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Oil declines as US stockpile gains counter Nigeria disruption

Wed, May 11 2016, 05:56 GMT – Bloomberg

Oil declined as rising US crude stockpiles countered supply disruptions in Nigeria, Africa’s second-biggest producer.

Futures slid as much as 0.7 per cent in New York after advancing 2.8 per cent Tuesday.

US inventories increased by 3.45 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles expanded from the highest level since 1929.

Royal Dutch Shell Plc and Chevron Corp are evacuating workers from the Niger Delta because of deteriorating security, a union official said.

Oil has rebounded after slumping earlier this year to the lowest level since 2003 on signs the global gut is easing as US output declines. Producers in Canada including Shell and ConocoPhillips are beginning the process of restarting operations after the easing of wildfires that curbed supply.

“The impact of supply disruptions at the moment is a lot less given the very large stockpiles and supply surplus, but if we were to see a prolonged outage then it would help to redress the significant increase we saw in Iranian and Iraqi production last month,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone.

“The market has rallied quite a long way amid the US production cuts.”

West Texas Intermediate for June delivery fell as much as 32 US cents to US$44.34 a barrel on the New York Mercantile Exchange and was at US$44.45 at 12:59 pm Hong Kong time.

The contract gained US$1.22 to close at US$44.66 on Tuesday, paring its 2.7 per cent loss the previous session. Total volume traded was about 34 per cent below the 100-day average. Prices have gained about 70 per cent from a low in February.

Brent for July settlement lost as much as 29 US cents, or 0.6 per cent, to US$45.23 a barrel on the London-based ICE Futures Europe exchange. The contract climbed US$1.89 to US$45.52 on Tuesday. The global benchmark crude was at a premium of 22 US cents to WTI for July.

Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased by 1.46 million barrels last week, the API said Tuesday, according to a person familiar with the figures.

Nationwide stockpiles probably expanded by 750,000 barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report.

 

Sources:  Bloomberg

Oil trades near 2-week low as Canada wildfire threat lessens

Tue, May 10 2016, 06:00 GMT Bloomberg

Crude traded near a two-week closing low as wildfires in Canada moved away from the main oil-sands facilities, reducing the likelihood of a long period of reduced production levels.

Futures fell as much as 0.6 per cent in New York. The wildfires led to cuts equivalent to about 1 million barrels a day, or 40 per cent of the region’s production, based on IHS Energy estimates. A shift in winds away from the facilities and cooler weather limited damage to producers.

Once fires in Alberta are under control, the majority of oil sands mining projects could be back to normal production levels in about a week, Morgan Stanley said.

Oil has rebounded after slumping to the lowest level since 2003 earlier this year amid signs the global oversupply will ease as US output declines. While American production has dropped, the Organization of Petroleum Exporting Countries has boosted supply to more than 33 million barrels a day, underpinned by gains from Iran and Iraq.

West Texas Intermediate for June delivery fell as much as 25 US cents to US$43.19 a barrel onthe New York Mercantile Exchange and was at US$43.24 at 7:28 am Tokyo time.

The contract dropped US$1.22 to close at US$43.44 on Monday, the lowest in two weeks. Total volume traded was about 65 per cent below the 100-day average.

Brent for July settlement slipped US$1.74 to end the session at US$43.63 a barrel on the London-based ICE Futures Europe exchange on Monday. WTI for July closed at a 40-US-cent premium to Brent.

Saudi Arabia, the world’s largest crude exporter, replaced its oil minister Ali al-Naimi over the weekend with the chairman of state energy company Saudi Arabian Oil Co Khalid Al-Falih.

Speaking in January at the World Economic Forum in Davos, Mr Al- Falih indicated that Saudi Arabia plans to act vigorously to defend its market share and exports as the market re-balances.

Sources:  Bloomberg

Oil rally powers on as Asian index futures climb after payrolls

Mon, May 09 2016, 05:37 GMT Bloomberg

Crude oil extended gains into a fourth day as Canada’s wildfires crimp production out of the nation’s main energy hub, while Asian index futures foreshadowed advances, with US payrolls data failing to bolster prospects of a June interest-rate hike from the Federal Reserve.

Brent and West Texas Intermediate crude jumped more than 2 per cent as Monday trading got under way, while copper futures dropped amid evidence imports into China, the world’s top industrial metals consumer, slumped last month from a record high. Futures on stock gauges in Australia and Hong Kong rallied with US stocks at the end of last week, and Japanese contracts signaled gains in Osaka and Chicago. Gold retreated.

