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Business

Oil falls ahead of OPEC+, U.S. Federal Reserve meetings

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SINGAPORE, Jan 30 (Reuters) – Oil prices fell on Monday, giving up earlier gains, as global producers this week will likely keep output unchanged during a meeting this week and investors are cautious ahead of a U.S. Federal Reserve meeting that may spur market volatility.

Brent crude futures fell 20 cents, or 0.2%, to $86.46 a barrel by 0435 GMT while U.S. West Texas Intermediate crude was at $79.57 a barrel, down 11 cents, or 0.1%.

Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known collectively as OPEC+, are unlikely to tweak their current oil output policy when they meet virtually on Feb. 1.

Still, an indication of a rise in crude exports from Russia’s Baltic ports in early February caused Brent and WTI to post their first weekly loss in three last week.

“No change to the OPEC+ output is expected to be announced at this week’s meeting and we expect outlook commentary from the U.S. Fed to be the key driver of the outlook in the near term,” said National Australia Bank analysts in a research note.

Ahead of the Federal Reserve’s policy meeting scheduled on Jan. 31-Feb. 1, the market broadly expects the U.S. central bank to scale back rate hikes to 25 basis points (bps) from 50 bps announced in December, which may ease concerns of an economic slowdown that would curb fuel demand in the world’s biggest oil consumer.

Oil prices earlier gained amid tensions in the Middle East following a drone attack in oil producer Iran and as China, the world’s biggest crude importer, pledged over the weekend to promote a consumption recovery which would support fuel demand.

“It is not really clear yet what’s happening in Iran, but any escalation there has the potential to disrupt crude flow,” said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.

“We have Russia on the supply side and China on the demand side. Both can swing by more than 1 million barrels per day above or below expectation,” said Grasso, formerly an oil trader with Italy’s Eni.

“China seems to have surprised the market in terms of how fast they are coming out of zero COVID while Russia has surprised in terms of resilience of export volume despite the sanctions.”

China resumes business this week after its Lunar New Year holidays. The number of passengers travelling prior to the holidays rose above levels in the past two years but is still below 2019, Citi analysts said in a note, citing data from the Ministry of Transport.

“Overall international traffic recovery remains gradual, with high-single to low-teens digits to 2019 level, and we expect further recovery when outbound tour group travel resumes on Feb. 6,” the Citi note said.

Reporting by Florence Tan and Emily Chow; Editing by Muralikumar Anantharaman and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

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Business

Oil settles mixed after hitting 7-week high on strong China outlook

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  • Brent, U.S. crude hit highest since early December
  • G7 seeks two price caps for Russian oil products
  • India’s crude imports hit 5-month high in December

NEW YORK, Jan 23 (Reuters) – Oil prices settled mixed on Monday, retreating as investors cashed in on a jump to a seven-week high on optimism about a possible recovery in demand of top oil importer China as the economy recovers this year from pandemic lockdowns.

Brent crude settled 56 cents higher at $88.19 a barrel. The session high was $89.09 a barrel, the highest since Dec. 1. U.S. West Texas Intermediate (WTI) crude settled 2 cents lower at $81.62 a barrel, off the session high $82.64 a barrel, the highest since Dec. 5.

Prices pulled back at the end of the session as investors took profits, said Phil Flynn, analyst at Price Futures Group.

Still, the market wants to preserve long positions in case Chinese growth resumes, said Sukrit Vijayakar, director of Mumbai-based energy consultancy Trifecta.

Data shows a solid pick-up in travel in China after COVID-19 curbs were eased, ANZ commodity analysts said in a note, pointing out that road traffic congestion in the country’s 15 key cities so far this month is up 22% from a year ago.

Crude oil prices in much of the world’s physical markets have started the year with a rally as China has shown signs of more buying and traders have worried that sanctions on Russia could tighten supply.

“While the (China) reopening itself will no doubt prove to be complicated, particularly over the holiday season, early indications suggest there has been a rise in activity, meaning the economy could perform better,” said OANDA analyst Craig Erlam.

Brent is expected to move back into a range between $90 and $100 as the oil market tightens, Erlam said.

Demand for products has lifted the oil market and refining margins, Flynn said. The 3-2-1 crack spread , a proxy for refining margins, rose to $42.18 per barrel on Monday, the highest since October.

The European Union and Group of Seven (G7) coalition will cap prices of Russian refined products from Feb. 5, in addition to the price cap on Russian crude in place since December and an EU embargo on imports of Russian crude by sea.

