Brent crude futures were up 99 cents, or 3.4%, to trade at $30.18 per barrel, while West Texas Intermediate crude futures were 94 cents, or 3.7%, higher at $26.23 per barrel.
Prices have ticked up in the last two weeks as some countries relaxed coronavirus restrictions and lockdowns to allow factories and shops to reopen.
However the emergence of new cases in South Korea and China has raised concerns over a possible second wave of infections that would weigh on economic recovery and fuel demand.
U.S. Federal Reserve Chairman Jerome Powell warned on Wednesday of an “extended period” of weak economic growth.
Providing some bullish impetus, U.S. crude inventories fell for the first time in 15 weeks.
U.S. crude stockpiles were down by 745,000 barrels to 531.5 million barrels in the week to May 8, the Energy Information Administration said on Wednesday.
“Cash markets are strengthening, time spreads are tighter and physical demand is picking up. All these will provide price supports in the next few weeks, but this confidence will not last,” PVM said in a report.
Physical crude prices, including in the North Sea which is home to the Brent crude stream, have been climbing and the six-month Brent futures contango is at its shallowest in two months at around -$3.50 a barrel .
But any recovery is seen as too weak to erase a historic demand fall this year.
The International Energy Agency (IEA) on Thursday again forecast a record drop in demand in 2020, although it trimmed its estimate of the fall, citing easing lockdown measures.
As demand increases, the IEA expects crude stockpiles to shrink by around 5.5 million barrels per day in the second half.
Goldman Sachs said recovering demand and lower output would push the global oil market into deficit in June. However it maintained its summer price forecasts of $30 per barrel for Brent and $28 per barrel for WTI.
The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday it expected 2020 global oil demand to shrink by 9.07 million bpd, a deeper contraction than its previous forecast of 6.85 million bpd.
It said it expected the second quarter to see the steepest decline in demand.

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On Wednesday 13, May 2020

Oil falls on second wave outbreak fears, rise in US inventories (Afternoon Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday on worries about a possible second wave of coronavirus cases in countries starting to ease lockdowns, while industry data showed a rise in U.S. crude inventories.
The concerns overshadowed a further call by Saudi Arabia for larger production cuts to balance the market following a virus-induced demand slump, after OPEC’s biggest producer said earlier this week it planned to add to cut output again.
Brent crude was down 58 cents, or 1.9%, at $29.40 by 0221 GMT, having risen 1.2% on Tuesday. U.S. crude was down 39 cents, or 1.5%, at $25.39 a barrel, after jumping nearly 7% in the previous session.
“While the market feels more comfortable on the supply side of the equation, on the demand side, the focus will continue to revolve around the risks of easing lockdowns,” said Stephen Innes, chief markets strategist at AxiCorp.
U.S. infectious disease expert Anthony Fauci on Tuesday told Congress that easing coronavirus lockdowns may set off new outbreaks of the illness, which has killed 80,000 Americans and badly damaged the world’s biggest economy.
New outbreaks have been reported in South Korea and in China, where the health crisis started before spreading around the world, prompting governments to lock down billions of people, devastating economies and demand for oil.
On the supply side, Saudi Arabia’s cabinet has urged OPEC+ countries to reduce oil output further to restore balance in global crude markets, the country’s state news agency reported early on Wednesday.
On Monday, Saudia Arabia said it would add to planned cuts by reducing production by a further 1 million barrels per day (bpd) next month, bringing output down to 7.5 million bpd.
The Organization of the Petroleum Export Countries (OPEC) and other producers such as Russia — a group known as OPEC+ — agreed to cut output by 9.7 million barrels per day (bpd) in May and June, a record reduction, in response to a 30% fall in global fuel demand.
In the United States, inventories of crude oil rose by 7.6 million barrels last week to 526.2 million barrels, against analysts’ expectations for an increase of 4.1 million barrels.
Still, stocks of crude at the Cushing, Oklahoma, delivery hub fell by 2.3 million barrels, API said, which, if confirmed by official data, would be the first drawdown since February, according to ING Economics.
“Concerns over hitting storage capacity have eased, as we see demand gradually recovering, along with supply cuts hitting the market,” ING said in a note, pointing to the decline in Cushing stocks.
Official storage data from the U.S. Energy Information Administration is due later on Wednesday

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On Tuesday 12, May 2020

Oil jumps more than 6% as Saudi Arabia pledges further production cuts ( Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
U.S. West Texas Intermediate crude futures climbed $1.64, or 6.8%, to settle at $25.78 per barrel. Brent crude futures climbed 35 cents, or 1.18%, to settle at $29.98 per barrel. The benchmark fell $1.34 on Monday.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.
The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total.
Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.
“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?’” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of Covid-19 cases spurring renewed lockdowns.
“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.
Inventory data this week will be key to extending the recent rally in oil prices, analysts said.
U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

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Oil prices climb as Saudi Arabia pledges further production cut (Morning Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
Brent crude futures climbed 98 cents, or 3.3%, to trade at $30.61 per barrel. The benchmark fell $1.34 on Monday.
U.S. West Texas Intermediate crude futures climbed $1.33, or 5.5%, to trade at $25.47 per barrel.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.
The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total.
Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.
“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?’” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of Covid-19 cases spurring renewed lockdowns.
“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.
Inventory data this week will be key to extending the recent rally in oil prices, analysts said.
U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

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On Monday 11, May 2020

Oil drops more than 2% despite Saudi Arabia announcing plans to slash output (Afternoon)

Pippa Stevens


Oil tanks at an oil processing facility of Saudi Aramco, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.
Oil tanks at an oil processing facility of Saudi Aramco, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.
Stanislav Krasilnikov | TASS via Getty Images
Oil moved lower on Monday as coronavirus-induced demand fears outweighed Saudi Arabia announcing additional production cuts in an effort to support prices.
West Texas Intermediate, the U.S. benchmark, shed 60 cents, or 2.43%, to settle at $24.14 per barrel. In a volatile session WTI traded as high as $25.58, and as low as $23.67. International benchmark Brent crude fell $1.37, or 4.4%, to settle at $29.60 per barrel. 
Beginning on June 1 Saudi Arabia will cut output by an additional 1 million bpd, which combined with the cuts agreed to by OPEC and its oil-producing allies, brings Saudi Arabia’s total cut to roughly 4.8 million bpd below its April record production level. Production for June will now be 7.492 million bpd.
Saudi Arabia also said that it would scale back May production “in consent with its customers.”
“The Kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets,” a statement from the Saudi press agency said.
Following Saudi Arabia’s announcement, Kuwait and UAE said they would also implement additional cuts.
Rystad Energy said that with these new cuts, global storage will most likely not reach capacity, which had been a fear in the market. “An extra 1.2 million bpd cut will not re-balance the market, but will surely remove strain from the storage infrastructure and buy time to wait for the demand rebound,” said senior oil markets analyst Paola Rodriguez Masiu. 
Oil is coming off its second straight positive week as investors have cheered signs that demand recovery is underway amid ongoing production cuts. WTI jumped 25% last week in one of its best weeks in history, while Brent rose 17%.
Still, prices are well below their highs and the path to recovery is far from certain. On Monday oil moved lower on fears of a possible second wave of coronavirus cases after countries thought to be beyond the worst of the virus, including South Korea, reported a jump in infections. 



Oil prices drop amid supply glut, fears of 2nd coronavirus wave (Morning)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Monday as concern over a persistent glut and economic gloom caused by the coronavirus pandemic combined to cancel out support from supply cuts at some of the world’s top producers.
Brent crude futures were down 29 cents, or 0.9%, at $30.68 a barrel by 0431 GMT, while U.S. West Texas Intermediate crude futures fell 17 cents, or 0.7%, to $24.57 a barrel.
Both benchmarks have notched up gains over the past two weeks as countries have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has rebounded modestly. Oil production worldwide is also declining.
But possible signs of a second wave of coronavirus infections in northeast China and South Korea worried investors even as more countries started to pivot towards easing pandemic restrictions in moves that could support oil demand.
Goldman Sachs analysts said there was still concern that demand will stay weak in 2021, with worries about a second wave of Covid-19 cases and only a modest increase in personal or corporate travel.
Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally.
Fears that the United States is running out of storage space triggered WTI prices crashing into negative territory last month, prompting some U.S. producers to slash output.
In a sign of that impact, the number of operating oil and gas rigs in the world’s largest oil producer fell to 74 in the week to May 8, a record low according to data released on Friday from energy services firm Baker Hughes going back to 1940.
“People are surprised by how quickly the U.S. is shutting in production and that’s exactly what we need in order to support prices,” said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.
“There’s another 10 days before the June contract expires ... if the WTI contract can avoid a crash going into expiry, hopefully we’ve seen the bottom.”

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On Friday 8, May 2020

Oil jumps 5%, posts second straight week of gains



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices rose on Friday and were on course for a second consecutive week of gains as U.S. producers rapidly shut crude production and more states moved ahead with plans to relax lockdowns intended to prevent the spread of the worst public health crisis in a generation.
U.S. West Texas Intermediate crude gained $1.19, or 5%, to settle at $24.74 per barrel, while international benchmark Brent crude traded 2.8% higher at $30.28 per barrel.
“This advance of the past couple of weeks has been a bit suspect given the fact that coronavirus cases continue to increase and the U.S. crude surplus is maintaining a steep up trend where a record U.S. stock level is likely to be achieved in next week’s EIA report,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
The U.S. Energy Information Administration’s weekly report on Wednesday showed 15 weeks of consecutive rises in crude stocks although the rate of growth in inventories has slowed since a record build of 19 million barrels in early April.
However, the number of operating oil and natural gas rigs fell by 34 to an all-time low of 374 this week - reflecting data going back 80 years - as the energy industry slashes output and spending to deal with the coronavirus-led crash in fuel demand.
North American oil companies have shut production faster than analysts expected and are on track to withdraw about 1.7 million barrels per day (bpd) of output by the end of June.
These commercially-driven cuts are in addition to those by Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group know as OPEC+, which began implementing a deal to curb a record 9.7 million bpd from the start of May.
Market spectators are now watching for more data that supports OPEC+ countries are complying with production cuts, according to Andrew Lipow, president of Lipow Oil Associates in Houston.
“I expect now prices will pull back to $20 a barrel because skepticism will come into the market about the compliance of OPEC+ on the production cuts,” said Lipow.
Iraq has yet to inform its regular oil buyers of cuts to its exports, suggesting it is struggling to fully implement supply cuts.
“All it takes is one or two countries not to comply and it could open the door for others,” Lipow said.
Australia on Friday became the latest country to plan an easing of lockdowns, while France, parts of the United States and countries such as Pakistan are also planning to ease restrictions.
Market participants are watching as the economic crisis unfolding in the United States affects oil demand in the coming months. The world’s biggest economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression.

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On Thursday 7, May 2020

Oil prices rise, on pace for more than 30% gain this week

Pippa Stevens


Oil jumped more on Thursday and was on track for its second best week in history as a number of bullish factors supported prices, including U.S. companies cutting production, Saudi Arabia raising its official oil selling price and gasoline demand improving as economies around the world reopen.
West Texas Intermediate, the U.S. benchmark, jumped 8%, or $1.91, to trade at $25.90 per barrel. Earlier in the session WTI had been up more than 11%, hitting a session high of $26.74. This week, WTI has gained more than 30%, putting it on pace for its second best week ever going back to the contract’s inception in 1983. Of course, given the more than 50% decline this year a smaller move now accounts for a larger percentage change.
Brent crude, the international benchmark, traded 4.2% higher at $30.98.
“Nascent signs of rebounding gasoline demand in the U.S. and a rapid curtailment of oil production that has seen U.S. producers cut over 1 million barrels per day of output in a matter of weeks has enabled oil prices to recover,” Again Capital’s John Kilduff told CNBC. “Volatility will remain the watchword, but there is an increasing sense that the worst is behind the industry, at this point.”
A drilling crew secures a stand of drill pipe into the mouse hole on a drilling rig near Midland, Texas February 12, 2019.
Nick Oxford | Reuters
On Wednesday, data from the Energy Information Administration showed that for the week ending May 1 production declined by 200,000 barrels per day to 11.9 million bpd, which is more than 1 million bpd below March’s record high. Exxon, Chevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
“There has just been a fierce reaction by U.S. oil and exploration and production companies to really crater U.S. output. It’s still very high, but it’s working its way down rapidly,” Kilduff added.
While inventory in the U.S. is still rising, it’s now at a slower clip. Last week, stockpiles grew by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting, according to FactSet. And while demand for gasoline is still well below its highs, government data showed that it is starting to turn a corner as states open up their economies.
Mizuho energy analyst Paul Sankey noted that oil also got a boost after Saudi Arabia raised its official oil selling prices, which “alleviates pressure on global crude pricing.”
“They are still fighting for market share (against Iraq/Iran primarily) in Asia, but have backed off US market share competition all-but completely,” he wrote in a note to clients Thursday.

Rally overdone?

Given WTI’s nearly 40% gain this month, some say the rally is overdone, especially as storage around the world continues to fill.
“A shift in market sentiment was lifting prices earlier this week, but the physical overhang does not want go away just yet,” Citi analyst Francesco Martoccia said Wednesday. “The supply picture remains uncertain in size and timing, leaving a true read of US balances murkier in the short term,” he noted.
“We’re not out of the woods yet,” Kilduff added. “There still may be one more flirtation with negative pricing when this June contract goes off the board in a couple of weeks, but beyond that we should be clear of those kind of worries.”

— CNBC’s Michael Bloom and Patti Domm contributed reporting.

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On Wednesday 6, May 2020

Oil turns lower, snapping five-day winning streak as oversupply fears weigh

Pippa Stevens


An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices dropped on Wednesday, snapping a five-session winning streak, as oversupply concerns outweighed optimism over economies reopening.
West Texas Intermediate, the U.S. benchmark, shed 4.6%, or $1.14, to trade at $23.42 per barrel. In a volatile session, the contract swung between a gain of more than 6% at the high — climbing to $26.08 — and a more than 8% loss, hitting a session low of $22.58 per barrel. On Tuesday the contract soared 20.45%.
Brent crude, the international benchmark, traded $1.66, or 5.3%, lower at $29.34, as the coronavirus pandemic continues to hit demand.
“The rally in crude also feels lofty as discussions with refiners continue to suggest lower run cuts are in the cards given weak margins,” analysts at Tudor, Pickering, Holt & Co., a Houston-based energy investment bank, said in a note to clients Wednesday.
Data from the U.S. Energy Information Administration released Wednesday showed that for the week ending May 1 inventories rose by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting, according to FactSet.
Over the last week, WTI has soared more than 50% as easing shelter-in-place restrictions fueled optimism that demand for oil may have bottomed. Given the rapid run higher, Jeff Kilburg, CEO at KKM Financial, said the selling could be due to investors locking in gains.
“Crude oil volatility persists and after a nearly 100% sensational move higher (off of $14 on 4/29) WTI is incurring some profit taking,” he told CNBC. “Additionally, the demand for crude remains quite opaque as re-openings of economies globally occur,” he added.
NationsShares president and chief investment officer Scott Nations noted that the recent run took the WTI contract for June delivery to its highest level since it became the front-month contract, so “the getting probably seemed good.”
An improving demand outlook spurred recent optimism, with prices also supported by producers announcing scale backs in operations. The historic cut from OPEC and its oil-producing allies, which takes 9.7 million barrels per day offline, went into effect on May 1. Norway and Canada have also curbed production.
In the U.S., data from the Energy Information Administration showed that weekly production averaged 12.1 million barrels per day for the week ending April 24, roughly 1 million barrels per day below the all-time high levels from March. ExxonChevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
But some note that as storage continues to fill, the announced shut-ins are still not enough.
“Indications show that for yet another week, storage is continuing to fill up, despite the shut-ins and the output cuts,” noted Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Demand, which indeed now is on the recovery road, is not yet enough to balance the produced oil and that oil has to go somewhere,” he added.

