Showing posts with label Oil Prices. Show all posts
Showing posts with label Oil Prices. Show all posts

Mar 31, 2020

Oil Pices: Oil prices are on track for their worst ever quarter as coronavirus slashes demand

Sam Meredith



GP: Pumpjacks in Tatarstan, Russia 200331 EU
A pumpjack near the Yamashinskoye rural settlement in the Almetyevsk District.
Yegor Aleyev | TASS via Getty Images

Oil prices are on pace to register their worst quarterly performance on record, as the coronavirus pandemic continues to crush global demand for crude.
A public health crisis has meant countries around the world have effectively had to shut down, with many governments imposing draconian measures on the daily lives of hundreds of millions of people.
The restrictions have created an unprecedented demand shock in energy markets, ramping up the pressure on companies and governments reliant on crude sales.
To date, more than 787,000 people have contracted COVID-19 worldwide, with 37,829 deaths, according to data compiled by Johns Hopkins University.
International benchmark Brent crude traded at $23.36 a barrel Tuesday morning, up more than 2.6%, while U.S. West Texas Intermediate (WTI) stood at $21.26, more than 5.8% higher.
Brent futures fell to their lowest level in 18 years on Monday and WTI ended the previous session below $20, before both benchmarks pared some of their losses on the final trading day of the first quarter.
To date, Brent futures have fallen more than 65% through the first three months of 2020, putting the benchmark on track to register its worst quarter through our history to 1990, according to data compiled by CNBC.
Brent is also on pace to record its worst-ever monthly performance, down over 54% in March alone.
Meanwhile, WTI futures slumped more than 67% for the first quarter, putting it on track for its worst-ever quarterly performance back to when the contract began trading in 1983.
WTI is also down over 55% month-to-date, on pace for its worst-ever monthly performance, too.

Storage capacity likely to ‘hit its limit by midyear’

Oil consumption has collapsed by at least 25% compared to 2019 levels of 100 million barrels per day (b/d), according to analysts at Eurasia Group, with severe restrictions on global movement and most retail in lockdown.
“With demand collapsing but supply rising after OPEC and non-affiliated Russia failed to reach a production cut agreement in early March, global inventories could reach their maximum capacity within weeks,” Eurasia Group analysts said in a research note published Monday.
“Even if OPEC and other producers start restricting their output again soon, the supply overhang from the global lockdown is so big that storage capacity will likely hit its limit by midyear,” they added.
Earlier this month, oil producer group OPEC and its allied partners, sometimes referred to as OPEC+, failed to agree on extending production cuts beyond March 31.
It has led to concerns of a supply surge from April 1, with Saudi Arabia and the United Arab Emirates both pledging to ramp up production.
Industry experts have warned that plans to ramp up production could prompt a wave of bankruptcies and investment cuts in the U.S. which, in turn, would have a noticeable impact on shale production.
On Monday, U.S. President Donald Trump and Russian President Vladimir Putin held talks to discuss Moscow’s ongoing oil price war with OPEC kingpin Saudi Arabia.
The Kremlin said Trump and Putin had agreed to have their top energy officials discuss stabilizing oil markets.
Trump had initially welcomed the declaration of a price war between Saudi Arabia and Russia, hailing lower oil prices as good news for U.S. consumers.

Jun 29, 2018

Oil hits new multi-year high as market tightens on lost supply I Oil Prices I CNBC

cnbc.com

Oil hits new multi-year high as market tightens on lost supply

CNBC


Oil prices rose on Friday as U.S. sanctions against Iran threatened to remove a substantial volume of crude from world markets at a time of rising global demand.
U.S. West Texas Intermediate (WTI) crude ended Friday's session up 70 cents, or 1 percent, at $74.15, its best closing price since Nov. 24, 2014. WTI hit a session peak of $74.46, also its highest level since November 2014.
Brent crude rose $1.59, or 2 percent, to $79.44, just shy of a 3½-year closing price.
"All the potential shortfalls could outstrip the production increase agreed to by OPEC and Russia," said Dominick Chirichella, Director of Risk Management at EMI DTN. There's a risk that supplies from Iran could be cut further as there's pressure on other countries to join the United States in sanctions, he said.
Iran is the fifth-largest oil producer in the world, pumping about 4.7 million barrels per day (bpd), or almost 5 percent of world's oil, much of it to China and other energy-hungry nations such as India.
The U.S. government wants to stop Tehran exporting oil to cut off a vital supply of finance and hopes other big oil producers in the Organization of the Petroleum Exporting Countries and Russia will make up for the deficit.
But the world oil market is already tight and many analysts and big investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.
But the world oil market is already tight with unplanned disruptions in Canada, Libya and Venezuela removing supply.
Many analysts and investors think strict enforcement of U.S. sanctions against Iran will push up prices sharply.
"It is becoming increasingly clear that Saudi Arabia and Russia will struggle to compensate for potential losses in oil production from the likes of Venezuela, Iran and Libya," said Abhishek Kumar, analyst at Interfax Energy in London.
Vienna-based consultancy JBC Energy said the stronger the implementation and enforcement of U.S. sanctions, the higher the oil price will go. "Triple-digit oil prices are not off the table," JBC said.
A Reuters survey of 35 economists and analysts on Friday forecast Brent would average $72.58 a barrel in 2018, 90 cents higher than the $71.68 forecast in last month's poll and compared with the $71.15 average so far this year.
North American oil stocks have fallen as an outage at Canada's Syncrude has locked in more than 300,000 bpd of production. The outage is expected to last at least through July, according to operator Suncor Energy.
Outside North America, record demand and voluntary supply cuts led by OPEC have pushed up prices. Unplanned supply disruptions from Libya to Venezuela have further tightened the market.
Libya's National Oil Corporation (NOC) said on Friday it expects to declare force majeure on loadings from the eastern ports of Zueitina and Hariga from July 1, raising losses in output from a power struggle over oil exports to 800,000 bpd
OPEC and Russia have said they will raise output to meet demand and replace crude from unplanned disruptions but many analysts think that the extra supply may be inadequate.
Major buyers of Iranian oil, including Japan, India and South Korea, have indicated that they may stop importing Iranian crude if U.S. sanctions are imposed.
Until then, however, Asia is buying as much Iranian oil as possible. Imports of Iranian crude oil by major buyers in Asia rose in May to the highest in eight months. China, India, Japan and South Korea last month imported 1.8 million bpd from Iran, up 15 percent from a year ago.
— CNBC's Tom DiChristopher contributed to this report.

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