Oil rises 2 percent on supply cuts but global slowdown looms

LONDON (Reuters) – Oil prices rose around 2 percent on Tuesday amid production cuts by OPEC and Russia as well as signs of lower U.S. oil stocks, but grim Chinese economic data raised fears for global growth.

Brent LCOc1 was up $1.13 or 1.92 percent at $60.12 per barrel by 1410 GMT.

U.S. crude CLc1 was up $1.07 or 2.12 percent at $51.58.

“OPEC-led cuts and declining U.S. rig counts have bolstered market sentiment in the new year,” Singapore-based brokerage Phillip Futures said.

The Middle East-led Organization of the Petroleum Exporting Countries and other producers including Russia agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut.

The bloc and its allies set a meeting for March 17-18 to monitor implementation of their pact, sources told Reuters, and another on April 17-18 on whether to extend cuts beyond the agreed six months.

Further help has come from data showing the number of U.S. rigs looking for new oil dipped slightly to 873 in early 2019, and a Reuters poll on Monday found that U.S. crude oil stockpiles were likely to have fallen last week.

The rig data could signal a slowing of the swift rise in output from the United States, which became the world’s top oil producer in 2018. C-OUT-T-EIA.

But analysts said a price recovery may be short-lived, as a darkening economic outlook could dampen growth in fuel demand.

“Any price rally is unlikely to be sustainable in the first half of the year simply because the demand for OPEC’s oil is expected to be lower than the projected output from the organization,” PVM Oil Associates strategist Tamas Varga said.

Crude prices fell more than 2 percent on Monday after data showed weakening imports and exports in China, raising new worries about a global slowdown.

(GRAPHICS: U.S. oil production, drilling & storage levels – tmsnrt.rs/2GVNTmb)

But China’s National Development and Reform Commission offered some support on Tuesday, signaling it might roll out more fiscal stimulus.

Such positive signals and hopes for renewed U.S.-China talks to resolve trade tensions have boosted world stock markets and oil prices, but fears about global growth weigh heavily.

“It would seem that the market is having a rather hard time making up its mind as to which story to believe in,” consultancy JBC Energy said.

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Oil falls back to $60 on concerns about China slowdown

LONDON (Reuters) – Oil slipped to around $60 a barrel on Monday after data showed weakening imports and exports in China, the world’s second-largest oil consumer, raising the prospect of a slowdown in fuel demand.

China’s exports fell by the most in two years in December while imports contracted, official figures showed, pointing to further weakness in what is also the world’s second-largest economy.

Brent crude, the international benchmark, fell 50 cents to $59.98 a barrel by 0932 GMT, trading as low as $59.37 intraday. U.S. crude slipped 41 cents to $51.18.

“Both imports and exports disappointed expectations and are set to revive fears about a global growth slowdown,” said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.

Crude gave up an earlier gain following the release on Monday of the Chinese figures, the latest to point to an economic slowdown since the second half of 2018. Asian stock markets also slipped and European equities fell in early trade.

“Oil prices are getting weighted down by the prospects of weaker economic growth in China,” Stephen Innes of futures brokerage Oanda said in a report.

“This data drives home just how negative of an impact trade war is having on the Chinese and perhaps global economy.”

Despite concern about the outlook, there is little sign that Chinese oil demand has weakened yet. China’s crude imports in December surged nearly 30 percent from a year earlier, Reuters calculations of customs data showed.

Oil is drawing support from supply cuts led by the Organization of the Petroleum Exporting Countries and non-OPEC allies, including Russia.

The group of producers, known as OPEC+, agreed in December to cut oil output by 1.2 million barrels per day starting in January to prevent a supply glut and boost prices.

With the rise in Brent from a dip below $50 in December, OPEC officials appear more confident that prices will be supported by output declines in January as producers implement the deal.

Saudi Energy Minister Khalid al-Falih said on Sunday the oil market was “on the right track” and there was no need for an extraordinary OPEC meeting before its next planned gathering in April.

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Oil prices edge up on OPEC-led supply cuts, lower U.S. drilling activity

SINGAPORE (Reuters) – Oil prices edged up on Monday, supported by ongoing supply cuts from producer club OPEC and Russia and by a drop in U.S. drilling activity.

International Brent crude oil futures were at $60.75 per barrel at 0040 GMT, up 27 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up 22 cents, or 0.4 percent, at $51.81 a barrel.

Economic research firm TS Lombard said oil “prices are likely to stabilize around current levels and quite possibly drift upwards”, pointing to supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC allies, including Russia, as a fundamental driver.

Drillers cut four oil rigs in the week to Jan. 11, bringing the total count down to 873, energy services firm Baker Hughes said in a weekly report on Friday.

However, TS Lombard said oil prices may not rise much higher as “the world economy is now slowing… limiting the scope for positive surprises in oil demand and hampering inventory reduction.”

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Oil set for weekly gain on trade optimism, OPEC-led supply cuts

LONDON (Reuters) – Oil prices rose slightly on Friday, putting them on track for solid weekly gains after financial markets strengthened due to hopes the United States and China may soon resolve their trade dispute.