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On Tuesday 5, May 2020

Oil jumps 18% in fifth day of gains on demand recovery and production cuts

Pippa Stevens


Workers operate a drilling rig for an EBR Energy LP natural gas well near Columbus, Texas.
Workers operate a drilling rig for an EBR Energy LP natural gas well near Columbus, Texas.
Scott Dalton | Bloomberg | Getty Images
Oil prices surged on Tuesday as optimism around ongoing production cuts and a recovery in demand with the reopening of economies around the world pushed prices higher.
West Texas Intermediate, the U.S. benchmark, jumped 18.2%, or $3.72, to trade at $24.11 per barrel. The contract gained 3.08% on Monday — closing above $20 for the first time since mid-April — and is on pace for its fifth-straight day of gains for the first time since February. International benchmark Brent crude traded 11.5% higher at $30.33 per barrel, and is also pacing for its fifth-consecutive positive session.
“One thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise,” said Per Magnus Nysveen, Rystad Energy’s head of analysis. The “key reason behind the price strengthening is regional traffic data, which indicate the demand bottom is behind us,” he added.
President Donald Trump weighed in on the jump in prices, writing “Oil prices moving up nicely as demand begins again!” in a tweet on Tuesday morning.
Oil demand has fallen off a cliff as the coronavirus pandemic spread around the globe, forcing billions of people to remain inside and bringing air travel to a near standstill. By some estimates as much as a third of worldwide demand was erased in April.
But with economies gradually starting to reopen — a number of U.S. states, including Florida, began phase one reopening plans on Monday, while millions of Italians will return to work this week — investors believe there will be an uptick in demand.
“The reopening of economies has injected a degree of cautious optimism back into an oil market that plunged to historic lows only weeks ago,” RBC analyst Michael Tran said in a note to clients Tuesday.
“There’s reason to believe the worst of the demand destruction is behind us. Commentary from multiple companies pointed to an improvement in US demand at the end of April, particularly for gasoline,” added Stacey Morris, director of research at Alerian.
The improving demand outlook comes as producers have scaled back production, which has also supported prices. The historic cut from OPEC and its oil-producing allies, which takes 9.7 million barrels per day offline, went into effect on May 1. Norway and Canada have also curbed production.
In the U.S., data from the Energy Information Administration showed that weekly production averaged 12.1 million bpd for the week ending April 24, roughly 1 million bpd below the all-time high levels from March. ExxonChevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
Oil’s recent strength barely puts a dent in its historic fall, however. Both WTI and Brent are firmly in a bear market, plunging 68% and 62%, respectively, from their 52-week high levels. The decline has also been swift — WTI’s 52-week high of $65.65 is from Jan. 8.
And traders caution that the road to recovery for oil prices will be long and uncertain. Even with global producers scaling back operations, global storage is rapidly filling and some believe tank tops could be reached within weeks.
“The path to recovery for oil demand in the US and globally is still up in the air,” Morris said.
And Nysveen believes the “market is still vulnerable.”
“The existing problems did not magically get resolved, the storage constraint is still there ... We remain very cautious short term, but our view is that we will see a price recovery on the longer term,” he added.

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On Monday 4, May 2020

Oil turns positive as traders eye demand recovery



GP: Dozens Of Oil Tankers Sit Off The California Coast As Demand For Crude Plummets During Pandemic
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices pared losses to turn higher on Monday, despite worries that a global oil glut may persist even as coronavirus pandemic lockdowns start to ease and amid a fresh spat between the United States and China over the origin of the virus.
Brent crude gained 45 cents, or 1.7%, to trade at $26.89 per barrel, while West Texas Intermediate crude gained 50 cents, or 2.5%, to trade at $20.27 per barrel.
While global oil demand is expected to recover modestly from April lows as countries ease some lockdown measures, the glut created over months in storage facilities will loom over the markets.
“As oil inventories are likely still increasing over the coming weeks, oil prices remain vulnerable to renewed setbacks,” said UBS analyst Giovanni Staunovo.
However, Goldman Sachs was more optimistic than before about the rise of oil prices next year due to lower crude production and a partial recovery in oil demand.
The Wall Street bank raised its 2021 forecast for global benchmark Brent to $55.63 per barrel from $52.50 earlier. The bank hiked its estimate for WTI to $51.38 a barrel from $48.50 previously.
Signs that the output cuts may help reduce the supply overhang have emerged with the narrowing of Brent’s contango - the market structure in which later-dated prices are higher than prompt supplies.
The six-month spread of Brent futures hit its narrowest in almost a month at a discount of around $6.50, up from a record wide discount of almost $14 in late-March, reflecting decreasing oversupply expectations and making storage for later sale less profitable.
The re-emergence of trade tensions between the United State and China also weighed on prices.
Adding to U.S. President Donald Trump’s threat last week to impose tariffs on China, Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory.
“Demand projections have sobered up last week’s enthusiasm and this, together with the prospect of new U.S.-China trade tensions, have weighted heavily on prices today,” said Rystad’s senior oil markets analyst Paola Rodriguez-Masiu.
Oil prices recovered some of their losses after U.S. Treasury Secretary Steven Mnuchin said he expected China to make good on its trade agreement with the United States. He also said he expected oil markets to rebound, and that the Trump administration was looking for more storage capacity.
Concerns about weak manufacturing data in Asia and Europe, assessed by Purchasing Managers’ Index (PMI) of manufacturing companies, also put pressure on oil prices.
In Asia, a series of PMIs from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.
PMIs in France, the euro zone’s second-biggest economy, dropped in April to the lowest level on record. IHS Markit’s Final PMI for German manufacturing, which accounts for about a fifth of Europe’s largest economy, shrank at the fastest rate on record.
The U.S. dollar surged against most major currencies on Monday amid fears that last year’s U.S.-China dispute will be re-ignited.
Oil is usually priced in dollars so a stronger greenback makes crude more expensive for buyers with other currencies.

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On Friday 1, May 2020

Oil higher after US stockpiles grow less than feared, output cuts kick in



GP: Oil storage tanks Carson CA
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil moved higher on Friday, extending the previous session’s gains, buoyed by a lower-than-expected gain in U.S. crude inventories and the start of output cuts in a bid to offset a slump in fuel demand triggered by the coronavirus pandemic.
U.S. crude for June delivery climbed 16 cents, or 0.7%, to $18.98 per barrel, having gained 25% in the previous session.
Brent crude for July delivery, which started trading on Friday as the new front-month contract, fell 46 cents, or 1.7%, to trade at $26.02 per barrel. Brent gained 12% on Thursday.
“This is a second straight week of inventory and product demand figures suggesting a bottoming of the U.S. market,” said Stephen Innes, chief market strategist at AxiCorp.
U.S. Energy Information Administration data showed crude inventories rose by 9 million barrels last week to 527.6 million barrels, less than the 10.6 million-barrel rise analysts had forecast in a Reuters poll.
The other significant support factor on Friday was the official start of output cuts agreed between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russia - a grouping known as OPEC+ - to counter sliding demand.
“OPEC+ quotas are due to kick in on Friday, suggesting short-term supply conditions have likely peaked,” AxiCorp’s Innes said.
The OPEC+ deal covers a cut in production of nearly 10 million barrels per day (bpd), a record level.
That, nevertheless, falls well short of the roughly 30 million bpd of demand that has evaporated amid the coronavirus pandemic as much of the world’s population remains under some form of economic and social lockdown.

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On Thursday 30, April 2020

Oil prices jump 20% on early signs of pick up in fuel demand



GP: Dozens Of Oil Tankers Sit Off The California Coast As Demand For Crude Plummets During Pandemic - 106511787
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices jumped on Thursday, lifted by signs that the U.S. crude glut is not growing as quickly as expected and of a rise in fuel demand, which has been crushed by the coronavirus.
West Texas Intermediate crude futures climbed $3.29, or 21.9%, to $18.33 per barrel. The U.S. benchmark surged 22% on Wednesday.
Brent was up 13.6%, or $3.07 at $25.61 a barrel in light trading, with the June contract expiring on Thursday, having posted a 10% gain on Wednesday.
U.S. crude inventories grew by 9 million barrels last week to 527.6 million barrels, U.S. Energy Information Administration  data showed, well below the 10.6 million-barrel rise analysts polled by Reuters had expected.
U.S. gasoline stockpiles fell by 3.7 million barrels from record highs the previous week, with a slight rise in fuel demand offseting a rebound in refinery output.
“If we see a continuation of this trend in the coming weeks, it could suggest the worst might be behind the oil market,” ING’s head of commodities strategy Warren Patterson said.
Adding to positive sentiment, China Petroleum & Chemical Corp (Sinopec) said on Thursday its daily sales of refined oil products have risen to more than 90% of levels seen before the coronavirus outbreak.
However, storage concerns continued to weigh on markets with the International Energy Agency warning that global capacity could reach its maximum by mid-June and that energy demand could slump by a record 6% in 2020 due to lockdowns.
“If the already-stretched storage capacity is getting fuller and fuller every week, a rise in prices cannot be sustainable for long as the problem is not really resolved”, said Rystad Energy’s head of oil  markets Bjornar Tonhauge.
“At around 80-90% full, traders keep on seeing the storage glass as half empty when it is not even half full. It’s close to overflowing, even at a lower speed.”
U.S. President Donald Trump said his administration will soon release a plan to help the country’s oil companies, which Treasury Secretary Steven Mnuchin said could include adding millions of barrels of oil to already-teeming national reserves.
Meanwhile, Western Europe’s largest oil producer Norway said it will slash its output from June to December of 2020, the first time in 18 years it has joined other major producers to shore up prices.

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On Wednesday 29, April 2020

Oil jumps more than 30% on hope economy will reopen sooner than expected

Eustance Huang, Pippa Stevens


Oil prices jumped more than 30% on Wednesday following a report that showed a smaller-than-expected build in U.S. inventories, as well as on the hope that economies will reopen sooner than expected.
West Texas Intermediate for June delivery surged 34.2%, or $4.22, to trade at $16.56 per barrel, while international benchmark Brent crude traded 13.3% higher at $23.17.
Optimism that economies will be able to re-open ahead of schedule rose after Gilead said early results of its coronavirus drug trial showed that at least 50% of patients treated with a five-day dosage of antiviral drug remdesivir improved and more than half were discharged from the hospital within two weeks.
Stocks rose following the news, despite a 4.8% contraction for U.S. GDP in the first quarter — the largest contraction since the financial crisis.
Oil prices also got a boost on a smaller-than-expected build in U.S. inventories. According to data from the U.S. Energy Information Administration, crude stockpiles rose by 9 million barrels for the week ending April 24. This was lower than the 11.7 million barrel build analysts polled by FactSet had been expecting.
The data also showed that U.S. production fell by 100,000 barrels per day last week to 12.1 million bpd. This is 1 million bpd below the record 13.1 million bpd production set during the week ending March 13.
“Oil prices rose on Wednesday morning as traders cling to potentially positive indications that the demand-supply gap may somewhat become smaller soon,” Rystad Energy’s global head of oil markets Bjornar Tonhaugen told CNBC.
“Overall we need official announcements for cuts or economies reopening for prices to stabilize. Expect a lot of volatility and price swings either way in coming days as bullish and bearish traders weigh their hopes and fears in a market that is desperate to find something to hang on,” he added.
Oil prices swayed wildly on Tuesday between gains and losses as investors continue to keep an eye on depleting crude storage space amid a dearth in demand. The coronavirus pandemic, which has forced countries around the world to shut their economies temporarily as people are told to stay home, has reduced global demand for crude by as much as a third, according to some estimates.
WTI for June delivery fell 44 cents, or 3.4%, to settle at $12.34 per barrel on Tuesday. International benchmark Brent crude, on the other hand, gained 47 cents, or 2.35%, to settle at $20.46.
In a note dated April 28, Moody’s Investors Service said it was reducing its near-term oil price assumptions for WTI as well as Brent.
“Exceptionally weak short-term prices will persist until production drops enough to ease the strain on storage facilities already operating at or close to full capacity,” said Elena Nadtotchi, vice president and senior credit officer at Moody’s. “Significant supply adjustments in due course should help to balance the market later in 2020, but the pace of the market’s rebalancing and rising oil prices will depend on demand recovery.”
Moody’s price prediction for WTI is currently $30 per barrel this year, and $40 next year. For Brent, it sees prices averaging $35 per barrel in 2020 and $45 in 2021.
Data from the American Petroleum Institute released Tuesday night showed that U.S. crude inventories jumped by 10 million barrels in the week to April 24, bringing the total to 510 million barrels. That was lower than analysts’ expectations of a build of 10.6 million barrels, according to estimates from Reuters.
— CNBC’s Patti Domm Sam Meredith contributed to this report.

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On Tuesday 28, April 2020

Oil falls back into the red in volatile session

Pippa Stevens, Sam Meredith

Oil alternated between gains and losses in a volatile trading session that at one point saw U.S. crude drop more than 20%. Traders continue to eye dwindling storage capacity worldwide, although some of the losses were offset by optimist around reopening of economies.
West Texas Intermediate futures for June delivery gained 6 cents, or 0.47%, to trade at $12.84 per barrel, while international benchmark Brent crude traded 14 cents, or 0.7%, higher at $20.13. Earlier WTI had been down more than 20%, touching a session low of $10.07, while also trading as high as $13.69.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, said that oil moved off its lows on optimism about economies reopening.
“A ramp up in business activity will give a boost in US domestic oil demand, which can postpone filling the country’s oil storage a bit further in the future,” he told CNBC in an email. But he was quick to caution that demand will continue to stay depressed.
“US reopening industrial activity can give a temporary boost to prices as traders need space to breath, but we don’t expect the levels to last. Oil prices will likely average at 20 USD per barrel in the second quarter, with the lowest levels coming sometime in May,” he added.
On Monday, WTI fell 24.56%, or $4.16, to settle at $12.78 per barrel. Brent crude fell 6.76% to settle at $19.99. Each contract is coming off its eighth week of losses in nine weeks.
As demand drops more and more producers have announced production cuts. But some believe it won’t be fast enough to combat the unprecedented fall-off in demand from the pandemic.
Earlier in April, OPEC and its oil-producing allies agreed to a record production cut that will take 9.7 million barrels per day off the market beginning Friday, while Exxon and Chevron are among the U.S.-based companies that have scaled back operations.
“Despite the forthcoming OPEC+ production cuts, more production needs to be cut – particularly in the US and Canada to avoid tank tops by June,” S&P Global Platts’ global head of analysis Chris Midgley told CNBC in an email.
Last week the International Monetary Fund said that the global economy is expected to shrink by 3% this year, which Midgley said will lead to slower recovery in demand for oil.
Prices were also pressured on Monday after the United States Oil Fund, which trades under the ticker ‘USO’ and is popular with retail investors, said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term contracts.
“The move [by the USO] is a recognition of the bleak prospects for the US oil sector in May and June,” said Cailin Birch, global economist at The Economist Intelligence Unit.
WTI and Brent are both on pace for their fourth straight month of losses for the first time since 2017.
Last Monday WTI plunged into negative territory for the first time in history as holders of the contract for May delivery — which was set to expire the next day — scrambled to sell their contract. But with oil demand not expected to recover anytime soon, and with nowhere to store oil, there was no buyer on the other side. In the end, the contract holders had to pay to have it taken off their hands.
And traders are saying the same fate could befall the June contract as it approaches expiration on May 19.
“Will we hit -$100/bbl next month?” Mizuho analyst Paul Sankey wrote in a note to clients last week, to which he answered, “quite possibly.” “The physical reality of oil is that it is difficult to handle, volatile, potentially polluting, and actually useless without a refinery,” he added.