The G7 has agreed to delay a review of the level of the price cap on Russian oil to March, a month later than originally planned, to provide time to assess the impact of the oil products price cap.

In India, crude oil imports rose to a five-month high in December, government data showed on Monday, as refiners stocked up discounted Russian fuel amid a steady increase in consumption in the country.

Reporting by Stephanie Kelly in New York; additional reporting by Ron Bousso in London, Mohi Narayan in New Delhi and Sonali Paul in Melbourne
Editing by David Goodman, David Gregorio and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

Stephanie Kelly

Thomson Reuters

A New-York-based correspondent covering the U.S. crude market and member of the energy team since 2018 covering the oil and fuel markets as well as federal policy around renewable fuels.

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Business

Oil jumps 3% on demand optimism as China borders reopen

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  • China reopens borders in final farewell to zero-COVID
  • Hopes of slower U.S. interest rate hikes boost risk sentiment
  • Oil’s gain follows more than 8% drop last week

LONDON, Jan 9 (Reuters) – Oil extended gains on Monday, rising more than 3% after China’s move to reopen its borders boosted the outlook for fuel demand and overshadowed global recession concerns.

The rally was part of a wider boost for risk sentiment supported by both the reopening of the world’s biggest crude importer and hopes for less-aggressive increases to U.S. interest rates, with equities rising and the dollar weakening.

Brent crude was up $2.38, or 3.03%, at $80.95 a barrel by 1312 GMT while U.S. West Texas Intermediate crude rose $2.36, or 3.2%, to $76.13.

“If recession is avoided, global oil demand and demand growth will remain resilient,” said Tamas Varga of oil broker PVM, adding that developments in China were the main reason for Monday’s gains.

“The gradual reopening of the Chinese economy will provide an additional and immeasurable layer of price support,” he said.

The rally followed a drop last week of more than 8% for both oil benchmarks, their biggest weekly declines at the start of a year since 2016.

As part of a “new phase” in the fight against COVID-19, China opened its borders over the weekend for the first time in three years. Domestically, about 2 billion trips are expected during the Lunar New Year season, nearly double last year’s and 70% of 2019 levels, Beijing says.

In oil-specific developments, China issued a second batch of 2023 crude import quotas, according to sources and documents reviewed by Reuters, raising the total for this year by 20% from the same time last year.

Despite Monday’s oil rebound, there is still concern that the massive flow of Chinese travellers could cause another surge in COVID infections while broader economic concerns also linger.

Those concerns are reflected in oil’s market structure. Both the near-term Brent and U.S. crude contracts are trading at a discount to the next month, a structure known as contango, which typically indicates bearish sentiment. ,

Reporting by Alex Lawler
Additional reporting by Florence Tan and Jeslyn Lerh
Editing by David Goodman

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Business

Oil rises on hopes for China’s economy

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  • Reopening of Chinese economy buoys demand expectations
  • Rising interest rates and recession fears weigh
  • U.S. to begin purchases for strategic reserve

LONDON, Dec 19 (Reuters) – Oil rose on Monday after falling by more than $2 a barrel in the previous session as optimism over the Chinese economy outweighed concern over a global recession.

China, the world’s top crude oil importer, is experiencing its first of three expected waves of COVID-19 cases after Beijing relaxed mobility restrictions but said it plans to step up support for the economy in 2023.

“There is no doubt that demand is being adversely influenced,” said Naeem Aslam, analyst at brokerage Avatrade.

“However, not everything is so negative as China has vowed to fight all pessimism about its economy, and it will do what it takes to boost economic growth.”

Brent crude gained 65 cents, or 0.8%, to $79.69 a barrel by 1248 GMT while U.S. West Texas Intermediate crude rose 85 cents, or 1.1%, to $75.14.

Oil surged towards its record high of $147 a barrel earlier in the year after Russia invaded Ukraine in February. It has since unwound most of this year’s gains as supply concerns were edged out by recession fears, which remain a drag on prices.

The U.S. Federal Reserve and European Central Bank raised interest rates last week and promised more. The Bank of Japan, meanwhile, could shift its ultra-dovish stance when it meets on Monday and Tuesday.

“The prospect of further rate rises will hit economic growth in the new year and in doing so curb demand for oil,” said Stephen Brennock of oil broker PVM.