“There is plenty of news for market participants to digest,” Chris Weston, chief markets strategist in Melbourne at IG Ltd, said in an e-mail to clients.

“Asia-based traders will have their chance to react to the below-par payrolls data, so one should watch the dollar intently. The market is still highly skeptical around future hikes, with the next interest-rate hike not fully priced in until June 2017.”

The fires that raging through Canada’s Alberta province have spread toward the oil-sands facilities north of Fort McMurray, knocking out an estimated 1 million barrels of production at a time when crude traders are fretting about a global supply glut.

Investors trimmed bets on the Fed raising benchmark rates next month after nonfarm payrolls rose by 160,000 workers, below what economists had anticipated, while the jobless rate held at 5 per cent. Meanwhile, trade and foreign-currency reserves data at the weekend provided evidence of stability in China’s slowing economy.

Stocks

New Zealand’s S&P/NZX 50 Index, the first major stock index to start trading each day, slipped 0.3 per cent as of 8:28 am Tokyo time, snapping a two-day advance. Futures on the S&P 500 Index climbed 0.2 per cent following a late-in-the-day rally in US equities Friday, with the US benchmark driven up 0.3 per cent by advances in mining and technology shares.

Futures on Australia’s S&P/ASX 200 Index added 0.4 per cent in most recent trading, with markets in South Korea, Indonesia and Thailand to resume Monday following two-day breaks.

Contracts on the Hang Seng Index in Hong Kong climbed 0.4 per cent at the end of last week, while those on the Hang Seng China Enterprises Index advanced 0.6 per cent. FTSE China A50 Index futures climbed less than 0.1 per cent late on Friday.

Nikkei 225 Stock Average futures were bid for 16,150 in the Osaka pre-market, from 16,080 at their close on Friday, while yen-denominated contracts on the Japanese index added 0.4 per cent early Monday to 16,150.

The probability of the Fed hiking borrowing costs at its meeting next month fell to 8 per cent after the jobs data, from 12 per cent a week earlier.

The US dollar’s reaction to the jobs report was muted by comments from Fed Bank of New York President William Dudley. While the data was “a touch softer, maybe, than what people were expecting,” Mr Dudley said he wouldn’t put a lot of weight on it and that two rate hikes were still a reasonable expectation for 2016. The Fed reduced its outlook for rate increases this year to two from four in March.

The odds “seem too low for a ‘live’ meeting, but it highlights the huge difficulty facing the Fed,” Con Williams, a rural economist in Wellington at ANZ Bank New Zealand Ltd, said in an e-mail to clients.

“Data releases apart, for a central bank that prides itself on nurturing market expectations, it has a mountain to climb to raise rates in June if it deems that appropriate.”

Minutes of the Bank of Japan’s March meeting are due Monday, along with data on Japanese earnings and Australian job advertisements. Taiwan reports on trade, while Thailand and Singapore issue data on foreign reserves. China is scheduled to report on foreign direct investment.

Sources:  Bloomberg

Oil stable as production outages offset impact of stronger dollar

[SINGAPORE] Oil prices were steady on Friday after a run up on supply disruptions, especially in the Americas, where wildfires continue to rage near Canada’s huge oil sand fields, tightening a market suffering global oversupply.

The disruptions helped offset the impact of a stronger dollar this week, which potentially reduces demand for crude as it makes dollar-traded imports more expensive for countries using other currencies.

International benchmark Brent crude futures were trading at US$44.95 per barrel at 0203 GMT, 6 cents below their last settlement but flat with its first close this week.

US West Texas Intermediate (WTI) crude futures were at US$44.17, down 15 cents but over 1 per cent above this week’s first close. “Supply disruptions and closures helped push crude oil prices higher, despite the stronger US-dollar,” ANZ bank said on Friday.

A massive fire around the Canadian oil city of Fort McMurray has forced the evacuation of all its residents and the closure of 690,000 barrels per day (bpd) worth of production out of Canada’s total oil sands output of 2.2 million bpd.

Adding to the production outage in Canada is an ongoing decline in US output. “While the wildfire in the oil-sands regions of Canada is still wreaking havoc with many producers, US oil output continues to feel the impact of low prices,” ANZ said.

Data by the US Energy Information Administration (EIA) shows that U.S. crude oil output has fallen by 410,000 bpd this year, and by 800,000 bpd since mid-2015, as many producers succumb to a rout that saw prices tumble 70 per cent between mid-2014 and early-2016.