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On Monday 27, April 2020

Oil plunges more than 25%, extending recent losses as storage fills

Pippa Stevens



GP: Oil storage tanks Carson CA
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

U.S. oil prices plunged more than 25% on Monday on fears that worldwide storage will soon fill as the coronavirus pandemic continues to roil demand.
West Texas Intermediate for June delivery fell 27%, or $4.58, to trade at $12.36 per barrel, while international benchmark Brent crude traded 8.2% lower at $19.69 per barrel. Each contract is coming off its eighth week of losses in nine weeks.
WTI for July delivery fell more than 11% to $18.84 while the August contract slipped more than 7% to $22, suggesting the Street doesn’t see a meaningful recovery in the next few months.
“The market knows that the storage problem remains and we are on a calculated path to reach tank tops in weeks,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken.”
WTI, the U.S. benchmark, has fallen more than Brent as traders eye the quickly filling tanks at Cushing, Oklahoma, which is the nation’s largest storage facility apart from the Strategic Petroleum Reserve. It’s also where the contract is priced. U.S. stockpiles rose by 15 million barrels to 518.6 million barrels for the week ending April 17, according to the U.S. Energy Information Association.
At closely watched Cushing, oil in storage rose by about 10% in a week to 59.7 million barrels, about 25 million barrels shy of its capacity.
With prices at such depressed levels — WTI and Brent have dropped 72% and 68% this year, respectively — producers are struggling to breakeven. On Sunday, Houston-based Diamond Offshore Drilling filed for bankruptcy protection, and analysts say that more bankruptcies could be coming.
Prices were also pressured after the United States Oil Fund, which trades under the ticker ‘USO’ and is popular with retail investors, said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term contracts.
Last Monday WTI plunged into negative territory for the first time in history as holders of the contract for May delivery — which was set to expire the next day — scrambled to sell their contract. But with oil demand not expected to recover anytime soon, and with nowhere to store oil, there was no buyer on the other side. In the end, the contract holders had to pay to have it taken off their hands.
And traders are saying the same fate could befall the June contract as it approaches expiration on May 19.
“Will we hit -$100/bbl next month?” Mizuho analyst Paul Sankey wrote in a note to clients last week, to which he answered, “quite possibly.” “The physical reality of oil is that it is difficult to handle, volatile, potentially polluting, and actually useless without a refinery.”
Earlier in April, OPEC and its oil-producing allies agreed to a historic production cut that would take 9.7 million barrels per day of production offline beginning this Friday. A number of U.S. producers, including Exxon and Chevron, have also said they will scale back, but investors fear that the cuts simply won’t be fast enough. In addition to being costly, shutting in wells can also take time.
Citi’s Michael Hsueh said prices won’t rebound until there’s a meaningful recovery in demand.
“We would need to see a recovery in oil product demand in the end user markets, for example motorists, airlines and manufacturers, as countries cautiously relax epidemic mitigation efforts possibly as soon as May, but more so in June,” he said Friday in a note to clients.
“We would need to see a normalisation of oil inventory from abnormally high levels, since oil refiners will choose to drawdown inventory in the first instance, before resuming a normal pace of buying,” he added.
- CNBC’s Michael Bloom and Patti Domm contributed reporting.

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On Friday 24, April 2020

Oil heads for another weekly slide after coronavirus turmoil



GP: Oil rig offshore platform Oil Prices Trade In Negative Numbers For First Time Amid Global Oil Glut
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices moved between gains and losses on Friday, following a two-day winning streak that saw West Texas Intermediate gain more than 40%. The turn lower game despite some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand  for fuels caused by the coronavirus pandemic.
U.S. oil rose 66 cents, or 4%, to trade at $17.17 per barrel, after surging nearly 20% in the previous session. Brent crude traded 11 cents lower at $21.22.
But barring a sharper jump on the last trading day of the week, prices are heading for their eighth weekly loss in the last nine — one of the most tumultuous weeks in the history of oil trading, with U.S. West Texas Intermediate falling into negative territory to minus $37.63 a barrel on Monday, while Brent thudded to a two-decade low.
“The disruption relating to the coronavirus is set to cause the steepest fall in global GDP since the Second World War,” Capital Economics said in a note, forecasting a 5.5% contraction in global economies this year, dwarfing the 0.5% fall seen during the global financial crisis.
“Once the virus is under control output should rebound, but it will take years to return to its pre-virus path,” it said.
Under a deal agreed between the Organization of the Petroleum Exporting Counties (OPEC) and associated producers like Russia, a grouping known as OPEC+, production cuts equal to 9.7 million barrels of oil per day are due to kick in from May.
But Kuwait’s state news agency KUNA said on Thursday the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal.
Meanwhile Azerbaijan’s Azeri-Chirag-Guneshli oil project will have to cut output sharply from May onwards as the oil producer fulfills its commitments under the deal to cut production, four sources told Reuters.

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On Thursday 23, April 2020

Oil rallies more than 40% in two days as it comes back from record lows

Pippa Stevens


Oil jumped nearly 20% on Thursday, accelerating its recent rally as the Street eyed continued production cuts and rising U.S.-Iranian tensions.
West Texas Intermediate, the U.S. benchmark, rose 19.7%, or $2.72, to settle at $16.50 per barrel. WTI did close off the highest level of the day, however, after hitting $18.26 in mid-morning trading. Brent crude, the international benchmark, traded 5.4% higher at $21.48 per barrel.
On Wednesday, WTI jumped 19.1% — one of its best days on record. In just two days, from Tuesday’s settle of $11.57 to Thursday’s settle WTI has gained 42.6%. Given oil’s more than 70% decline this year a smaller gain, of course, now accounts for a much larger percentage move.
The rise was fueled in part by President Donald Trump’s threat that the U.S. would “destroy” any Iranian gunboats that harass American ships in the oil-rich Persian Gulf, said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
There was also optimism in the market that with oil prices at historic lows, producers will continue to scale back on production and shut-in wells. Oklahoma regulators said they would help producers shut wells without taking away leases, which Tonhaugen said was “a relief for producers that want to cut some output but were hesitating due to regulatory consequences.”
But oil’s strength over the last two days has done little to dent crude’s enormous 75% loss this year as the coronavirus pandemic sapped about a third of global demand. At the beginning of the year, WTI traded above $60. On Monday for the first time in history, WTI plunged into negative territory, as storage facilities filled up. The May contract was about to expire and therefore was thinly traded, but the move was nonetheless notable.
“The ultimate complication is that storing oil costs money, and storage facilities aren’t unlimited,” Howard Marks, co-founder of Oaktree Capital Management, told CNBC in an email. “Right now storage is scarce and thus expensive, so it’s not worth it to buy oil today and store it. The cost of storing exceeds the value today; thus the price is negative.”
As the June WTI contract nears expiration on May 19, some are warning that it could plunge in the same way that the May contract did.
“June could see storage tanks struggling to come off highs, in which case the days leading to expiry next month could see yet another squeeze,” Francesco Martoccia, senior associate in commodity research at Citi, wrote in a note to clients.
Data from the U.S. Energy Information Administration on Wednesday showed that storage in Cushing, Oklahoma — the hub for WTI delivery — rose by about 10% in a week to 59.7 million barrels, about 25 million barrels shy of its capacity.
Traders say this will lead to natural shut-ins since there will soon be nowhere for oil to go.
“There is an inflection point coming for Cushing stocks (and global stocks), but their exact timing is tricky. US oil production is falling quickly even now,” Martoccia said.
But supply is only one side of the equation. Tonhaugen warned that until demand recovers any gains could be short term.
“The only concrete development that could give prices a boost that can last is either a rebound in demand, when lockdowns are scrapped and industrial activity ramps up, or a generous and unprecedented production cut, in addition to what OPEC+ decided,” he said.
- CNBC’s Michael Bloom, Patti Domm and Tanvir Gill contributed reporting.

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On Tuesday 2, June 2020

Oil rises nearly 4% ahead of OPEC+ meeting, easing lockdowns



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices were up about $1 a barrel on Tuesday on expectations that major producers will agree to extend output cuts during a video conference likely to be held this week and as countries and U.S. states begin to restart after coronavirus lockdowns.
West Texas Intermediate crude climbed $1.37, or 3.87%, to settle at $36.81 per barrel. Brent crude rose 2.7%, or $1.04, to $39.36 a barrel.
The Organization of the Petroleum Exporting Countries and others including Russia, a grouping known as OPEC+, are considering extending their production cuts of 9.7 million barrels per day (bpd), or about 10% of global production, into July or August, at a meeting expected to be held on June 4.
“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
The gradual reopening of businesses in a growing number of U.S. states and countries around the world after shelter-in-place mandates caused by the coronavirus pandemic also oil boosted prices.
“As the economy opens up, there’s more and more people on the road. That’s going to be good, obviously, for crude oil,” said Bob Yawger, director of energy futures at Mizuho in New York.
Steadily increasing gasoline demand in the United States and falling crude inventories at the nation’s oil storage hub in Cushing, Oklahoma, has also supported prices, Yawger said.
Industry group American Petroleum Institute will release its weekly oil inventory report later in the day, with official data following on Wednesday.

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Oil prices rise before OPEC+ meeting about extending output cuts ( Morning Update)



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose on Tuesday on expectations that major producers would agree to extend output cuts that have shored up prices, during a video conference likely to be held this week.
Benchmark Brent crude rose 2.5%, or 99 cents, to trade at $39.27 a barrel. U.S. West Texas Intermediate (WTI) crude climbed 2.3%, or 83 cents, to $36.27 a barrel.
Brent has doubled in the past six weeks, thanks to supply cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia, a grouping known as OPEC+.
But oil prices are still 40% down so far this year.
OPEC+ producers are considering extending their production cuts of 9.7 million barrels per day (bpd), equivalent to about 10% of global production, into July or August, at an online meeting likely to be held on June 4.
“Most likely, OPEC+ could extend current cuts until Sept. 1, with a meeting set before then to decide on next steps,” said Citi’s head of commodities research Edward Morse.
Under the original OPEC+ plan, the cuts were due to run through May and June, scaling back to a reduction of 7.7 million bpd from July to December.
Saudi Arabia has been pushing to keep the deeper cuts in place for longer, sources said.
“An agreement to extend would buy the OPEC+ group some time to actually fully comply with the initial supply cut of 9.7 million bpd before decreasing output curtailment to 7.7 million bpd for the balance of the year,” BNP Paribas Global Head of Commodity Markets Strategy Harry Tchilinguirian told the Reuters Global Oil Forum.
Price gains have been capped by trade tension between China and the United States over Beijing’s security legislation in Hong Kong, as well as manufacturing data on Monday showing the world’s factories were still struggling.

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On Monday 1, June 2020

Oil moves lower as U.S.-China tensions weigh ( Afternoon Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images
}
Oil futures steadied on Monday as rising U.S.-China tensions weighed on sentiment, but prices drew support from reports that OPEC and Russia were close to a deal extending output cuts.
Brent futures rose 28 cents, or 0.7%, to trade at $38.12 per barrel. U.S. crude fell 5 cents, or 0.14%, to settle at $35.44 per barrel.
Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.
China has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two people familiar with the matter said, after Washington said it would eliminate special U.S. treatment for Hong Kong to punish Beijing.
“The possibility of heightened tensions does pose a risk for the recent rally in oil prices,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
Economic concerns and questions about fuel demand recovery also weighed on oil futures. Manufacturing data on Monday showed that Asian and European factories were struggling as government-imposed lockdowns tempered demand.
Prices found some support after news that the Organization of the Petroleum Exporting Countries and Russia, known as OPEC+, were moving closer to a compromise on extending oil output cuts and were discussing rolling over the curbs one to two months.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10.
Stockpiles at Cushing, Oklahoma, fell to 54.3 million barrels in the week to May 29, traders said, citing a Genscape report on Monday.
Bank of America said Monday it believed that North American oil shut-ins peaked in May.
“Oil prices have strengthened to levels where shutting-in no longer makes sense and should actually encourage producers to quickly restore production,” according to a BofA Global Research report.

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Oil falls as U.S.-China tension escalates (Morning Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil fell on Monday on worries about renewed tensions between the United States and China, although reports that OPEC and Russia were closer to a deal on extending oil output cuts lent some support to prices.
Benchmark Brent crude was down 46 cents, or 1.2%, at $37.38 a barrel, while U.S. crude fell $1.04, or 2.9%, to $34.45 a barrel.
Investors turned cautious after China warned of retaliation on U.S. moves over Hong Kong.
Beijing has asked its state-owned firms to halt purchases of soybeans and pork from the United States, two sources said. China could expand the order to include additional U.S. farm goods if Washington took further action, sources said.
“The possibility of heightened tensions does pose a risk for the recent rally in oil prices,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
U.S. President Donald Trump’s directive to begin the process of eliminating special treatment for Hong Kong is likely to create a new driver of volatility in global markets as tensions between Washington and Beijing climb again.
Manufacturing data has also showed that Asian and European factories were struggling as lockdowns due to the coronavirus pandemic kept demand in check.
Prices found some support, however, after a news that the Organization of the Petroleum Exporting Countries and Russia, part of a group known as OPEC+, were moving closer to a compromise on the duration for extending oil output cuts and were discussing rolling over the curbs one to two months.
“The fact that crude ... prices have not reacted much to the news of the potential cut extension can be seen as a sign that the market has already priced in a lot of optimism,” JBC Energy analysts said in a note.
Algeria, which holds the rotating OPEC presidency, has proposed that OPEC+ hold a meeting on June 4 rather than the previously planned June 9-10. Russia has said it has no objection to meeting sooner.

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On Friday 29, May 2020

Oil jumps nearly 90% in May to $35, registering best month on record (Afternoon Update)

Pippa Stevens

Oil jumped more than 5% on Friday, the last trading day of the month, capping off its best month in history as an uptick in demand as well as record supply cuts pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, finished May with a gain of 88%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%.
But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In other words, WTI at $35 per barrel is hardly something to celebrate.
“It certainly doesn’t feel like it was oil’s best month ever,” said Regina Mayor, KPMG’s global head of energy. “Low $30s for WTI is clearly better than where we were at the end of April, but it’s not sufficient enough to bring the bulk of production back online,” she added.
In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract’s imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed.
Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019′s number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma — the main delivery point for WTI — decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet.
On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts.
In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March’s record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output.
The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting.
Doubts over whether or not the the deeper cuts will be extended sent some jitters through the oil market this week, although WTI still on track for its fifth straight week of gains. On Friday the contract gained $1.78, or 5.28%, to settle at $35.49 per barrel. Earlier in the session it traded as low as $32.36 per barrel as geopolitical tensions weighed on sentiment. International benchmark Brent crude gained 4 cents, or 0.11%, to settle at $35.33 per barrel.
Of course, crude’s record month is partially due to the fact that after falling to such low levels, a smaller price move now accounts for a much larger percentage move. WTI is still 4% below its recent high of $65.65 from January. Additionally, oil contracts roll on a monthly basis, but the roll doesn’t align with the standard calendar meaning that evaluating price on a standard monthly basis — rather than the duration of the month-long contract — can be somewhat arbitrary.
Mayor, who is based in Houston, said the market is more positive than those who are on the ground in oil country feel. “I think it’s too early for the level of optimism we’re seeing in the market, and to be frank, I think it’s a bit inexplicable,” she said. “I don’t think demand fundamentals are the key driver of the optimism. I think it’s more quick on supply, which means to me that there’s downside risk to the current elevated price.”
Still, others are more positive on oil’s outlook. In a recent note to clients, Morgan Stanley said that the rally looks like it can continue in the coming months, while also acknowledging that many unknowns remain in the market.
Meanwhile, Rystad Energy said that wild price swings are now in the rearview mirror. “Supply developments and other geopolitical tensions that could affect demand are priced in...Now, waiting for the next OPEC+ meeting, the market is also comfortable in a relative calmness,” said Bjornar Tonhaugen, Rystad’s head of oil markets.

- CNBC’s Michael Bloom and Patti Domm contributed reporting.