Oil was supported by the U.S. Energy Department saying on Friday that it will begin repurchasing crude for the Strategic Petroleum Reserve – the first purchases since releasing a record 180 million barrels from the reserve this year.

Reporting by Alex Lawler
Editing by David Goodman and Barbara Lewis

Our Standards: The Thomson Reuters Trust Principles.

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Business

Oil resumes slide as weak economy outweighs supply risks

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  • Brent, WTI reverse gains, resume slide
  • Oil has been falling for four out of five last weeks
  • Keystone pipeline shut, Russia threatens to cut output

SINGAPORE/LONDON, Dec 12 (Reuters) – Oil prices fell on Monday, deepening a multi-week decline, as a weakening global economy offset supply woes stemming from the closure of a key pipeline supplying the United States and Russian threats of a production cut.

Brent crude futures were down 38 cents, or 0.4%, at $75.72 a barrel by 0900 GMT. U.S. West Texas Intermediate crude was at $70.76 a barrel, down 26 cents, or 0.3%.

Last week, Brent and WTI fell to their lowest since December 2021 amid concerns that a possible global recession will impact oil demand.

China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend.

On Monday, queues formed outside fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.

“Oil markets will likely stay volatile in the near term amid uncertainty over the impact on Russian output from the EU’s ban, headlines on China’s COVID policy, and central bank movements in the U.S. and Europe,” UBS analysts said in a note.

UBS said it believed Brent should recover to above $100 per barrel in the coming months amid supply constraints and rising demand while OPEC+ would keep supply tight.

On Sunday, Canada’s TC Energy (TRP.TO) said it had not yet determined the cause of the Keystone oil pipeline leak last week in the United States. It gave no timeline as to when the pipeline would resume operation.

The 622,000 barrel-per-day Keystone line is a critical artery shipping heavy Canadian crude to U.S. refiners.

Russian President Vladimir Putin said on Friday that Russia could cut production and would refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports.

Saudi Arabia’s energy minister also said on Sunday that price cap measures had had no clear results yet.

“The emergent EU embargo on Russian crude… may add moderate upside energy price risks in the next few months. But supply uncertainty should ease by spring 2023, after the embargo on oil products (on Feb.5) plays out,” Deutsche Bank said in a note.

Reporting by Florence Tan and Emily Chow in Singapore; Editing by Christian Schmollinger, Bradley Perrett and Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

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World

Oil prices fall on economic fears, dollar strength

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LONDON, Dec 6 (Reuters) – Oil prices fell in a volatile market on Tuesday as the U.S. dollar stayed strong and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and the prospects of a demand boost in China.

Brent crude futures were down 61 cents, or 0.74%, to $82.07 a barrel at 1447 GMT. West Texas Intermediate crude (WTI) fell 51 cents, or 0.66%, to $76.42.

Earlier in the session, both contracts fell by more than $1, while Brent rose by more than $1 in Asian trading.

Crude futures on Monday recorded their biggest daily drop in two weeks after U.S. services industry data indicated a strong U.S. economy and drove expectations of higher interest rates than recently forecast.

The U.S. dollar index edged lower on Tuesday but was still buoyed by bets of higher interest rates, following the biggest rally in two weeks on Monday.

A stronger greenback makes dollar-denominated oil more expensive for buyers holding other currencies, reducing demand for the commodity.

“Inflationary headwinds could still cause global economic turbulence in coming months,” said Tamas Varga of oil broker PVM, but added that “China’s gradual COVID opening is a tentatively positive development”.

In China, more cities are easing COVID-19-related curbs, prompting expectations of increased demand in the world’s top oil importer.

The country is set to announce a further relaxation of some of the world’s toughest COVID curbs as early as Wednesday, sources said.

The market was weighing the production impact of a price cap of $60 per barrel on Russian crude imposed by the Group of Seven (G7), the European Union and Australia, contributing to market volatility.

The price cap adds to the disruption caused by the EU’s embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and Britain.

The embargo is likely to tighten market supply as the EU has to source crude from elsewhere, Commerzbank analyst Carsten Fritsch said in a note.

Russia has declared its intention not to sell oil to anyone who signs up to the price cap.

The threat of losing insurance will limit Russia’s access to the tanker market and could reduce crude exports by 500,000 barrels per day from February levels, said analysts from Rystad Energy in a note.

Russia’s January-November oil and gas condensate production rose 2.2% from a year earlier to 488 million tonnes, according to Deputy Prime Minister Alexander Novak, who expects a slight output decline following the latest sanctions.

