Crude oil price rise: Markets speculate low supply

Crude oil price rise on Tuesday came across with speculation that the future supply may be hit gradually, especially in the United States. At Record price, Brent crude oil went up by 20 cents at $51.86 a barrel by 0930 GMT. U.S. light crude was 15 cents higher at $47.52.

Market analyst, Fawad Razaqzada at futures brokerage Forex.com said that the US crude oil stocks have been falling consistently in recent weeks.

“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” Razaqzada added

A 13% fall has been recorded in the US commercial crude inventories from their March figures, to 466.5 million barrels.

In addition, Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies which would eventually lead to rising prices.

Whereas on the contrary, oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

With a record crude production in US breaking 9.5 million barrels per day (bpd), its highest since July 2015. Some analysts say that output growth may slow down as energy corporations cut a number of rigs drilling for oil. However, the rise in production has been relentless with increasing volumes from shale, significantly from the enormous Permian basin in Texas and New Mexico.

“With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices,” Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.

To see if the recent downward trend in US stocks continues; the weekly data on US inventories have to be tracked which starts later on Tuesday. According to a Reuters poll, U.S. crude inventories are expected to fall for the eighth week in a row and drop by 3.4 million barrels

Hans van Cleef, senior energy economist at ABN AMRO Bank NV in Amsterdam said, Another decline in US crude stocks may lead to somewhat higher prices again, though the upside may be limited – especially if U.S. crude production ticks higher again.

 

SOURCES: NEW YORK TIMES, REUTERS

IMAGE SOURCE: YAHOO

India to import its first US crude oil 

India is prepared to import crude oil from the United States(US) for the first time after Indian Oil Corporation (IOC) bought a cargo which will be delivered in October.

India is the third largest importer of oil, this purchase comes after Prime Minister Narendra Modi’s visit to the U.S in June when President Donald Trump expressed his readiness to export more energy sources to India.

As per Reuters, IOC’s head of finance A.K Sharma said that IOC bought 1.6 million barrels of U.S. Mars crude- a heavy, high-sulphur grade, and 400,000 barrels of Western Canadian Select that will be delivered onboard a Very Large Crude Carrier.

A tender was granted to PetroChina to sell the cargoes, and the oil is expected to be loaded off the US Gulf coast. As the local regulations favour the use of Indian flagged carriers for imports, IOC had to get special permissions from the shipping ministry to buy the cargo on a delivered basis.

After  South Korea, Japan, China, Thailand, Australia and Taiwan, India is now the latest Asian country to buy U.S. crude oil.

The U.S. could become an alternative source for the Indian Companies as Indian refiners are looking for these heavy, high-sulphur grades as feedstocks after alterations at their plants make it less demanding to prepare these type of crudes, which normally offer at a lower cost in relative to other oil types.

Bharat Petroleum Corp Ltd too has purchased a tender to buy its first ever U.S crude oil.

Sources: Reuters and News18.

OPEC raises concerns as oil prices fall on rising crude stocks

11 countries and OPEC members agreed to cut oil prices
11 countries and OPEC members agreed to cut oil prices

 

The Organisation of the Petroleum Exporting Countries (OPEC) issued concerns over the potential threat of the falling oil prices in the upcoming year if the member nation and outside producers do not cut back production.

The global oil prices fell with the United States increasing its crude oil stocks. As a consequence, International Brent crude futures were down 82 cents at $54.90 per barrel while U.S. West Texas Intermediate (WTI) crude oil futures were down 92 cents at $52.06 a barrel, reported Reuters.

In a monthly report, OPEC said that without cuts the 2017 overhang would reach 1.24 million bpd (barrel per day), about 300,000 bpd higher than the forecast in its previous report. In a surprising turn of events, data from the American Petroleum Institute showed U.S. crude inventories rose by 4.7 million barrels in the week to Dec. 9, compared with analysts’ expectations for a 1.6-million-barrel decline.

In an effort to end two years of oversupply and cheap oil, OPEC and 11 producing countries from outside the group agreed to cut almost 1.8 million bpd of production.

 

Sources: Reuters CNBC

Image source: Reuters

Oil prices slide as OPEC struggles over targets

On Wednesday, oil price saw a considerable fall from the previous sessions after Saudi Arabia ruled out production cuts. The industry data also showed a build in US crude stocks.

However, Iran on the other side has made it a point that it will not restrain the production of oil after the international sanctions against it were lifted. It further called the joint Russian-Saudi proposal of output freeze, ‘laughable’.

Bijan Zanganeh told the Iranian news agency ISNA that some of Iran’s neighbours have increased their production to 10 million barrels a day in recent years and export this amount, and now they have the nerve to say everyone should freeze production together. While they freeze their production at 10 million barrels, Iran is to freeze at 1 million barrel, which is a laughable proposal.

The falls in U.S. West Texas Intermediate (WTI) crude futures and International benchmark Brent futures were due to lack of cooperation between Organization of the Petroleum Exporting Countries (OPEC) members. They were unable to decide whether to freeze or cut production to control oversupply that has kept the prices low by 70 per cent since 2014.

Saudi Arabia’s oil minister Ali Al-Naimi was of the view that a coordinated production cut by OPEC and non-OPEC exporters was not something that would happen because not many countries are going to deliver.

Russia, a non-OPEC member has tentatively agreed on freezing its output at January levels, which was when they hit a post-Soviet record.

To cope with falling oil revenues, even poorer OPEC nations like Nigeria have been forced to adopt austerity measures.

 

Sources: Reutersarabnews, The Economic Times

Oil prices drop for the seventh consecutive session

Image Source: Reuters/Lucy Nicholson A pump jack is seen at sunrise near Bakersfield, California
Image Source: Reuters/Lucy Nicholson
A pump jack is seen at sunrise near Bakersfield, California

 

Oil prices stumbled for the seventh consecutive session, coming close to their 11-year low. The prices of crude oil could worsen in the fourth coming months, due to a pricing war between leading Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer.

Brent crude fell below $38 a barrel for the first time in six years on Friday with the International Energy Agency (IEA) declaring that, demand growth was slowing down while the OPEC output remained high. Meanwhile, U.S. crude, settled in the $35 zone.

Since OPEC has lifted the output ceiling starting on December 4, both benchmarks were on a constant fall, with more than 13 per cent being shed from each. OPEC has been thrusting record levels since last year to try and drive higher-cost manufacturers such as U.S. shale firms out of the market.

On Friday, IEA said that the global supply glut was likely to deepen next year and put more pressure on prices.

Reuters: Reuters The Globe and Mail