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Oil is on track for its best month ever (Morning Update)

Pippa Stevens

Oil came under pressure on Friday, the last trading day of month, but it’s still on pace to post its best month in history as an uptick in demand as well as record supply cuts have pushed prices higher. West Texas Intermediate, the U.S. oil benchmark, is on track to finish May with a gain of 74%. To put the number in context, WTI’s second best month on record was Sept. 1990, when it gained 44.6%.
But experts are quick to note that the surge in prices follows the steepest downturn on record, and that oil still has a ways to go before it regains old highs. In other words, WTI at $33 per barrel is hardly something to celebrate.
“It certainly doesn’t feel like it was oil’s best month ever,” said Regina Mayor, KPMG’s global head of energy. “Low $30s for WTI is clearly better than where we were at the end of April, but it’s not sufficient enough to bring the bulk of production back online,” she added.
In April, with billions of people around the world under some sort of lockdown in an effort to slow the spread of Covid-19, demand for oil fell off a cliff, which sent prices plunging. WTI dropped below zero and into negative territory for the first time on record. Part of the move was due to the contract’s imminent expiration, but it also reflected the very real fact that no one wanted to take the physical delivery of crude while demand was expected to remain depressed.
Since then, things have started to improve. Data released by the U.S. Energy Information Administration on Thursday showed that for the week ending May 22 gasoline demand rose to 7.3 million barrels per day from the prior week. This marked an improvement, although was still below 2019′s number ahead of Memorial Day weekend, which was 9.4 million bpd. Storage in Cushing, Oklahoma — the main delivery point for WTI — decreased by 3.4 million barrels, and refinery utilization also rose to 71% from 69%. Overall inventory rose by 7.928 million barrels, compared with the 1.3 million barrel draw analysts had been expecting, according to FactSet.
On the other side of the equation, producers have scaled back output at a record pace as plunging prices made operation uneconomical. OPEC and its oil-producing allies agreed to the steepest production cut in history during an extraordinary, multi-day meeting in April. Then, earlier in May, Saudi Arabia said that, beginning June 1, it would voluntarily cut an additional 1 million bpd, on top of its portion of the cuts agreed to by OPEC+. Kuwait and UAE were among the other cartel members that followed suit and said they would also exercise additional cuts.
In the U.S., production has dropped to 11.4 million bpd, 1.9 million bpd below March’s record high of 13.1 million bpd. Norway and Canada are among the other nations that have scaled back output.
The OPEC+ production cuts as they stand now will begin to taper on July 1, and the group is expected to decide on whether or not to extend the deeper cuts at its June 9-10 meeting.
Doubts over whether or not the the deeper cuts will be extended sent some jitters through the oil market this week, and WTI was on track to snap a four-week winning streak. On Friday the contract slid 70 cents, or 2%, to trade at $33.01 as geopolitical tensions weighed on sentiment. International benchmark Brent crude slid 72 cents, or 2%, to trade at $34.57 per barrel.
Of course, crude’s record month is partially due to the fact that after falling to such low levels, a smaller price move now accounts for a much larger percentage move. WTI is still 50% below its recent high of $65.65 from January. Additionally, oil contracts roll on a monthly basis, but the roll doesn’t align with the standard calendar meaning that evaluating price on a standard monthly basis — rather than the duration of the month-long contract — can be somewhat arbitrary.
Mayor, who is based in Houston, said the market is more positive than those who are on the ground in oil country feel. “I think it’s too early for the level of optimism we’re seeing in the market, and to be frank, I think it’s a bit inexplicable,” she said. “I don’t think demand fundamentals are the key driver of the optimism. I think it’s more quick on supply, which means to me that there’s downside risk to the current elevated price.”
Still, others are more positive on oil’s outlook. In a recent note to clients, Morgan Stanley said that the rally looks like it can continue in the coming months, while also acknowledging that many unknowns remain in the market.
Meanwhile, Rystad Energy said that wild price swings are now in the rearview mirror. “Supply developments and other geopolitical tensions that could affect demand are priced in...Now, waiting for the next OPEC+ meeting, the market is also comfortable in a relative calmness,” said Bjornar Tonhaugen, Rystad’s head of oil markets.

- CNBC’s Michael Bloom and Patti Domm contributed reporting.

______________________________________________________

On Thursday 28, May 2020

Oil jumps more than 2% to reverse early losses on higher U.S. gasoline demand, refinery runs (Afternoon Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Thursday, erasing earlier losses, on signs U.S. gasoline demand is rising despite a big surprise build in crude inventories and worries that China’s new Hong Kong security law could result in trade sanctions.
The U.S. Energy Information Administration (EIA) said crude inventories rose 7.9 million barrels in the latest week, exceeding expectations, due to a big increase in imports. Gasoline stockpiles fell unexpectedly, but refiners boosted output.
“Even though we got the big increase in crude supplies, there’s optimism in the numbers because of the uptick in refinery runs and because of the uptick in gasoline demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption roughly 30%. Overall investment is dropping and U.S. production cuts are balancing out the supply glut, but demand still has not bounced back entirely.
On its second to last day as the front-month, Brent futures for July delivery rose 55 cents, or 1.6%, to settle at $35.29 a barrel. West Texas Intermediate crude rose 90 cents, or 2.7%, to settle at $33.17 per barrel.
Uncertainty about Russia’s commitment to continuing deep output cuts kept the price gain in check. Saudi Arabia and other OPEC producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group dubbed OPEC+, meets on June 9 to discuss continuing the April supply deal that cut 9.7 million bpd from the  market.

Markets are also concerned that Washington could slap trade sanctions on China due to Beijing’s move to impose a new security law on Hong Kong. The United States and other nations said this would threaten freedom and breach a 1984 Sino-British agreement on the autonomy of the former UK-colony.

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Oil prices steady, awaiting confirmation of surprise U.S. inventory build (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures steadied on Thursday as the market awaited confirmation of industry data that showed a surprise increase in U.S. crude stocks, which offset hopes for a demand recovery as coronavirus lockdowns ease.
After tumbling on Wednesday, Brent crude futures were down 0.3%, or 11 cents, at $34.63 a barrel after dropping by more than $1 to $33.62 in early trading.
West Texas Intermediate crude futures were down 0.55%, or 18 cents, at $32.63. U.S. futures earlier slipped as much as 5% to a low of $31.14.
“All in all oil is pretty much flat after the price correction yesterday. The market opened lower after the shock API numbers, but it is now treading water until EIA statistics are released,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.
Data from industry group API showed U.S. crude stocks rose 8.7 million barrels in the week to May 22, against analyst expectations for a 1.9 million-barrel draw.
Also weighing on prices was uncertainty about Russia’s commitment to continuing deep output cuts ahead of a June 9 meeting of the Organization of the Petroleum Exporting Countries and its allies, a grouping dubbed OPEC+.
Saudi Arabia and some other OPEC oil producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman agreed during a telephone call on further “close coordination” on output restrictions, the Kremlin said on Wednesday.
With WTI holding above $30 a barrel, OPEC+ will be watching to see whether U.S. shale oil producers, who have breakeven prices in the high $20 to low $30 range, step up production, said National Australia Bank’s head of commodity research, Lachlan Shaw.

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On Wednesday 27, May 2020

Oil falls on U.S.-China tensions over Hong Kong (Afternoon Update)




An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday after U.S. President Donald Trump said he was working on a strong response to China’s proposed security law in Hong Kong.
A potential deterioration in relations between the world’s two biggest economies could ratchet up the pressure on global businesses and oil demand already weakened by the coronavirus pandemic.
Brent crude fell $1, or 2.6%, to trade at $35.17 per barrel, while West Texas Intermediate crude was down $1.02, or 2.9%, to trade at $33.32 per barrel.
“As much as oil fundamentals are improving, there are still several flies in the bullish ointment. They include the latest uptick in U.S.-China tensions,” said Stephen Brennock of oil broker PVM.
“The threat of a fresh U.S.-China trade war is no longer just a tail risk and could spell disaster for risk assets.”
Gloomy forecasts over the economic impact of the pandemic also weighed on crude prices. The euro zone economy is likely to shrink between 8% and 12% this year, European Central Bank President Christine Lagarde said, warning that a mild scenario was already outdated and the outcome would be between medium and severe.
Traders were also paying attention to early signals on a meeting between the Organization of the Petroleum Exporting Countries and its allies in less than two weeks.
The group, known as OPEC+, is cutting output by nearly 10 million barrels per day (bpd) in May and June, but the question is whether it will continue to do so as demand recovers after the easing of coronavirus lockdowns in many countries.
“Stock builds are falling and the market will be balanced in June, so who wants to willingly forego millions of crude barrels in sales if he’s able to sell it in a recovering market,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.

In another sign of weak fuel demand, Japan’s refineries operated at only 56.1% of capacity last week, the lowest rate since at least 2005.

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Oil slips on demand worries, Hong Kong tensions (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday on revived concerns over how quickly fuel demand will recover even as coronavirus lockdowns begin to ease in many countries, while U.S.-China tensions added to negative sentiment.
Brent crude futures fell 21 cents, or 0.6%, to $35.96 by 0120 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.9%, at $34.04 a barrel.
The Organization of the Petroleum Exporting Countries and producers including Russia, a grouping referred to as OPEC+, are cutting their output by nearly 10 million barrels per day in May-June to buttress prices as measures to rein in the coronavirus pandemic have slashed fuel demand.
In the United States, where some states are opening up after lockdowns, optimism about an increase in demand has supported sentiment, but the recovery is fragile, analysts caution. The Memorial Day holiday just passed typically heralds the start of the peak U.S. demand season.
“Early estimates suggest gasoline demand is down by as much as 30% from last year as people stay close to home,” ANZ Research said in a note.
Some analysts and banks are predicting a balanced oil market as soon as June, but that could be too optimistic, according to Eurasia Group. 
There is ... a significant risk of repeat outbreaks and lockdowns. Even without them, some restrictions — especially on aviation — will remain in place,” it said in a note.
Still as U.S. demand picks up, however slowly, there are signs that inventories are falling. U.S. crude inventories are forecast to have fallen for a third week last week, according a Reuters poll of analysts. 
Prices were also under pressure after U.S. President Donald Trump’s economic adviser, Larry Kudlow, said China was making “a big mistake” with national security legislation on Hong Kong. 
Beijing’s proposed security law would reduce the territory’s separate legal status. China’s parliament is expected to approve it by Thursday.

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On Tuesday 26, May 2020

Oil jumps more than 3% as faith in supply cuts grows (Afternoon Update).



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices rose on Tuesday, supported by growing confidence that producers are following through on commitments to cut supplies and as fuel demand picks up with coronavirus restrictions easing.
Brent crude futures gained 64 cents, or 1.8%, to settle at $36.17 per barrel. West Texas Intermediate crude futures gained $1.10, or 3.3%, to settle at $34.35 per barrel.
The Organization of the Petroleum Exporting Countries and other leading oil producers including Russia, a group known as OPEC+, agreed last month to cut their combined output by almost 10 million barrels per day in May-June to shore up prices and demand, which has been hit by the coronavirus pandemic.

Russian Energy Minister Alexander Novak is due to meet oil major producers on Tuesday to discuss the possible extension of the current level of cuts beyond June, sources familiar with the plans told Reuters.

The RIA news agency said Russian oil production volumes were near the country’s target of 8.5 million bpd for May and June.

On Monday, Russia’s energy ministry quoted Novak as saying that a rise in fuel demand should help to cut a global surplus of about 7 million to 12 million bpd by June or July.
OPEC+ countries are due to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down about 45% since the start of the year.
“The 16 million bpd oversupply in crude during April could be reversed altogether by June, helped by a 4 million-bpd recovery in crude demand and a 12 million-bpd cut in crude supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy.

“OPEC+ is pulling the most weight by far, effectively reducing supply by nearly 9 million bpd while non-OPEC+ crude supply is down by more than 3.5 million bpd from March levels.”
In an indication of lower supply in the future, data from energy services business Baker Hughes showed that the U.S. rig count hit a record low of 318 last week.

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Oil prices rise on supply cut hopes, easing of coronavirus lockdowns (Morning Update)



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices climbed on Tuesday, boosted by increasing faith in the market that producers will to stick to commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns are eased around the world.
U.S. West Texas Intermediate (WTI) crude futures gained 3.2%, or $1.06, to $34.31 a barrel as of 0429 GMT, just off an intra-day high of $34.33. There was no WTI settlement on Monday because of the U.S. Memorial Day holiday.
Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading.
The market was buoyed by comments from Russia reporting its oil output had nearly dropped to its target of 8.5 million barrels per day (bpd) for May and June under its supply cut deal with the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers, a grouping known as OPEC+.
“There’s definitely a feeling those cuts have come through as well as you could expect,” said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.
OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices, which are still down around 45% since the start of the year. The big producers agreed in April to cut output by nearly 10 million bpd for May and June.
Russia’s energy ministry on Monday quoted minister Alexander Novak as saying a rise in fuel demand should help cut the current global surplus of around 7-12 million bpd by June or July.
“With economies restarting, the focus definitely is on the improvement in the fundamentals, rather than what seemed like a complete collapse in demand only a few weeks ago,” said strategist Hynes.
Meanwhile data from energy services firm Baker Hughes showed the United States’ rig count hitting a record low of 318 in the week to May 22, also indicating lower output in the future

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On Monday 25, May 2020

Oil falls as U.S.-China tensions take toll ( Morning Update)



The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters

Oil prices eased on Monday on concerns over rising tensions between the United States and China over Beijing’s plans to impose security laws on Hong Kong and the possibility of sanctions from Washington.
Oil prices have risen sharply in recent weeks as an easing of coronavirus restrictions has led to increased demand, but the tensions between the United States and China are beginning to weigh on sentiment.
Brent was down 19 cents, or 0.5%, at $34.94 a barrel by 0152 GMT. U.S. oil was down by 6 cents, or 0.2%, at $33.19 a barrel. Both contracts have risen for the past four weeks, although prices are still down around 45% so far this year.
Hong Kong police used tear gas and water cannons on Sunday to disperse thousands of people rallying against Beijing’s plan to impose national security laws on the city.
“The HK security legislation packs on a hefty amount (of) trade war risk premium,” said Stephen Innes, chief market strategist at AxiCorp, noting that it added to market worries last week about the level of Chinese policy stimulus.
Ties between Washington and Beijing have soured since the outbreak of the new coronavirus. President Donald Trump and President Xi Jinping have traded barbs over the outbreak, including accusations of cover-ups and lack of transparency.
Clashes between the superpowers have included Hong Kong, human rights, trade and U.S. support for Chinese-claimed Taiwan.

______________________________________________________

On Friday 22, May 2020

Oil drops after China abandons target for 2020 GDP amid coronavirus outbreak (Afternoon Update).



Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices slumped on Friday after China’s decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user.
Brent crude fell $1.06, or 2.9%, to $34.97 a barrel, after gaining nearly 1% on Thursday. West Texas Intermediate crude dropped by 98 cents, or 2.9%, to trade at $32.94 per barrel, having gained more than 1% in the last session.
China’s National People’s Congress (NPC) kicked off a week-long meeting on Friday with the government saying it omitted the 2020 target, while pledging to issue 1 trillion yuan ($140 billion) of special treasury bonds to support companies and regions hit by the pandemic.
Abandoning the growth target “could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil,” said Stephen Innes, chief global market strategist at AxiCorp.
“The commodity market, in general, was looking for a bigger infrastructure pump from the NPC so there is bound to be an element of disappointment,” he said.
Still, both Brent and WTI are heading for a fourth week of gains as more evidence emerged that fuel demand is recovering as countries ease business and social restrictions imposed to counter the coronavirus pandemic.
Gasoline demand is returning with traffic congestion in some of the world’s capitals recovering to year-earlier levels after the lifting of coronavirus, data prepared for Reuters shows.
Traffic flows in Berlin and Tokyo have rebounded, according to the data, while in the United States the easing of restrictions in many states has supported demand for gasoline. The upcoming Memorial Day holiday weekend typically kicks off the U.S. summer driving season.

______________________________________________________

Oil drops after China abandons target for 2020 GDP amid coronavirus outbreak (Morning Update)



Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Oil storage tanks stand at the RN-Tuapsinsky refinery, operated by Rosneft Oil Co., in Tuapse, Russia, on Monday, March 23, 2020.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices slumped on Friday after China’s decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world’s second-largest oil user.
Brent crude fell $1.70, or 4.7%, to $34.36 a barrel, after gaining nearly 1% on Thursday. West Texas Intermediate crude dropped by $1.91, or 5.6%, to $32.01 a barrel, having gained more than 1% in the last session.
China’s National People’s Congress (NPC) kicked off a week-long meeting on Friday with the government saying it omitted the 2020 target, while pledging to issue 1 trillion yuan ($140 billion) of special treasury bonds to support companies and regions hit by the pandemic.
Abandoning the growth target “could be interpreted as putting less focus on infrastructure investment and could be viewed as negative for oil,” said Stephen Innes, chief global market strategist at AxiCorp.
“The commodity market, in general, was looking for a bigger infrastructure pump from the NPC so there is bound to be an element of disappointment,” he said.
Still, both Brent and WTI are heading for a fourth week of gains as more evidence emerged that fuel demand is recovering as countries ease business and social restrictions imposed to counter the coronavirus pandemic.
Gasoline demand is returning with traffic congestion in some of the world’s capitals recovering to year-earlier levels after the lifting of coronavirus, data prepared for Reuters shows.