Analysts said that the hits to North American output, combined with disruptions in Latin America, were contributing to a fast erosion of global oversupply that peaked as high as 2 million barrels bpd last year.

“Unplanned oil supply disruptions have been a key element so far this year that have contributed to a tighter oil market than was otherwise expected,” said analyst Guy Baber of Simmons & Co.

Sources:  REUTERS

Oil prices drift as US crude output falls

Oil prices drifted sideways on Wednesday with US futures slightly higher but London slipping amid news that US oil output fell by another 100,000 barrels a day last week.

U.S crude and gasoline stockpiles also increased significantly – a bearish signal for the market – but US prices were supported by a major wildfire in Alberta, Canada, which has threatened production from the oil sands region.

US benchmark WTI crude for delivery in June finished the day at US$43.78 a barrel, up 13 cents from Tuesday.

In London, Brent crude for July dropped 35 cents to US$44.62.

Oil output sank last week by more than 100,000 barrels a day to its lowest level since September 2014 as producers cut back in the face of low import prices, the US Energy Department reported.

Domestic production dropped to 8.83 million barrels a day in the week to April 29, compared to 8.94 million a week earlier, and was down 800,000 barrels a day from the peak last June, department data showed.

US crude imports in the week rose by 110,000 barrels a day, showing the competing pressure from Saudi Arabia and other producers that have slashed prices to hold and build market share.

Meanwhile, US commercial crude inventories piled higher, rising 2.8 million barrels, and gasoline inventories mounted as well, as local supplies continued to outpace demand growth.

“We continue to tread water below our five-month highs,” Gene McGillian of Tradition Energy said.

“The expectation that we are going to see further decline in US production levels and increased demand is keeping the market supported.”

Wildfires are burning out of control in the Alberta oil sands region, which mines and ships heavy crude south to the US market.

“The reports of the wildfire in Canada started some worry that some production in Canada might be impacted,” Mr McGillian said.

The monster fire around the Fort McMurray hub has forced tens of thousands of residents to flee.

Oil companies crucial to the region such as Suncor, Syncrude and Shell have reduced operations to facilitate the evacuation of non-essential employees.

Sources: AFP

Oil settles below US$44 in New York before US stockpile report

Oil tumbled to below US$44 a barrel ahead of US government data forecast to show nationwide crude supplies rose last week.

Futures fell 2.5 per cent in New York, declining for a third day after reaching a five-month high. Inventories are forecast to have increased by 750,000 barrels last week, according to the median estimate in a Bloomberg survey before an Energy Information Administration report Wednesday.

Cushing crude supplies probably rose by 1.3 million barrels, according to a Bloomberg proprietary model, even as some analysts expect a drop.

“The price of crude got ahead of itself,” Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital LLC in Miami, said by telephone.

“The supply issue is definitely there. That’s not something that is going to change. Now people are starting to get worried about demand.”

West Texas Intermediate for June delivery dropped US$1.13 to settle at US$43.65 a barrel on the New York Mercantile Exchange after falling to as low as US$43.32 a barrel. Total volume traded Tuesday was about 3 per cent above the 100-day average.

Brent for July settlement declined 86 US cents to end the session at US$44.97 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a premium of 56 US cents to WTI for July.

There is “concern that the bull market has run its course for the time being,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone.

“People are waiting for the market to get back into equilibrium and we are quite a ways from that, so I’m not surprised we’re seeing a little bit of a pullback.”

Prices remain about 60 per cent below their peak in mid-2014 as the global oversupply persists. The Organization of Petroleum Exporting Countries raised production last month, with Iraq and Iran leading the gains, according to data compiled by Bloomberg. Iran’s representative to Opec, Mehdi Asali, said commodity prices including oil won’t go up anytime soon and the surplus of crude and gas could last at least five years, according to the country’s Shana news service.

Supplies at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, are expected to have increased by 1.3 million barrels in the week ended April 29, according to a Bloomberg proprietary model.

Analysts surveyed by Bloomberg, however, are expecting a decline at Cushing, with four forecasting an average 250,000-barrel drop. Stockpiles at Cushing rose in the week ended April 22 after falling the two previous weeks.

“I can see WTI down to US$40 if there are no new fundamentals,” Mr Hiley said.

Sources:  BLOOMBERG

Crude IMF & World Bank Forecast Chart

World Bank Crude Oil Forecast.

world-bank-crude-oil-price-forecast

IMF Crude Oil Forecast.

imf-crude-oil-price-forecast

 

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