Reporting by Rowena Edwards in London, additional reporting by Muyu Xu in Singapore; editing by Jason Neely and Barbara Lewis

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Business

Oil prices climb after OPEC+ keeps output cut targets, China eases COVID curbs

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  • Brent gained 0.8% at 0430 GMT, WTI up 0.9%
  • OPEC+ sticks to plans to cut production by 2 mln bpd
  • More Chinese cities relax COVID-19 restrictions

MELBOURNE, Dec 5 (Reuters) – Oil prices rose as much as 2% on Monday after OPEC+ nations held their output targets steady ahead of a European Union ban and a price cap kicking in on Russian crude.

At the same time, in a positive sign for fuel demand, more Chinese cities eased COVID-19 curbs over the weekend, though a patchwork easing in policies sowed confusion across the country on Monday.

Brent crude futures were last up 72 cents, or 0.8%, to $86.29 a barrel at 0430 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 70 cents, or 0.9%, to $80.68 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, agreed on Sunday to stick to their October plan to cut output by 2 million barrels per day (bpd) from November through 2023.

Analysts said the OPEC+ decision was expected as major producers wait to see the impact of the EU import ban and Group of Seven (G7) $60-a-barrel price cap on seaborne Russian oil, with Russia threatening to cut supply to any country adhering to the cap.

“While OPEC remained steady on output over the weekend, I expect they will continue to balance the market,” said Baden Moore, head of commodity research at National Australia Bank.

“(A) Roll-off of the SPR releases, and implementation of the EU sanctions and price cap act to tighten the market, although we’d expect the market has already positioned for this outlook,” he said, referring to the U.S. strategic petroleum reserve.

The European Union will need to replace Russian crude with oil from the Middle East, West Africa and the United States, which should put a floor under oil prices at least in the near term, Wood Mackenzie vice president Ann-Louise Hittle said in a note.

“Prices are currently weighed down by expectations of slow demand growth, despite the EU oil import ban on Russian crude and the G7 price cap. The adjustment to the EU ban and price cap is likely to support prices temporarily,” Hittle said.

A key factor that has weighed on demand is China’s zero-COVID policy, but that appears to be easing now after protests were followed by several cities, including Beijing and Shanghai, relaxing restrictions to varying degrees.

Hittle added that the EU’s looming embargo on Russian oil products, in addition to crude oil, from Feb. 5 should support crude demand in the first quarter of 2023, as the market is short of diesel and heating oil.

Reporting by Sonali Paul in Melbourne and Emily Chow in Singapore; Editing by Cynthia Osterman and Kenneth Maxwell

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Business

Oil prices erase 2022 gains as China’s protests spark demand worries

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  • WTI hits lowest since Dec 2021, Brent at lowest since Jan 2022
  • Clashes in Shanghai as COVID protests flare across China
  • Investors focus on next OPEC+ meeting on Dec 4

Nov 28 (Reuters) – Oil prices fell close to their lowest this year on Monday as street protests against strict COVID-19 curbs in China, the world’s biggest crude importer, stoked concern over the outlook for fuel demand.

Brent crude dropped by $2.67, or 3.1%, to trade at $80.96 a barrel at 1330 GMT, having dived more than 3% to $80.61 earlier in the session for its lowest since Jan. 4.

U.S. West Texas Intermediate (WTI) crude slid $2.09, or 2.7%, to $74.19 after touching its lowest since Dec. 22 last year at $73.60.

Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines.

Reuters Graphics Reuters Graphics

“On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty caused by rare protests over the government’s stringent COVID restrictions in Shanghai prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Markets appeared volatile ahead of an OPEC+ meeting this weekend and a looming G7 price cap on Russian oil.

China has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over the restrictions flared for a third day and spread to several cities.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, will meet on Dec. 4. In October OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

Meanwhile, Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.

However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.

“Talks will continue on a price cap but it seems it won’t be as strict as first thought, to the point that it may be borderline pointless,” said Craig Erlam, senior markets analyst at OANDA

“The threat to Russian output from a $70 cap, for example, is minimal given it’s selling around those levels already.”

The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude also takes effect.