Traffic flows in Berlin and Tokyo have rebounded, according to the data, while in the United States the easing of restrictions in many states has supported demand for gasoline. The upcoming Memorial Day holiday weekend typically kicks off the U.S. summer driving season.

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On Thursday 21, May 2020

Oil at highest since March on lower U.S. inventories, recovering demand (Afternoon Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose to the highest level since March on Thursday, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments ease restrictions imposed on people’s movements due to the coronavirus crisis.
Crude prices have slumped in 2020, with Brent hitting a 21-year low below $16 a barrel in April as demand collapsed. With fuel use rising and more signs that the supply glut is being tackled, Brent has since more than doubled.
Brent rose 23 cents, or 0.6%, to $35.98 per barrel, while West Texas Intermediate crude rose 23 cents, or 0.7%, to $33.76.
“Global supply has been curtailed to a great degree,” said Rystad Energy analyst Paola Rodriguez Masiu. “We are on a clear path to a gradual recovery now.”
In the latest sign the supply glut is easing, U.S. crude inventories fell 5 million barrels last week. Analysts had expected an increase.
“The rally in the crude futures is beginning to approach levels in which U.S. shale production declines will begin to slow and possibly reverse as low cost producers attempt to generate revenue,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
At the same time, there is evidence of recovering fuel use.
Top U.S. airlines and Air Canada (AC.TO) on Tuesday reported slower ticket cancellations and an improvement in bookings on some routes, though executives said overall demand remained weak.
The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, agreed to cut supply by a record 9.7 million barrels per day from May 1.
So far in May, OPEC+ has cut oil exports by about 6 million bpd, according to companies that track the flows, suggesting a strong start in complying with the deal. OPEC says the market has responded well.

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Oil prices rise to highest since March after U.S. stock drawdown (Morning Update).



An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
An aerial drone view of a crude oil storage facility on April 23, 2020 in Cushing, Oklahoma.
Tom Pennington | Getty Images

Oil prices rose on Thursday to their highest since March, as a drawdown of U.S. crude inventories and output cuts by major producers helped ease concerns about a supply glut, offsetting fears over the economic fallout from the Covid-19 epidemic.
Brent crude futures for July delivery were trading up 62 cents, or 1.7%, at $36.37 per barrel at 0550 GMT, rising for a second day.
U.S. West Texas Intermediate (WTI) crude futures for July were up 61 cents, or 1.8%, at $34.10 a barrel, extending its gains into a sixth straight session.
Both prices are at their highest since March 11.
U.S. crude inventories fell by 5 million barrels last week, against expectations in a Reuters poll for a 1.2 million-barrel rise, Energy Information Administration (EIA) data showed, while stocks at the Cushing, Oklahoma, delivery hub dropped by 5.6 million barrels.
“While signs that WTI storage pressures are abating is positive for prices, the latest report shows that the fall in stocks owes more to supply factors than growing product demand,” Capital Economics said in a note issued on Wednesday.
Prices have been boosted lately by shipping data showing the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies, a group known as OPEC+, are complying with their pledge to cut 9.7 million barrels per day (bpd).
OPEC itself is encouraged by the rally in prices and strong adherence to output cut pledges, its secretary general said, although sources say the group has not ruled out further steps to support the market.
“With supply being managed through the compliance among OPEC+ and demand recovering in North Asia, particularly in China, things are moving in the right direction in terms of supporting oil prices,” said Victor Shum, vice president of Energy Consulting at IHS Markit.
“If there is no surprise in a second or third wave in the virus attack and key members of OPEC+, Saudi Arabia in particular, are doing more cuts, we expect a gradual recovery will continue in the second half,” he said.
Physical crude markets are signalling a rapid shift from an enormous over-supply at the height of the coronavirus lockdowns in April towards an expected under-supply in the second half of the year.
Still, concerns about the lasting economic impact from the pandemic, especially in the United States, the world’s biggest oil consumer, have applied some downward pressure on prices.
Federal Reserve policymakers repeated a vow to take all steps necessary to shore up the U.S. economy, minutes from the U.S. central bank’s April 28-29 policy meeting released on Wednesday showed. 

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On Wednesday 20, May 2020

Oil rises on signs of firmer demand, fall in U.S. crude stocks (Afternoon Update).



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
West Texas Intermediate July crude futures were up $1.36, or 4.2%, to trade at $33.32 per barrel. Brent crude futures rose $1.04, or 3%, to trade at $35.69 per barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
Data from the U.S. Energy Information Administration showed that for the week ending May 15 inventory dropped by 5 million barrels. According to estimates from FactSet, analysts had been expecting a build of 1.8 million barrels.
“Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.
“We would need to see strength in refinery margins in order to persuade refiners to increase utilisation rates, but at current levels there seems little incentive for them to do so, with many regions still seeing negative margins,” the bank added.
Refiners are pinning hope on easing of lockdowns boosting gasoline demand.
Lingering concerns about the economic fallout from the coronavirus pandemic, especially in the United States which is the world’s biggest oil consumer, kept a lid on further gains.
U.S. Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.

U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.

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Oil rises on signs of firmer demand, fall in U.S. crude stocks ( Morning Update)



An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
An offshore oil platform is seen with a tanker in the distance on April 20, 2020 in Huntington Beach, California.
Michael Heiman | Getty Images

Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
Brent crude futures were up $1.29, or 3.7%, at $35.94 per barrel. West Texas Intermediate July crude futures were up $1.13, or 3.5%, to trade at $33.13 per barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed on Tuesday.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
Official data from the Energy Information Administration (EIA) is due later on Wednesday.
“Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.
“We would need to see strength in refinery margins in order to persuade refiners to increase utilisation rates, but at current levels there seems little incentive for them to do so, with many regions still seeing negative margins,” the bank added.
Refiners are pinning hope on easing of lockdowns boosting gasoline demand.
Lingering concerns about the economic fallout from the coronavirus pandemic, especially in the United States which is the world’s biggest oil consumer, kept a lid on further gains.
U.S. Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.

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On Tuesday 19, May 2020

Oil moves between gains and losses, output cuts and demand hopes in focus (Afternoon Update)



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images

Oil prices moved between gains and losses on Tuesday, assigns that producers are cutting output as promised and on signs of increasing demand as more countries ease out of curbs imposed to counter the coronavirus pandemic.
The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, gained 66 cents, or 2.1%, to trade at $32.50 per barrel. The July contract, which was trading at vastly higher volumes, traded slightly lower at $31.50 per barrel. International benchmark Brent crude shed 13 cents, or 0.34%, to trade at $34.69 per barrel.
“The market sees both forces aligning: the cuts OPEC+ promised are materialising and other non-member production shut-downs are also really helping to limit the oversupply,” said Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy.
“Meanwhile, lockdown measures are removed globally and the economy needs fuel to restart.”
But global demand recovery is expected to be slow as some restrictions remain and there is a significant risk of repeat outbreaks and lockdowns.
Consultants the Eurasia Group urged caution on expectations for higher oil consumption, citing “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”.
But amid signs of rising demand for crude and fuels, there was little sign of a repeat of the historic plunge below zero seen a month ago on the eve of the May contract’s expiry.
The market was boosted earlier by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries and others including Russia, a group known as OPEC+, are being implemented.
OPEC+ cut its oil exports sharply in the first half of May, companies that track shipments said, suggesting a strong start in complying with their latest pact to curb output.
U.S. production is also falling, with crude output from seven major shale formations expected to fall to 7.822 million barrels per day in June, the lowest since August 2018, according to the U.S. Energy Information Administration.

A recovery in fuel demand in India also gathered momentum in the first half of May.

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Oil steady on signs of output cuts ( Morning Update)



A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
A kayaker passes in front of an offshore oil platform in the Guanabara Bay in Niteroi, Brazil, Saturday, Feb. 1, 2020.
Dado Galdieri | Bloomberg | Getty Images.

Oil prices were steady on Tuesday amid signs that producers are cutting output as promised while traders awaited more clarity on the demand picture as some countries ease out of lockdowns.
Benchmark Brent crude rose 43 cents, or 1.26%, to trade at $35.25 per barrel. The front-month contract for West Texas Intermediate crude, which is set to expire on Tuesday, was up $1.27, or 4%, at $33.09 per barrel.
The July contract, which was trading at vastly higher volumes, was up one cent at $31.75 a barrel.
“A powerful cocktail made of bullish ingredients have been supporting the oil market for a month ... Demand is improving, supply is decreasing,” said oil broker PVM’s Tamas Varga.
“This improvement in sentiment, however, is expected to be relatively short-lived ... economic output  will grow compared to the current quarter but will be well below the levels expected at the beginning of the year,” Varga added.
Global demand recovery is expected to be slow as some restrictions remain and there is a significant risk of repeat outbreaks and lockdowns.
The Eurasia group urged caution on oil consumption, citing “a global recession, cautious consumers, and a later and potentially worse peak of the coronavirus outbreak in emerging markets such as Latin America, Africa, and South Asia”.
There was little sign of a repeat of the historic plunge below zero seen last month ago on the eve of the May contract’s expiry amid signs of rising demand for crude and fuels.
The market was boosted earlier by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia, a group known as OPEC+, are being implemented.
OPEC+ cut its oil exports sharply in the first half of May, companies that track shipments said, suggesting a strong start in complying with their latest pact to curb output.
U.S. production is also falling, with crude output from seven major shale formations expected to fall to 7.822 million barrels per day in June, the lowest since August 2018, according to the U.S. Energy Information Administration.
A recovery in fuel demand in India also gathered momentum in the first half of May.

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On Monday 18, May 2020

Oil retreats from earlier 12% gain as June futures contract nears expiration (Afternoon Update).

Pippa Stevens


Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

West Texas Intermediate for June delivery jumped more than 12% at the session high on Monday, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices.
“Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.”
WTI, the U.S. benchmark, rose $2.20, or 7.4%, to trade at $31.62 per barrel. Earlier in the session it had been up more than 12%, touching a session high of $33.32. International benchmark Brent crude, which has already rolled to the July contract, traded 7.5% higher at $34.92 per barrel.
Monday’s jump is in sharp contrast to just one month ago when, on the day before the contract for May delivery expired, prices plunged below zero and into negative territory for the first time in history. With much of the world still on lockdown and storage rapidly filling, people were worried that there would be nowhere to put the oil. The contract holders were left scrambling and ultimately would do anything — in this case, even pay to have it taken off their hands.
Since then, demand has begun to recover, and worldwide suppliers have reduced output in an effort to support the market. OPEC and its oil-producing allies took 9.7 million barrels per day offline beginning on May 1, and Saudi Arabia, Kuwait and UAE are among the group’s nations that have said they will voluntarily cut production further. Beginning in June OPEC de facto leader Saudi Arabia said it would take an additional 1 million bpd offline.
In the U.S., data from the Energy Information Administration last week showed that production has dropped 1.5 million bpd below March’s all-time high level of 13.1 million bpd. Gasoline demand has also started to show signs of recovery as states begin to reopen economies.
The more actively traded WTI contract for July delivery jumped 8% to trade at $31.89, while the contract for August delivery traded 7.4% higher at $32.33.
“Almost half a year into the outbreak of the coronavirus pandemic, which has seen an unprecedented shock to oil consumption as most the world’s population has been locked in at home to slow the spread of the deadly Covid-19 illness caused by the virus, oil markets are reaching a turning point,” Eurasia Group’s Henning Gloystein said in a note to clients Sunday.
Oil is coming off its third straight week of gains, but prices are still well below January’s high, when WTI traded above $60 per barrel.
Gloystein noted that for prices to maintain their upward trajectory, producers will have to maintain supply cuts into 2021.
Some are less optimistic that the oil market will be able to bounce back. Mizuho’s Paul Sankey said Sunday that 2019 could have been the peak in terms of demand for oil. “Behavior changes are widely expected, particularly lower ongoing jet demand,” he said in a note to clients.
U.S. producer Whiting Petroleum is among the companies in the oil patch that have filed for bankruptcy as producers struggle to breakeven with oil trading at depressed levels.
“With Oil around $30, U.S. shale remains under pressure and we expect further bankruptcy filings as smaller companies struggle to service debt,” S&P Global Platts’ head of analytics Chris Midgley said.

— CNBC’s Michael Bloom contributed reporting.

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Oil jumps 12% to $33 as June futures contract nears expiration (Morning Update)

Pippa Stevens


Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

West Texas Intermediate for June delivery jumped more than 12% on Monday to a two-month high, one day ahead of the contract’s expiration, as production cuts and the easing of stay-at-home restrictions supported prices.
“Producers are significantly throttling back output and, with demand increasing, the market is on a slow path towards recovery,” said Rystad Energy’s senior oil markets analyst Paola Rodriguez Masiu. “Faced with meager demand and unattractive low prices, production curtailments came faster and deeper than initially anticipated.”
WTI, the U.S. benchmark, surged 12.5%, or $3.67, to trade at $33.10 per barrel. International benchmark Brent crude, which has already rolled to the July contract, traded 9.2% higher at $35.49 per barrel.
Monday’s jump is in sharp contrast to just one month ago when, on the day before the contract for May delivery expired, prices plunged below zero and into negative territory for the first time in history. With much of the world still on lockdown and storage rapidly filling, people were worried that there would be nowhere to put the oil. The contract holders were left scrambling and ultimately would do anything — in this case, even pay to have it taken off their hands.
Since then, demand has begun to recover, and worldwide suppliers have reduced output in an effort to support the market. OPEC and its oil-producing allies took 9.7 million barrels per day offline beginning on May 1, and Saudi Arabia, Kuwait and UAE are among the group’s nations that have said they will voluntarily cut production further. Beginning in June OPEC de facto leader Saudi Arabia said it would take an additional 1 million bpd offline.
In the U.S., data from the Energy Information Administration last week showed that production has dropped 1.5 million bpd below March’s all-time high level of 13.1 million bpd. Gasoline demand has also started to show signs of recovery as states begin to reopen economies.
The more actively traded WTI contract for July delivery jumped 8% to trade at $31.89, while the contract for August delivery traded 7.4% higher at $32.33.
“Almost half a year into the outbreak of the coronavirus pandemic, which has seen an unprecedented shock to oil consumption as most the world’s population has been locked in at home to slow the spread of the deadly Covid-19 illness caused by the virus, oil markets are reaching a turning point,” Eurasia Group’s Henning Gloystein said in a note to clients Sunday.
Oil is coming off its third straight week of gains, but prices are still well below January’s high, when WTI traded above $60 per barrel.
Gloystein noted that for prices to maintain their upward trajectory, producers will have to maintain supply cuts into 2021.
Some are less optimistic that the oil market will be able to bounce back. Mizuho’s Paul Sankey said Sunday that 2019 could have been the peak in terms of demand for oil. “Behavior changes are widely expected, particularly lower ongoing jet demand,” he said in a note to clients.
U.S. producer Whiting Petroleum is among the companies in the oil patch that have filed for bankruptcy as producers struggle to breakeven with oil trading at depressed levels.
“With Oil around $30, U.S. shale remains under pressure and we expect further bankruptcy filings as smaller companies struggle to service debt,” S&P Global Platts’ head of analytics Chris Midgley said.

— CNBC’s Michael Bloom contributed reporting.

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On Friday 15, May 2020

Oil jumps 6%, posts third week of gains amid signs of demand pickup (Afternoon Update).

