Tag Archives: Crude Oil Markets

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U.S. crude oil price tops $80 a barrel, the highest since 2014

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West Texas Intermediate crude futures, the U.S. oil benchmark, crossed $80 per barrel on Friday for the first time since November 2014 as demand rebounds while supply remains tight.

The U.S. oil benchmark jumped more than 2% to trade as high as $80.09 on Friday. Brent crude, the international benchmark, advanced 1.7% to $83.32 per barrel.

Oil prices have surged in recent days alongside a broader rally in commodities including natural gas and coal amid an energy crunch that’s sweeping Europe and Asia.

“The $80 print became an inevitability,” said John Kilduff, partner at Again Capital. “Despite the rise in U.S. crude oil inventories in this week’s report, the global market remains tight and in a supply deficit. … Unless and until OPEC+ acts to meaningfully increase supplies, prices will grind higher still.”

WTI is on track for its seventh straight positive week, its longest weekly winning streak since December 2013. For the year both WTI and Brent are now up more than 60%. Natural gas was little changed on Friday, dipping slightly to $5.67 per million British thermal units. Prices have more than doubled since the beginning of the year.

“In what has been another blockbuster week, oil prices are rising further as the global energy supply tightness squeezes fuel availability,” Louise Dickson, senior oil markets analyst at Rystad Energy, said Friday.

Oil prices got a boost at the start of the week after OPEC and its allies opted to stick to a prior agreement to raise production by a modest 400,000 barrels per day in November despite the recent fuel shortage. Ahead of that meeting, some thought the group might opt to bring more production online to meet rising demand. Crude also got a boost Thursday after the Department of Energy said it has no current plans to tap the Strategic Petroleum Reserve in an effort to cool rising prices.

“DOE continues to monitor global energy market supply and will work with our agency partners to determine if and when actions are needed,” the agency said in the statement. “All tools in the tool box are always under consideration to protect the American people, there is no immediate plan to take those actions at this time.”

Higher oil prices translate to higher prices at the pump, and consumers across the U.S. are paying the most for gasoline in seven years. The national average for a gallon of gas stood at $3.26 on Friday, according to AAA, which is more than $1 higher than last year.

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Turbulence fueling unprecedented trend in energy and stocks: Bespoke

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An unprecedented trend appears to be underway between the booming energy sector and the turbulent stock market.

Over the past ten trading days, the Bespoke Investment Group’s Paul Hickey finds energy has never performed this well while the S&P 500 is trading lower.

“The energy sector is up close to 17% and the S&P 500 is down,” the independent research firm’s co-founder told CNBC’s “Trading Nation” on Tuesday. “This is an unheard of situation that we’re in.”

He highlights the relationship in a special chart with data going back to 1990.

“You have a big disparity where one end of the rubber band is stretched way to the left and the other is stretched way to the right,” he noted. “When you’ve seen that happen, you tend to see a reversion to the mean.”

He also mentions the Energy Select Sector SPDR Fund is up 3% in three of the last four trading days. It’s a longer-term bullish trend, according to Hickey, that has happened only a few times in about the last two decades.

“Following prior periods of similar strength in XLE, the sector has seen short-term profit-taking, but a year later it was higher all five times,” Hickey wrote to investors this week. “Performance of the broader equity market following similar surges in the Energy sector was uniformly weak in the short-term, but uniformly positive six and twelve months later.”

On Tuesday, the XLE rose 0.58% to close at $55.04, and is up more than 13% over the past month.

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Business

Correction may strike stocks after record September: Tom Lee

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Longtime market bull Tom Lee is predicting a profitable period for investors in September.

According to Lee, the S&P 500 is positioned to surge more than 100 points this month. However, he warns the positive momentum has an expiration date.

“We could have a really strong rally in September,” the Fundstrat Global Advisors’ co-founder and head of research told CNBC’s “Trading Nation” on Friday. “We didn’t think there was a window for a 10% correction for most of 2021. The window where we think you could start to have potentially a 10% pullback is October.”

Lee attributes the vulnerability to growing fiscal and monetary policy risks — as well as uncertainty surrounding the pandemic and flu season.

“We get that much closer to tapering,” the CNBC contributor said. “That’s really when the debt ceiling rhetoric comes back, and if there are going to be concerns about the debt ceiling, the bond market could panic.”

When there’s upheaval in the bond market, it typically spills to stocks. But in the meantime, Lee indicates he would be a buyer.

He sees uncertainty regarding Covid-19 delta cases and its economic impact pushing the Federal Reserve to stay dovish for longer. According to Lee, it’s a recipe for new market highs.

“The U.S. is still in an underlying expansion. This is a risk on formula,” said Lee, who ran equity strategy for JPMorgan Chase from 2007 until 2014.

He cites a crude oil price comeback and bitcoin’s return above $50,000 as evidence.

Lee’s top market picks still involve trades most tied to the economic recovery. He particularly likes energy, and materials. He also sees opportunities in FAANG stocks, otherwise known as Facebook, Amazon, Apple, Netflix and Alphabet.

“My guess is that quite a number of investors thought we’d have a 10% correction in August,” Lee said. “So, money was taken off the table. Usually when people re-risk they start buying cyclical and epicenter ideas.”

Lee believes the S&P 500 could exceed 4,650 in September — 50 points above his year-end target. On Friday, the index closed at 4,535.43 and is about a quarter of a percent below its record high.

Disclosure: Tom Lee owns bitcoin.

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Business

White House Urges OPEC to Boost Oil Output Amid Covid-19 Economic Recovery

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WASHINGTON—The White House urged OPEC to boost oil production Wednesday, saying recent planned increases are insufficient as countries around the world seek to emerge from the Covid-19 pandemic.

National security adviser Jake Sullivan said in a statement that recent planned production increases by the Organization of the Petroleum Exporting Countries would “not fully offset previous production cuts” made by OPEC and its oil-producing allies during the pandemic.

“At a critical moment in the global recovery, this is simply not enough,” Mr. Sullivan said.

Brent crude, the international oil benchmark, fell 0.8% to $70.04 a barrel after the White House announcement. Oil prices have experienced volatility in recent days due to concerns over the Delta variant of Covid-19.

In July, OPEC and a group of Russian-led oil producers agreed to unleash millions of barrels of crude over the next two years, committing to restore all the cuts they made at the start of the Covid-19 pandemic. The group chose to move gradually, with monthly installments of new oil through the latter end of 2022.

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Oil Prices Tumble on Worries Over China Delta Variant Outbreak

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The price of oil and other key industrial commodities slid Monday after Chinese government measures to halt the spread of the Delta variant spooked investors about global energy demand.

Brent crude oil, the global benchmark, fell 4% to $67.87 a barrel and West Texas Intermediate futures—the main U.S. benchmark—were down 4.3% at $65.38 a barrel. At those prices, both gauges were set for their lowest close in around 2½ months.

The spread of Delta variant Covid-19 cases has raised alarms in China and other East Asian countries. Beijing health authorities said last week that the city would cancel all large-scale exhibitions and events for the remainder of August.

China is the world’s biggest importer of oil and “while some countries seem to be flipping to learning to live with the coronavirus, it is adopting a zero-tolerance policy” with stricter travel rules and quarantine measures, said Norbert Rücker, head of economics at Swiss private bank Julius Baer .

Customs data published over the weekend show that China imported less crude per day in July than in June and those figures were also weighing on prices, according to analysts at Dutch bank ING.

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