Reporting by Noah Browning
Additional reporting by Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi
Editing by Kirsten Donovan and David Goodman

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Business

Oil dives, hits 10-month low on reports of OPEC+ output boost

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  • Saudi Arabia and other OPEC producers eye output increase -WSJ
  • Chinese demand fears and strong dollar also weigh on prices

NEW YORK, Nov 21 (Reuters) – Oil prices plunged on Monday to their lowest since early January, after the Wall Street Journal reported that Saudi Arabia and other OPEC oil producers are considering a half-million barrel daily output increase.

Brent crude futures for January tumbled $4.07, or 4.7%, to $82.93 a barrel by 11:43 a.m. EST (1643 GMT). U.S. West Texas Intermediate (WTI) crude futures for December were down $4.48, or 5.6%, at $75.60 ahead of the contract’s expiry later on Monday. The more active January contract was down $4.05, or 5%, at $76.04.

An increase of up to 500,000 barrels per day (bpd) will be discussed at the OPEC+ meeting on Dec. 4, The Wall Street Journal reported.

Reuters was not immediately able to verify the report.

“It’s hard to believe they’re going into a market that is basically trading in contango,” said Bob Yawger, director of energy futures at Mizuho in New York, referring the effect of current oil futures trading at a discount to later dated contracts. “That’s playing with fire.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, recently cut production targets and de facto leader Saudi Arabia’s energy minister was quoted this month as saying the group will remain cautious.

Releasing more oil at the same time as weak Chinese fuel demand and U.S. dollar strength could move the market deeper into contango, encouraging more oil to go into storage and pushing prices still lower, Yawger said.

Expectations of further increases to interest rates have buoyed the greenback, making dollar-denominated commodities like crude more expensive for investors.

The dollar rose 0.9% against the Japanese yen to 141.665 yen, on pace for its largest one-day gain since Oct. 14. read more

“Apart from the weakened demand outlook due to China’s COVID curbs, a rebound in the U.S. dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng.

“Risk sentiment becomes fragile as all the recent major countries’ economic data point to a recessionary scenario, especially in the UK and euro zone,” she said, adding that hawkish comments from the U.S. Federal Reserve last week also sparked concerns over the U.S. economic outlook.

New COVID case numbers in China remained close to April peaks as the country battles outbreaks nationwide.

The front-month Brent crude futures spread narrowed sharply last week while WTI flipped into contango, reflecting dwindling supply concerns.

Additional reporting by Noah Browning, Florence Tan and Emily Chow
Editing by Jason Neely, David Goodman and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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Business

Oil prices drop more than 1% as China demand data disappoints

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SINGAPORE, Oct 24 (Reuters) – Oil prices slid more than 1% on Monday after Chinese data showed that demand from the world’s largest crude importer remained lacklustre in September as strict COVID-19 policies and fuel export curbs depressed consumption.

Brent crude futures for December settlement slid $1, or 1.1%, to $92.50 a barrel by 0609 GMT after rising 2% last week. U.S. West Texas Intermediate crude for December delivery was at $84.02 a barrel, down $1.03, or 1.2%.

Although higher than in August, China’s September crude imports of 9.79 million barrels per day were 2% below a year earlier, customs data showed on Monday, as independent refiners curbed throughput amid thin margins and lacklustre demand.

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“The recent recovery in oil imports faltered in September,” ANZ analysts said in a note, adding that independent refiners failed to utilise increased quotas as ongoing COVID-related lockdowns weighed on demand.

“This was exacerbated by falling refinery margins and product export curbs,” the analysts said.

Saudi Arabia and Russia were neck and neck as China’s top two suppliers in September.

Uncertainty over China’s zero-COVID policy and property crisis are undermining the effectiveness of pro-growth measures, ING analysts said in a note, even though third-quarter gross domestic product (GDP) growth beat expectations.

The GDP data came a day after China’s Xi Jinping secured a precedent-breaking third leadership term on Sunday, cementing his place as the country’s most powerful ruler since Mao Zedong.

Brent rose last week despite U.S. President Joe Biden announcing the sale of a remaining 15 million barrels of oil from the U.S. Strategic Petroleum Reserves. The sale is part of a record 180 million-barrel release that began in May.

Biden added that his aim would be to replenish stocks when U.S. crude is around $70 a barrel.

“Biden’s comments that the U.S. will only buy crude once prices hit USD70/bbl provides a strong support level,” ANZ said.

Last week, U.S. energy firms added oil and natural gas rigs for the second week in a row as relatively high oil prices encourage firms to drill more, energy services firm Baker Hughes Co said in a report on Friday.

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Reporting by Florence Tan; Editing by Christian Schmollinger and Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

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