3-4 minutes - Source: CNBC



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday, posting their third week of gains, as data showed demand for crude picking up in China after the easing of curbs to stem the coronavirus outbreak, boosting hopes that the global supply overhang may start to fade.
Brent crude was up $1.14, or 3.66%, to trade at $32.27 per barrel, while West Texas Intermediate settled up 5.9% to trade at $29.52 per barrel, having jumped 9% in the previous session.
Amid supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, bright spots are also emerging on the demand side. Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations.
Still the market mood remains far from euphoric, with the coronavirus pandemic far from over and new clusters emerging in some countries where lockdowns have been eased.
“The fundamentals in the market are clearly improving,” ING Research analysts said in a note. “But we still believe that in the near term, the upside is limited given that we are still in a surplus environment ... There is plenty of inventory for the market to digest.”
There is optimism that stockpiles may be on the wane.
The International Energy Agency said it expects crude inventories to fall by about 5.5 million barrels per day (bpd) in the second half of this year.
Meanwhile U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday.
Output cuts will boost the trend towards lower inventories, but U.S. crude is unlikely to see strong gains.
“WTI crude will struggle to break above the $30 level until both the economic outlook improves for the U.S. and some of the downside risks ease,” said Edward Moya, senior market analyst at OANDA.
On the production side, OPEC and associated producers — collectively known as OPEC+ — had already agreed to cut output by a record of nearly 10 million bpd before Saudi Arabia this week extended its planned reductions for June, pledging to lower supply by nearly 5 million bpd.
Saudi Aramco, the world’s largest oil exporter, reduced the volume of crude it will supply to at least three buyers in Asia by as much as 30% for June, three sources with knowledge of the matter told Reuters on Thursday.
OPEC+ now wants to extend overall production cuts beyond May and June when the group next meets, sources told Reuters earlier this week. 

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Oil extends gains amid signs of China demand pickup, global supply overhang fading (Morning Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Friday, extending day-earlier gains, as data showed demand for crude picking up in China after the easing of curbs to stem the coronavirus outbreak, boosting hopes that the global supply overhang may start to fade.
Brent crude was up 31 cents, or 1% at $31.47 per barrel, after rising nearly 7% on Thursday. The global benchmark is heading for a 1.8% gain on the week after rising for the previous two weeks.
West Texas Intermediate was up 21 cents, or 0.76%, at $27.77 per barrel, having jumped 9% in the previous session. WTI is heading for a third weekly increase, up more than 12%.
Amid supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other major producers, bright spots are also emerging on the demand side. Data released on Friday showed China’s daily crude oil use rebounded in April as refineries ramped up operations.
Still the market mood remains far from euphoric, with the coronavirus pandemic far from over and new clusters emerging in some countries where lockdowns have been eased.
“The fundamentals in the market are clearly improving,” ING Research analysts said in a note. “But we still believe that in the near term, the upside is limited given that we are still in a surplus environment ... There is plenty of inventory for the market to digest.”
There is optimism that stockpiles may be on the wane.
The International Energy Agency said it expects crude inventories to fall by about 5.5 million barrels per day (bpd) in the second half of this year.
Meanwhile U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday.
Output cuts will boost the trend towards lower inventories, but U.S. crude is unlikely to see strong gains.
“WTI crude will struggle to break above the $30 level until both the economic outlook improves for the U.S. and some of the downside risks ease,” said Edward Moya, senior market analyst at OANDA.
On the production side, OPEC and associated producers — collectively known as OPEC+ — had already agreed to cut output by a record of nearly 10 million bpd before Saudi Arabia this week extended its planned reductions for June, pledging to lower supply by nearly 5 million bpd.
Saudi Aramco, the world’s largest oil exporter, reduced the volume of crude it will supply to at least three buyers in Asia by as much as 30% for June, three sources with knowledge of the matter told Reuters on Thursday.
OPEC+ now wants to extend overall production cuts beyond May and June when the group next meets, sources told Reuters earlier this week. 

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On Thursday 14, May 2020

Oil jumps 9% on dip in U.S. crude stockpiles, IEA data (Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices surged on Thursday after the International Energy Agency forecast lower global stockpiles in the second half of 2020, even as worries remain over a second surge in coronavirus infections in coming months.
Crude prices have ticked up in the last two weeks as some countries relaxed coronavirus restrictions and lockdowns to allow factories and shops to reopen.
West Texas Intermediate crude futures surged 8.98%, or $2.27, to settle at $27.56 per barrel, while Brent crude futures rose $1.87, or 6.4%, to trade at $31.06 per barrel.
The market rebounded from Wednesday’s losses built on a glum forecast for the economy from U.S. Federal Reserve Chairman Jerome Powell, who warned of an “extended period” of weak economic growth. That offset an unexpected drop in U.S. stockpiles.
Initial claims for state unemployment benefits totaled a seasonally adjusted 2.98 million for the week ended May 9, the U.S. Labor Department said on Thursday. While that was down from 3.18 million in the prior week and marked the sixth straight weekly drop, claims remain astoundingly high.
“Gasoline demand correlates pretty well with the employment level, and it’s hard to see gasoline demand come back much more than it already has,” said John Kilduff, partner at Again Capital LLC in New York.
U.S. crude inventories fell for the first time in 15 weeks, the Energy Information Administration said on Wednesday, with a fall in U.S. crude stockpiles of 745,000 barrels to 531.5 million barrels in the week to May 8.
On Thursday, the IEA again forecast a record drop in demand in 2020, although it trimmed its estimate for the fall, citing measures to ease lockdowns.
As demand increases, the IEA expects crude stockpiles to shrink by about 5.5 million barrels per day in the second half.
“While these supply and demand dynamics are certainly capable of boosting prices near term, a potential record level of global crude supply will remain as a force to be reckoned with,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
The Organization of the Petroleum Exporting Countries said on Wednesday it expected 2020 global oil demand to shrink by 9.07 million bpd, a deeper contraction than its previous forecast of 6.85 million bpd.
It said it expected the second quarter to see the steepest decline. In response, Saudi Arabia deepened its planned cuts for June, reducing output by nearly 5 million barrels per day.

“The Saudis going from market wreckers to market makers again and leading by example has sent a very supportive message,” Kilduff said.
The U.S. Commodities Futures Trading Commission warned exchanges and brokerages on Thursday that they should be prepared for volatility and possible negative pricing for certain contracts as expiration approaches next week.

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Oil prices rise on dip in US crude stockpiles, IEA data  (Morning Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices rose on Thursday after a drop in U.S. crude stocks and an IEA forecast for lower global stockpiles in the second half, but the Brent benchmark still hovered around $30 a barrel as a weak demand picture curbed gains.
Brent crude futures were up 99 cents, or 3.4%, to trade at $30.18 per barrel, while West Texas Intermediate crude futures were 94 cents, or 3.7%, higher at $26.23 per barrel.
Prices have ticked up in the last two weeks as some countries relaxed coronavirus restrictions and lockdowns to allow factories and shops to reopen.
However the emergence of new cases in South Korea and China has raised concerns over a possible second wave of infections that would weigh on economic recovery and fuel demand.
U.S. Federal Reserve Chairman Jerome Powell warned on Wednesday of an “extended period” of weak economic growth.
Providing some bullish impetus, U.S. crude inventories fell for the first time in 15 weeks.
U.S. crude stockpiles were down by 745,000 barrels to 531.5 million barrels in the week to May 8, the Energy Information Administration said on Wednesday.
“Cash markets are strengthening, time spreads are tighter and physical demand is picking up. All these will provide price supports in the next few weeks, but this confidence will not last,” PVM said in a report.
Physical crude prices, including in the North Sea which is home to the Brent crude stream, have been climbing and the six-month Brent futures contango is at its shallowest in two months at around -$3.50 a barrel .
But any recovery is seen as too weak to erase a historic demand fall this year.
The International Energy Agency (IEA) on Thursday again forecast a record drop in demand in 2020, although it trimmed its estimate of the fall, citing easing lockdown measures.
As demand increases, the IEA expects crude stockpiles to shrink by around 5.5 million barrels per day in the second half.
Goldman Sachs said recovering demand and lower output would push the global oil market into deficit in June. However it maintained its summer price forecasts of $30 per barrel for Brent and $28 per barrel for WTI.
The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday it expected 2020 global oil demand to shrink by 9.07 million bpd, a deeper contraction than its previous forecast of 6.85 million bpd.
It said it expected the second quarter to see the steepest decline in demand.

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On Wednesday 13, May 2020

Oil falls on second wave outbreak fears, rise in US inventories (Afternoon Update)



An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view shows a cruise ship (L) and tanker vessel anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Wednesday on worries about a possible second wave of coronavirus cases in countries starting to ease lockdowns, while industry data showed a rise in U.S. crude inventories.
The concerns overshadowed a further call by Saudi Arabia for larger production cuts to balance the market following a virus-induced demand slump, after OPEC’s biggest producer said earlier this week it planned to add to cut output again.
Brent crude was down 58 cents, or 1.9%, at $29.40 by 0221 GMT, having risen 1.2% on Tuesday. U.S. crude was down 39 cents, or 1.5%, at $25.39 a barrel, after jumping nearly 7% in the previous session.
“While the market feels more comfortable on the supply side of the equation, on the demand side, the focus will continue to revolve around the risks of easing lockdowns,” said Stephen Innes, chief markets strategist at AxiCorp.
U.S. infectious disease expert Anthony Fauci on Tuesday told Congress that easing coronavirus lockdowns may set off new outbreaks of the illness, which has killed 80,000 Americans and badly damaged the world’s biggest economy.
New outbreaks have been reported in South Korea and in China, where the health crisis started before spreading around the world, prompting governments to lock down billions of people, devastating economies and demand for oil.
On the supply side, Saudi Arabia’s cabinet has urged OPEC+ countries to reduce oil output further to restore balance in global crude markets, the country’s state news agency reported early on Wednesday.
On Monday, Saudia Arabia said it would add to planned cuts by reducing production by a further 1 million barrels per day (bpd) next month, bringing output down to 7.5 million bpd.
The Organization of the Petroleum Export Countries (OPEC) and other producers such as Russia — a group known as OPEC+ — agreed to cut output by 9.7 million barrels per day (bpd) in May and June, a record reduction, in response to a 30% fall in global fuel demand.
In the United States, inventories of crude oil rose by 7.6 million barrels last week to 526.2 million barrels, against analysts’ expectations for an increase of 4.1 million barrels.
Still, stocks of crude at the Cushing, Oklahoma, delivery hub fell by 2.3 million barrels, API said, which, if confirmed by official data, would be the first drawdown since February, according to ING Economics.
“Concerns over hitting storage capacity have eased, as we see demand gradually recovering, along with supply cuts hitting the market,” ING said in a note, pointing to the decline in Cushing stocks.
Official storage data from the U.S. Energy Information Administration is due later on Wednesday

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On Tuesday 12, May 2020

Oil jumps more than 6% as Saudi Arabia pledges further production cuts ( Afternoon Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
U.S. West Texas Intermediate crude futures climbed $1.64, or 6.8%, to settle at $25.78 per barrel. Brent crude futures climbed 35 cents, or 1.18%, to settle at $29.98 per barrel. The benchmark fell $1.34 on Monday.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.
The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total.
Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.
“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?’” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of Covid-19 cases spurring renewed lockdowns.
“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.
Inventory data this week will be key to extending the recent rally in oil prices, analysts said.
U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

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Oil prices climb as Saudi Arabia pledges further production cut (Morning Update)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil futures rose on Tuesday, boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the coronavirus pandemic crushed fuel demand.
Brent crude futures climbed 98 cents, or 3.3%, to trade at $30.61 per barrel. The benchmark fell $1.34 on Monday.
U.S. West Texas Intermediate crude futures climbed $1.33, or 5.5%, to trade at $25.47 per barrel.
Saudi Arabia said overnight it would cut production by a further 1 million barrels per day (bpd) in June, slashing its total production to 7.5 million bpd, down nearly 40% from April.
“This reduction in production provided excellent optics encouraging other OPEC+ members to comply and even offer additional voluntary cuts, which should quicken the global oil markets’ rebalancing act,” Stephen Innes, chief global market strategist at AxiCorp, said in a note. OPEC+ is a group comprised of members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia.
The United Arab Emirates and Kuwait committed to cut production by another 180,000 bpd in total.
Still, the moves to deepen cuts raised questions for some about why the further cuts were needed.
“It was so sudden and so significant, it was just seen as: ‘Is this a proactive policy or just a reaction to weak demand?’” said Vivek Dhar, Commonwealth Bank’s mining and energy economist.
The cuts, combined with the world’s biggest economies relaxing coronavirus restrictions and stoking a gradual recovery in fuel demand, are expected to ease pressure on crude storage capacity.
However, in the wake of new outbreaks of the coronavirus, including in China and South Korea, the market is wary of a second wave of Covid-19 cases spurring renewed lockdowns.
“On the demand side there’s probably a view that the worst may be behind us, in terms of the peak damage point. If we do see a second wave, that would hurt demand and hurt pricing,” said Commonwealth Bank’s Dhar.
Inventory data this week will be key to extending the recent rally in oil prices, analysts said.
U.S. crude inventories likely rose by about 4.3 million barrels in the week to May 8, a preliminary Reuters poll showed, ahead of reports from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday.

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On Monday 11, May 2020

Oil drops more than 2% despite Saudi Arabia announcing plans to slash output (Afternoon)

Pippa Stevens


Oil tanks at an oil processing facility of Saudi Aramco, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.
Oil tanks at an oil processing facility of Saudi Aramco, a Saudi Arabian state-owned oil and gas company, at the Abqaiq oil field.
Stanislav Krasilnikov | TASS via Getty Images
Oil moved lower on Monday as coronavirus-induced demand fears outweighed Saudi Arabia announcing additional production cuts in an effort to support prices.
West Texas Intermediate, the U.S. benchmark, shed 60 cents, or 2.43%, to settle at $24.14 per barrel. In a volatile session WTI traded as high as $25.58, and as low as $23.67. International benchmark Brent crude fell $1.37, or 4.4%, to settle at $29.60 per barrel. 
Beginning on June 1 Saudi Arabia will cut output by an additional 1 million bpd, which combined with the cuts agreed to by OPEC and its oil-producing allies, brings Saudi Arabia’s total cut to roughly 4.8 million bpd below its April record production level. Production for June will now be 7.492 million bpd.
Saudi Arabia also said that it would scale back May production “in consent with its customers.”
“The Kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets,” a statement from the Saudi press agency said.
Following Saudi Arabia’s announcement, Kuwait and UAE said they would also implement additional cuts.
Rystad Energy said that with these new cuts, global storage will most likely not reach capacity, which had been a fear in the market. “An extra 1.2 million bpd cut will not re-balance the market, but will surely remove strain from the storage infrastructure and buy time to wait for the demand rebound,” said senior oil markets analyst Paola Rodriguez Masiu. 
Oil is coming off its second straight positive week as investors have cheered signs that demand recovery is underway amid ongoing production cuts. WTI jumped 25% last week in one of its best weeks in history, while Brent rose 17%.
Still, prices are well below their highs and the path to recovery is far from certain. On Monday oil moved lower on fears of a possible second wave of coronavirus cases after countries thought to be beyond the worst of the virus, including South Korea, reported a jump in infections. 



Oil prices drop amid supply glut, fears of 2nd coronavirus wave (Morning)



An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices fell on Monday as concern over a persistent glut and economic gloom caused by the coronavirus pandemic combined to cancel out support from supply cuts at some of the world’s top producers.
Brent crude futures were down 29 cents, or 0.9%, at $30.68 a barrel by 0431 GMT, while U.S. West Texas Intermediate crude futures fell 17 cents, or 0.7%, to $24.57 a barrel.
Both benchmarks have notched up gains over the past two weeks as countries have eased business and social lockdowns imposed to cope with the coronavirus and fuel demand has rebounded modestly. Oil production worldwide is also declining.
But possible signs of a second wave of coronavirus infections in northeast China and South Korea worried investors even as more countries started to pivot towards easing pandemic restrictions in moves that could support oil demand.
Goldman Sachs analysts said there was still concern that demand will stay weak in 2021, with worries about a second wave of Covid-19 cases and only a modest increase in personal or corporate travel.
Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world, building up inventories globally.
Fears that the United States is running out of storage space triggered WTI prices crashing into negative territory last month, prompting some U.S. producers to slash output.
In a sign of that impact, the number of operating oil and gas rigs in the world’s largest oil producer fell to 74 in the week to May 8, a record low according to data released on Friday from energy services firm Baker Hughes going back to 1940.
“People are surprised by how quickly the U.S. is shutting in production and that’s exactly what we need in order to support prices,” said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.
“There’s another 10 days before the June contract expires ... if the WTI contract can avoid a crash going into expiry, hopefully we’ve seen the bottom.”

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On Friday 8, May 2020

Oil jumps 5%, posts second straight week of gains



Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil prices rose on Friday and were on course for a second consecutive week of gains as U.S. producers rapidly shut crude production and more states moved ahead with plans to relax lockdowns intended to prevent the spread of the worst public health crisis in a generation.
U.S. West Texas Intermediate crude gained $1.19, or 5%, to settle at $24.74 per barrel, while international benchmark Brent crude traded 2.8% higher at $30.28 per barrel.
“This advance of the past couple of weeks has been a bit suspect given the fact that coronavirus cases continue to increase and the U.S. crude surplus is maintaining a steep up trend where a record U.S. stock level is likely to be achieved in next week’s EIA report,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report.
The U.S. Energy Information Administration’s weekly report on Wednesday showed 15 weeks of consecutive rises in crude stocks although the rate of growth in inventories has slowed since a record build of 19 million barrels in early April.
However, the number of operating oil and natural gas rigs fell by 34 to an all-time low of 374 this week - reflecting data going back 80 years - as the energy industry slashes output and spending to deal with the coronavirus-led crash in fuel demand.
North American oil companies have shut production faster than analysts expected and are on track to withdraw about 1.7 million barrels per day (bpd) of output by the end of June.
These commercially-driven cuts are in addition to those by Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group know as OPEC+, which began implementing a deal to curb a record 9.7 million bpd from the start of May.
Market spectators are now watching for more data that supports OPEC+ countries are complying with production cuts, according to Andrew Lipow, president of Lipow Oil Associates in Houston.
“I expect now prices will pull back to $20 a barrel because skepticism will come into the market about the compliance of OPEC+ on the production cuts,” said Lipow.
Iraq has yet to inform its regular oil buyers of cuts to its exports, suggesting it is struggling to fully implement supply cuts.
“All it takes is one or two countries not to comply and it could open the door for others,” Lipow said.
Australia on Friday became the latest country to plan an easing of lockdowns, while France, parts of the United States and countries such as Pakistan are also planning to ease restrictions.
Market participants are watching as the economic crisis unfolding in the United States affects oil demand in the coming months. The world’s biggest economy lost a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression.

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On Thursday 7, May 2020

Oil prices rise, on pace for more than 30% gain this week

Pippa Stevens



Oil jumped more on Thursday and was on track for its second best week in history as a number of bullish factors supported prices, including U.S. companies cutting production, Saudi Arabia raising its official oil selling price and gasoline demand improving as economies around the world reopen.
West Texas Intermediate, the U.S. benchmark, jumped 8%, or $1.91, to trade at $25.90 per barrel. Earlier in the session WTI had been up more than 11%, hitting a session high of $26.74. This week, WTI has gained more than 30%, putting it on pace for its second best week ever going back to the contract’s inception in 1983. Of course, given the more than 50% decline this year a smaller move now accounts for a larger percentage change.
Brent crude, the international benchmark, traded 4.2% higher at $30.98.
“Nascent signs of rebounding gasoline demand in the U.S. and a rapid curtailment of oil production that has seen U.S. producers cut over 1 million barrels per day of output in a matter of weeks has enabled oil prices to recover,” Again Capital’s John Kilduff told CNBC. “Volatility will remain the watchword, but there is an increasing sense that the worst is behind the industry, at this point.”
A drilling crew secures a stand of drill pipe into the mouse hole on a drilling rig near Midland, Texas February 12, 2019.
Nick Oxford | Reuters
On Wednesday, data from the Energy Information Administration showed that for the week ending May 1 production declined by 200,000 barrels per day to 11.9 million bpd, which is more than 1 million bpd below March’s record high. Exxon, Chevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
“There has just been a fierce reaction by U.S. oil and exploration and production companies to really crater U.S. output. It’s still very high, but it’s working its way down rapidly,” Kilduff added.
While inventory in the U.S. is still rising, it’s now at a slower clip. Last week, stockpiles grew by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting, according to FactSet. And while demand for gasoline is still well below its highs, government data showed that it is starting to turn a corner as states open up their economies.
Mizuho energy analyst Paul Sankey noted that oil also got a boost after Saudi Arabia raised its official oil selling prices, which “alleviates pressure on global crude pricing.”
“They are still fighting for market share (against Iraq/Iran primarily) in Asia, but have backed off US market share competition all-but completely,” he wrote in a note to clients Thursday.

Rally overdone?

Given WTI’s nearly 40% gain this month, some say the rally is overdone, especially as storage around the world continues to fill.
“A shift in market sentiment was lifting prices earlier this week, but the physical overhang does not want go away just yet,” Citi analyst Francesco Martoccia said Wednesday. “The supply picture remains uncertain in size and timing, leaving a true read of US balances murkier in the short term,” he noted.
“We’re not out of the woods yet,” Kilduff added. “There still may be one more flirtation with negative pricing when this June contract goes off the board in a couple of weeks, but beyond that we should be clear of those kind of worries.”

— CNBC’s Michael Bloom and Patti Domm contributed reporting.

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On Wednesday 6, May 2020

Oil turns lower, snapping five-day winning streak as oversupply fears weigh

Pippa Stevens


An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices dropped on Wednesday, snapping a five-session winning streak, as oversupply concerns outweighed optimism over economies reopening.
West Texas Intermediate, the U.S. benchmark, shed 4.6%, or $1.14, to trade at $23.42 per barrel. In a volatile session, the contract swung between a gain of more than 6% at the high — climbing to $26.08 — and a more than 8% loss, hitting a session low of $22.58 per barrel. On Tuesday the contract soared 20.45%.
Brent crude, the international benchmark, traded $1.66, or 5.3%, lower at $29.34, as the coronavirus pandemic continues to hit demand.
“The rally in crude also feels lofty as discussions with refiners continue to suggest lower run cuts are in the cards given weak margins,” analysts at Tudor, Pickering, Holt & Co., a Houston-based energy investment bank, said in a note to clients Wednesday.
Data from the U.S. Energy Information Administration released Wednesday showed that for the week ending May 1 inventories rose by 4.6 million barrels, which was smaller than the 8.67 million barrels build analysts had been expecting, according to FactSet.
Over the last week, WTI has soared more than 50% as easing shelter-in-place restrictions fueled optimism that demand for oil may have bottomed. Given the rapid run higher, Jeff Kilburg, CEO at KKM Financial, said the selling could be due to investors locking in gains.
“Crude oil volatility persists and after a nearly 100% sensational move higher (off of $14 on 4/29) WTI is incurring some profit taking,” he told CNBC. “Additionally, the demand for crude remains quite opaque as re-openings of economies globally occur,” he added.
NationsShares president and chief investment officer Scott Nations noted that the recent run took the WTI contract for June delivery to its highest level since it became the front-month contract, so “the getting probably seemed good.”
An improving demand outlook spurred recent optimism, with prices also supported by producers announcing scale backs in operations. The historic cut from OPEC and its oil-producing allies, which takes 9.7 million barrels per day offline, went into effect on May 1. Norway and Canada have also curbed production.
In the U.S., data from the Energy Information Administration showed that weekly production averaged 12.1 million barrels per day for the week ending April 24, roughly 1 million barrels per day below the all-time high levels from March. ExxonChevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
But some note that as storage continues to fill, the announced shut-ins are still not enough.
“Indications show that for yet another week, storage is continuing to fill up, despite the shut-ins and the output cuts,” noted Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Demand, which indeed now is on the recovery road, is not yet enough to balance the produced oil and that oil has to go somewhere,” he added.

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On Tuesday 5, May 2020

Oil jumps 18% in fifth day of gains on demand recovery and production cuts

Pippa Stevens


Workers operate a drilling rig for an EBR Energy LP natural gas well near Columbus, Texas.
Workers operate a drilling rig for an EBR Energy LP natural gas well near Columbus, Texas.
Scott Dalton | Bloomberg | Getty Images
Oil prices surged on Tuesday as optimism around ongoing production cuts and a recovery in demand with the reopening of economies around the world pushed prices higher.
West Texas Intermediate, the U.S. benchmark, jumped 18.2%, or $3.72, to trade at $24.11 per barrel. The contract gained 3.08% on Monday — closing above $20 for the first time since mid-April — and is on pace for its fifth-straight day of gains for the first time since February. International benchmark Brent crude traded 11.5% higher at $30.33 per barrel, and is also pacing for its fifth-consecutive positive session.
“One thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise,” said Per Magnus Nysveen, Rystad Energy’s head of analysis. The “key reason behind the price strengthening is regional traffic data, which indicate the demand bottom is behind us,” he added.
President Donald Trump weighed in on the jump in prices, writing “Oil prices moving up nicely as demand begins again!” in a tweet on Tuesday morning.
Oil demand has fallen off a cliff as the coronavirus pandemic spread around the globe, forcing billions of people to remain inside and bringing air travel to a near standstill. By some estimates as much as a third of worldwide demand was erased in April.
But with economies gradually starting to reopen — a number of U.S. states, including Florida, began phase one reopening plans on Monday, while millions of Italians will return to work this week — investors believe there will be an uptick in demand.
“The reopening of economies has injected a degree of cautious optimism back into an oil market that plunged to historic lows only weeks ago,” RBC analyst Michael Tran said in a note to clients Tuesday.
“There’s reason to believe the worst of the demand destruction is behind us. Commentary from multiple companies pointed to an improvement in US demand at the end of April, particularly for gasoline,” added Stacey Morris, director of research at Alerian.
The improving demand outlook comes as producers have scaled back production, which has also supported prices. The historic cut from OPEC and its oil-producing allies, which takes 9.7 million barrels per day offline, went into effect on May 1. Norway and Canada have also curbed production.
In the U.S., data from the Energy Information Administration showed that weekly production averaged 12.1 million bpd for the week ending April 24, roughly 1 million bpd below the all-time high levels from March. ExxonChevron and ConocoPhillips are among the companies that have cut production in the face of depressed prices.
Oil’s recent strength barely puts a dent in its historic fall, however. Both WTI and Brent are firmly in a bear market, plunging 68% and 62%, respectively, from their 52-week high levels. The decline has also been swift — WTI’s 52-week high of $65.65 is from Jan. 8.
And traders caution that the road to recovery for oil prices will be long and uncertain. Even with global producers scaling back operations, global storage is rapidly filling and some believe tank tops could be reached within weeks.
“The path to recovery for oil demand in the US and globally is still up in the air,” Morris said.
And Nysveen believes the “market is still vulnerable.”
“The existing problems did not magically get resolved, the storage constraint is still there ... We remain very cautious short term, but our view is that we will see a price recovery on the longer term,” he added.

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On Monday 4, May 2020

Oil turns positive as traders eye demand recovery



GP: Dozens Of Oil Tankers Sit Off The California Coast As Demand For Crude Plummets During Pandemic
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices pared losses to turn higher on Monday, despite worries that a global oil glut may persist even as coronavirus pandemic lockdowns start to ease and amid a fresh spat between the United States and China over the origin of the virus.
Brent crude gained 45 cents, or 1.7%, to trade at $26.89 per barrel, while West Texas Intermediate crude gained 50 cents, or 2.5%, to trade at $20.27 per barrel.
While global oil demand is expected to recover modestly from April lows as countries ease some lockdown measures, the glut created over months in storage facilities will loom over the markets.
“As oil inventories are likely still increasing over the coming weeks, oil prices remain vulnerable to renewed setbacks,” said UBS analyst Giovanni Staunovo.
However, Goldman Sachs was more optimistic than before about the rise of oil prices next year due to lower crude production and a partial recovery in oil demand.
The Wall Street bank raised its 2021 forecast for global benchmark Brent to $55.63 per barrel from $52.50 earlier. The bank hiked its estimate for WTI to $51.38 a barrel from $48.50 previously.
Signs that the output cuts may help reduce the supply overhang have emerged with the narrowing of Brent’s contango - the market structure in which later-dated prices are higher than prompt supplies.
The six-month spread of Brent futures hit its narrowest in almost a month at a discount of around $6.50, up from a record wide discount of almost $14 in late-March, reflecting decreasing oversupply expectations and making storage for later sale less profitable.
The re-emergence of trade tensions between the United State and China also weighed on prices.
Adding to U.S. President Donald Trump’s threat last week to impose tariffs on China, Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory.
“Demand projections have sobered up last week’s enthusiasm and this, together with the prospect of new U.S.-China trade tensions, have weighted heavily on prices today,” said Rystad’s senior oil markets analyst Paola Rodriguez-Masiu.
Oil prices recovered some of their losses after U.S. Treasury Secretary Steven Mnuchin said he expected China to make good on its trade agreement with the United States. He also said he expected oil markets to rebound, and that the Trump administration was looking for more storage capacity.
Concerns about weak manufacturing data in Asia and Europe, assessed by Purchasing Managers’ Index (PMI) of manufacturing companies, also put pressure on oil prices.
In Asia, a series of PMIs from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.
PMIs in France, the euro zone’s second-biggest economy, dropped in April to the lowest level on record. IHS Markit’s Final PMI for German manufacturing, which accounts for about a fifth of Europe’s largest economy, shrank at the fastest rate on record.
The U.S. dollar surged against most major currencies on Monday amid fears that last year’s U.S.-China dispute will be re-ignited.
Oil is usually priced in dollars so a stronger greenback makes crude more expensive for buyers with other currencies.

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On Friday 1, May 2020

Oil higher after US stockpiles grow less than feared, output cuts kick in



GP: Oil storage tanks Carson CA
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

Oil moved higher on Friday, extending the previous session’s gains, buoyed by a lower-than-expected gain in U.S. crude inventories and the start of output cuts in a bid to offset a slump in fuel demand triggered by the coronavirus pandemic.
U.S. crude for June delivery climbed 16 cents, or 0.7%, to $18.98 per barrel, having gained 25% in the previous session.
Brent crude for July delivery, which started trading on Friday as the new front-month contract, fell 46 cents, or 1.7%, to trade at $26.02 per barrel. Brent gained 12% on Thursday.
“This is a second straight week of inventory and product demand figures suggesting a bottoming of the U.S. market,” said Stephen Innes, chief market strategist at AxiCorp.
U.S. Energy Information Administration data showed crude inventories rose by 9 million barrels last week to 527.6 million barrels, less than the 10.6 million-barrel rise analysts had forecast in a Reuters poll.
The other significant support factor on Friday was the official start of output cuts agreed between the Organization of the Petroleum Exporting Countries (OPEC) and other major producers like Russia - a grouping known as OPEC+ - to counter sliding demand.
“OPEC+ quotas are due to kick in on Friday, suggesting short-term supply conditions have likely peaked,” AxiCorp’s Innes said.
The OPEC+ deal covers a cut in production of nearly 10 million barrels per day (bpd), a record level.
That, nevertheless, falls well short of the roughly 30 million bpd of demand that has evaporated amid the coronavirus pandemic as much of the world’s population remains under some form of economic and social lockdown.

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On Thursday 30, April 2020

Oil prices jump 20% on early signs of pick up in fuel demand



GP: Dozens Of Oil Tankers Sit Off The California Coast As Demand For Crude Plummets During Pandemic - 106511787
An aerial view of oil tankers anchored near the ports of Long Beach and Los Angeles amid the coronavirus pandemic on April 28, 2020 off the coast of Long Beach, California.
Mario Tama | Getty Images

Oil prices jumped on Thursday, lifted by signs that the U.S. crude glut is not growing as quickly as expected and of a rise in fuel demand, which has been crushed by the coronavirus.
West Texas Intermediate crude futures climbed $3.29, or 21.9%, to $18.33 per barrel. The U.S. benchmark surged 22% on Wednesday.
Brent was up 13.6%, or $3.07 at $25.61 a barrel in light trading, with the June contract expiring on Thursday, having posted a 10% gain on Wednesday.
U.S. crude inventories grew by 9 million barrels last week to 527.6 million barrels, U.S. Energy Information Administration  data showed, well below the 10.6 million-barrel rise analysts polled by Reuters had expected.
U.S. gasoline stockpiles fell by 3.7 million barrels from record highs the previous week, with a slight rise in fuel demand offseting a rebound in refinery output.
“If we see a continuation of this trend in the coming weeks, it could suggest the worst might be behind the oil market,” ING’s head of commodities strategy Warren Patterson said.
Adding to positive sentiment, China Petroleum & Chemical Corp (Sinopec) said on Thursday its daily sales of refined oil products have risen to more than 90% of levels seen before the coronavirus outbreak.
However, storage concerns continued to weigh on markets with the International Energy Agency warning that global capacity could reach its maximum by mid-June and that energy demand could slump by a record 6% in 2020 due to lockdowns.
“If the already-stretched storage capacity is getting fuller and fuller every week, a rise in prices cannot be sustainable for long as the problem is not really resolved”, said Rystad Energy’s head of oil  markets Bjornar Tonhauge.
“At around 80-90% full, traders keep on seeing the storage glass as half empty when it is not even half full. It’s close to overflowing, even at a lower speed.”
U.S. President Donald Trump said his administration will soon release a plan to help the country’s oil companies, which Treasury Secretary Steven Mnuchin said could include adding millions of barrels of oil to already-teeming national reserves.
Meanwhile, Western Europe’s largest oil producer Norway said it will slash its output from June to December of 2020, the first time in 18 years it has joined other major producers to shore up prices.

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On Wednesday 29, April 2020

Oil jumps more than 30% on hope economy will reopen sooner than expected

Eustance Huang, Pippa Stevens


Oil prices jumped more than 30% on Wednesday following a report that showed a smaller-than-expected build in U.S. inventories, as well as on the hope that economies will reopen sooner than expected.
West Texas Intermediate for June delivery surged 34.2%, or $4.22, to trade at $16.56 per barrel, while international benchmark Brent crude traded 13.3% higher at $23.17.
Optimism that economies will be able to re-open ahead of schedule rose after Gilead said early results of its coronavirus drug trial showed that at least 50% of patients treated with a five-day dosage of antiviral drug remdesivir improved and more than half were discharged from the hospital within two weeks.
Stocks rose following the news, despite a 4.8% contraction for U.S. GDP in the first quarter — the largest contraction since the financial crisis.
Oil prices also got a boost on a smaller-than-expected build in U.S. inventories. According to data from the U.S. Energy Information Administration, crude stockpiles rose by 9 million barrels for the week ending April 24. This was lower than the 11.7 million barrel build analysts polled by FactSet had been expecting.
The data also showed that U.S. production fell by 100,000 barrels per day last week to 12.1 million bpd. This is 1 million bpd below the record 13.1 million bpd production set during the week ending March 13.
“Oil prices rose on Wednesday morning as traders cling to potentially positive indications that the demand-supply gap may somewhat become smaller soon,” Rystad Energy’s global head of oil markets Bjornar Tonhaugen told CNBC.
“Overall we need official announcements for cuts or economies reopening for prices to stabilize. Expect a lot of volatility and price swings either way in coming days as bullish and bearish traders weigh their hopes and fears in a market that is desperate to find something to hang on,” he added.
Oil prices swayed wildly on Tuesday between gains and losses as investors continue to keep an eye on depleting crude storage space amid a dearth in demand. The coronavirus pandemic, which has forced countries around the world to shut their economies temporarily as people are told to stay home, has reduced global demand for crude by as much as a third, according to some estimates.
WTI for June delivery fell 44 cents, or 3.4%, to settle at $12.34 per barrel on Tuesday. International benchmark Brent crude, on the other hand, gained 47 cents, or 2.35%, to settle at $20.46.
In a note dated April 28, Moody’s Investors Service said it was reducing its near-term oil price assumptions for WTI as well as Brent.
“Exceptionally weak short-term prices will persist until production drops enough to ease the strain on storage facilities already operating at or close to full capacity,” said Elena Nadtotchi, vice president and senior credit officer at Moody’s. “Significant supply adjustments in due course should help to balance the market later in 2020, but the pace of the market’s rebalancing and rising oil prices will depend on demand recovery.”
Moody’s price prediction for WTI is currently $30 per barrel this year, and $40 next year. For Brent, it sees prices averaging $35 per barrel in 2020 and $45 in 2021.
Data from the American Petroleum Institute released Tuesday night showed that U.S. crude inventories jumped by 10 million barrels in the week to April 24, bringing the total to 510 million barrels. That was lower than analysts’ expectations of a build of 10.6 million barrels, according to estimates from Reuters.
— CNBC’s Patti Domm Sam Meredith contributed to this report.

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On Tuesday 28, April 2020

Oil falls back into the red in volatile session

Pippa Stevens, Sam Meredith

Oil alternated between gains and losses in a volatile trading session that at one point saw U.S. crude drop more than 20%. Traders continue to eye dwindling storage capacity worldwide, although some of the losses were offset by optimist around reopening of economies.
West Texas Intermediate futures for June delivery gained 6 cents, or 0.47%, to trade at $12.84 per barrel, while international benchmark Brent crude traded 14 cents, or 0.7%, higher at $20.13. Earlier WTI had been down more than 20%, touching a session low of $10.07, while also trading as high as $13.69.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, said that oil moved off its lows on optimism about economies reopening.
“A ramp up in business activity will give a boost in US domestic oil demand, which can postpone filling the country’s oil storage a bit further in the future,” he told CNBC in an email. But he was quick to caution that demand will continue to stay depressed.
“US reopening industrial activity can give a temporary boost to prices as traders need space to breath, but we don’t expect the levels to last. Oil prices will likely average at 20 USD per barrel in the second quarter, with the lowest levels coming sometime in May,” he added.
On Monday, WTI fell 24.56%, or $4.16, to settle at $12.78 per barrel. Brent crude fell 6.76% to settle at $19.99. Each contract is coming off its eighth week of losses in nine weeks.
As demand drops more and more producers have announced production cuts. But some believe it won’t be fast enough to combat the unprecedented fall-off in demand from the pandemic.
Earlier in April, OPEC and its oil-producing allies agreed to a record production cut that will take 9.7 million barrels per day off the market beginning Friday, while Exxon and Chevron are among the U.S.-based companies that have scaled back operations.
“Despite the forthcoming OPEC+ production cuts, more production needs to be cut – particularly in the US and Canada to avoid tank tops by June,” S&P Global Platts’ global head of analysis Chris Midgley told CNBC in an email.
Last week the International Monetary Fund said that the global economy is expected to shrink by 3% this year, which Midgley said will lead to slower recovery in demand for oil.
Prices were also pressured on Monday after the United States Oil Fund, which trades under the ticker ‘USO’ and is popular with retail investors, said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term contracts.
“The move [by the USO] is a recognition of the bleak prospects for the US oil sector in May and June,” said Cailin Birch, global economist at The Economist Intelligence Unit.
WTI and Brent are both on pace for their fourth straight month of losses for the first time since 2017.
Last Monday WTI plunged into negative territory for the first time in history as holders of the contract for May delivery — which was set to expire the next day — scrambled to sell their contract. But with oil demand not expected to recover anytime soon, and with nowhere to store oil, there was no buyer on the other side. In the end, the contract holders had to pay to have it taken off their hands.
And traders are saying the same fate could befall the June contract as it approaches expiration on May 19.
“Will we hit -$100/bbl next month?” Mizuho analyst Paul Sankey wrote in a note to clients last week, to which he answered, “quite possibly.” “The physical reality of oil is that it is difficult to handle, volatile, potentially polluting, and actually useless without a refinery,” he added.

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On Monday 27, April 2020

Oil plunges more than 25%, extending recent losses as storage fills

Pippa Stevens



GP: Oil storage tanks Carson CA
Oil-storage tanks are seen from above in Carson, California, April 25, 2020 after the price for crude plunged into negative territory for the first time in history on April 20.
Robyn Beck | AFP | Getty Images

U.S. oil prices plunged more than 25% on Monday on fears that worldwide storage will soon fill as the coronavirus pandemic continues to roil demand.
West Texas Intermediate for June delivery fell 27%, or $4.58, to trade at $12.36 per barrel, while international benchmark Brent crude traded 8.2% lower at $19.69 per barrel. Each contract is coming off its eighth week of losses in nine weeks.
WTI for July delivery fell more than 11% to $18.84 while the August contract slipped more than 7% to $22, suggesting the Street doesn’t see a meaningful recovery in the next few months.
“The market knows that the storage problem remains and we are on a calculated path to reach tank tops in weeks,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken.”
WTI, the U.S. benchmark, has fallen more than Brent as traders eye the quickly filling tanks at Cushing, Oklahoma, which is the nation’s largest storage facility apart from the Strategic Petroleum Reserve. It’s also where the contract is priced. U.S. stockpiles rose by 15 million barrels to 518.6 million barrels for the week ending April 17, according to the U.S. Energy Information Association.
At closely watched Cushing, oil in storage rose by about 10% in a week to 59.7 million barrels, about 25 million barrels shy of its capacity.
With prices at such depressed levels — WTI and Brent have dropped 72% and 68% this year, respectively — producers are struggling to breakeven. On Sunday, Houston-based Diamond Offshore Drilling filed for bankruptcy protection, and analysts say that more bankruptcies could be coming.
Prices were also pressured after the United States Oil Fund, which trades under the ticker ‘USO’ and is popular with retail investors, said it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term contracts.
Last Monday WTI plunged into negative territory for the first time in history as holders of the contract for May delivery — which was set to expire the next day — scrambled to sell their contract. But with oil demand not expected to recover anytime soon, and with nowhere to store oil, there was no buyer on the other side. In the end, the contract holders had to pay to have it taken off their hands.
And traders are saying the same fate could befall the June contract as it approaches expiration on May 19.
“Will we hit -$100/bbl next month?” Mizuho analyst Paul Sankey wrote in a note to clients last week, to which he answered, “quite possibly.” “The physical reality of oil is that it is difficult to handle, volatile, potentially polluting, and actually useless without a refinery.”
Earlier in April, OPEC and its oil-producing allies agreed to a historic production cut that would take 9.7 million barrels per day of production offline beginning this Friday. A number of U.S. producers, including Exxon and Chevron, have also said they will scale back, but investors fear that the cuts simply won’t be fast enough. In addition to being costly, shutting in wells can also take time.
Citi’s Michael Hsueh said prices won’t rebound until there’s a meaningful recovery in demand.
“We would need to see a recovery in oil product demand in the end user markets, for example motorists, airlines and manufacturers, as countries cautiously relax epidemic mitigation efforts possibly as soon as May, but more so in June,” he said Friday in a note to clients.
“We would need to see a normalisation of oil inventory from abnormally high levels, since oil refiners will choose to drawdown inventory in the first instance, before resuming a normal pace of buying,” he added.
- CNBC’s Michael Bloom and Patti Domm contributed reporting.

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On Friday 24, April 2020

Oil heads for another weekly slide after coronavirus turmoil



GP: Oil rig offshore platform Oil Prices Trade In Negative Numbers For First Time Amid Global Oil Glut
Offshore oil platforms are seen on April 20, 2020 in Huntington Beach, California. Oil prices traded in negative territory for the first time as the spread of coronavirus (COVID-19) impacts demand.
Michael Heiman | Getty Images

Oil prices moved between gains and losses on Friday, following a two-day winning streak that saw West Texas Intermediate gain more than 40%. The turn lower game despite some producers like Kuwait said they would move to cut output swiftly to try to counter the evaporation in global demand  for fuels caused by the coronavirus pandemic.
U.S. oil rose 66 cents, or 4%, to trade at $17.17 per barrel, after surging nearly 20% in the previous session. Brent crude traded 11 cents lower at $21.22.
But barring a sharper jump on the last trading day of the week, prices are heading for their eighth weekly loss in the last nine — one of the most tumultuous weeks in the history of oil trading, with U.S. West Texas Intermediate falling into negative territory to minus $37.63 a barrel on Monday, while Brent thudded to a two-decade low.
“The disruption relating to the coronavirus is set to cause the steepest fall in global GDP since the Second World War,” Capital Economics said in a note, forecasting a 5.5% contraction in global economies this year, dwarfing the 0.5% fall seen during the global financial crisis.
“Once the virus is under control output should rebound, but it will take years to return to its pre-virus path,” it said.
Under a deal agreed between the Organization of the Petroleum Exporting Counties (OPEC) and associated producers like Russia, a grouping known as OPEC+, production cuts equal to 9.7 million barrels of oil per day are due to kick in from May.
But Kuwait’s state news agency KUNA said on Thursday the producer will begin cutting supplies to international markets without waiting for the official start of the OPEC+ deal.
Meanwhile Azerbaijan’s Azeri-Chirag-Guneshli oil project will have to cut output sharply from May onwards as the oil producer fulfills its commitments under the deal to cut production, four sources told Reuters.

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On Thursday 23, April 2020

Oil rallies more than 40% in two days as it comes back from record lows

Pippa Stevens


Oil jumped nearly 20% on Thursday, accelerating its recent rally as the Street eyed continued production cuts and rising U.S.-Iranian tensions.
West Texas Intermediate, the U.S. benchmark, rose 19.7%, or $2.72, to settle at $16.50 per barrel. WTI did close off the highest level of the day, however, after hitting $18.26 in mid-morning trading. Brent crude, the international benchmark, traded 5.4% higher at $21.48 per barrel.
On Wednesday, WTI jumped 19.1% — one of its best days on record. In just two days, from Tuesday’s settle of $11.57 to Thursday’s settle WTI has gained 42.6%. Given oil’s more than 70% decline this year a smaller gain, of course, now accounts for a much larger percentage move.
The rise was fueled in part by President Donald Trump’s threat that the U.S. would “destroy” any Iranian gunboats that harass American ships in the oil-rich Persian Gulf, said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
There was also optimism in the market that with oil prices at historic lows, producers will continue to scale back on production and shut-in wells. Oklahoma regulators said they would help producers shut wells without taking away leases, which Tonhaugen said was “a relief for producers that want to cut some output but were hesitating due to regulatory consequences.”
But oil’s strength over the last two days has done little to dent crude’s enormous 75% loss this year as the coronavirus pandemic sapped about a third of global demand. At the beginning of the year, WTI traded above $60. On Monday for the first time in history, WTI plunged into negative territory, as storage facilities filled up. The May contract was about to expire and therefore was thinly traded, but the move was nonetheless notable.
“The ultimate complication is that storing oil costs money, and storage facilities aren’t unlimited,” Howard Marks, co-founder of Oaktree Capital Management, told CNBC in an email. “Right now storage is scarce and thus expensive, so it’s not worth it to buy oil today and store it. The cost of storing exceeds the value today; thus the price is negative.”
As the June WTI contract nears expiration on May 19, some are warning that it could plunge in the same way that the May contract did.
“June could see storage tanks struggling to come off highs, in which case the days leading to expiry next month could see yet another squeeze,” Francesco Martoccia, senior associate in commodity research at Citi, wrote in a note to clients.
Data from the U.S. Energy Information Administration on Wednesday showed that storage in Cushing, Oklahoma — the hub for WTI delivery — rose by about 10% in a week to 59.7 million barrels, about 25 million barrels shy of its capacity.
Traders say this will lead to natural shut-ins since there will soon be nowhere for oil to go.
“There is an inflection point coming for Cushing stocks (and global stocks), but their exact timing is tricky. US oil production is falling quickly even now,” Martoccia said.
But supply is only one side of the equation. Tonhaugen warned that until demand recovers any gains could be short term.
“The only concrete development that could give prices a boost that can last is either a rebound in demand, when lockdowns are scrapped and industrial activity ramps up, or a generous and unprecedented production cut, in addition to what OPEC+ decided,” he said.
- CNBC’s Michael Bloom, Patti Domm and Tanvir Gill contributed reporting.

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