Tightened supply following OPEC-led crude production cuts aided gains, along with positive signals from top central banks which sent global stocks higher after sharp losses in late 2018.

International Brent crude futures LCOc1 were at $61.76 per barrel at 1200 GMT, up 8 cents, while U.S. West Texas Intermediate (WTI) crude futures CLc1 gained 23 cents to $52.82 per barrel.

WTI and Brent are set for their second week of gains, rising 10 percent and 8 percent respectively.

Markets were supported by hopes that an all-out trade war between Washington and Beijing might be averted. Three days of talks concluded this week with no concrete announcements, but higher-level talks may convene later this month.

“Sentiment is greatly improved, and trade talk optimism has helped boost risk appetite,” Jasper Lawler, head of research at London Capital Group, said in a note.

Concerns about the global economy have kept markets in check, however, with signs mounting that China’s growth in 2018 and 2019 would be the lowest since 1990.

Most analysts have downgraded their global economic growth forecasts below 3 percent for 2019, with some fearing a recession amid trade disputes and spiraling debt.

On the supply side, oil markets are receiving support from supply cuts led by the Organization of the Petroleum Exporting Countries and aimed at reining in a glut that emerged in the second half of 2018.

Lower oil exports from Iran since November, when U.S. sanctions against it resumed, have also supported crude.

Playing a key part in the emerging glut was the United States, where crude oil production C-OUT-T-EIA soared by more than 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Consultancy JBC Energy this week said it was likely that U.S. crude production was “significantly above 12 million bpd” by this month.

Abhishek Kumar, senior energy analyst at Interfax Energy in London, said higher oil prices so far this year “could well define a near-term trend despite uncertainties surrounding the U.S.-China trade talks.”

“The implementation of the OPEC+ deal, together with potential for further falls in Iranian supplies, will also be bullish for prices.”

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Oil slips on economic worries, but still set for strong weekly gain

SINGAPORE (Reuters) – Oil slipped on Friday amid concerns over the outlook for the global economy, but output cuts agreed by major exporters underpinned crude prices and kept markets on track for a strong weekly climb.

International Brent crude futures LCOc1 were at $61.55 per barrel at 0333 GMT, down 13 cents, or 0.2 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 dropped 7 cents, or 0.1 percent, to $52.52 per barrel.

Traders said the declines came on lingering concerns over the health of the global economy.

“If we experience an economic slowdown, crude will underperform due to its correlation to growth,” said Hue Frame, portfolio manager at Frame Funds in Sydney.

Most analysts have downgraded their global economic growth forecasts below 3 percent for 2019, with some even fearing a looming recession amid trade disputes and spiraling debt.

For now, however, there is hope that the trade war between Washington and Beijing may be resolved as global markets, including oil, took heart from talks between the two sides this week.

Despite Friday’s price falls, Brent and WTI are set for weekly gains of more than 7 and 8 percent respectively.

Beyond global economics, oil markets are receiving support from supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at reining in a glut that emerged in the second-half of 2018.

A key reason for the emerging glut was the United States where crude oil production C-OUT-T-EIA soared by more than 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Consultancy JBC Energy this week said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by January 2019.

Given the overall supply and demand balance, Swiss bank Julius Baer said it was “price neutral” in its oil forecast.

“We see the oil market as well balanced into the foreseeable future, as the petro-nations make space for further U.S. shale production growth,” said Norbert Ruecker, head of commodity research at the bank.

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Oil prices dip as worries over economic slowdown return

SINGAPORE (Reuters) – Oil prices slipped on Friday as concerns over economic growth were rekindled after talks fell short of offering concrete steps to end the Sino-U.S. trade conflict, although OPEC-led production cuts bolstered sentiment in crude markets.

Oil prices were also supported by comments from U.S. Federal Reserve Chairman Jerome Powell on Thursday that the central bank had the ability to be patient on monetary policy.

International Brent crude futures LCOc1 were at $61.22 per barrel at 0139 GMT, down 46 cents, or 0.75 percent, from their last close. However, Brent remains on track for a second consecutive week of gains as it is up about 7 percent so far this week.

U.S. West Texas Intermediate (WTI) crude futures CLc1 dropped 34 cents, or 0.65 percent, to $52.25 per barrel. WTI has climbed 9 percent this week, its biggest weekly rise since December, 2016.

China said three days of talks with the United States that wrapped up on Wednesday had established a “foundation” to resolve differences over trade. But it gave few details on key issues at stake, including a scheduled U.S. tariff increase on $200 billion worth of Chinese imports.

A partial U.S. government shutdown and tepid economic data in some countries also dragged on broad financial markets.

“If we experience an economic slowdown, crude will underperform due to its correlation to growth,” said Hue Frame, portfolio manager at Frame Funds in Sydney.

“China and the U.S. managing to agree on a positive deal would favor further risk-on sentiment within markets over the short-term. However, it is becoming more difficult to look past the weak readings of global manufacturing.”

China’s producer prices in December rose at their slowest pace in more than two years, a worrying sign of deflationary risks that could see Beijing roll out more policy support to help stabilize the economy.

“However, investors are becoming increasingly confident that OPEC+ production cuts will balance the market,” ANZ Bank said on Friday.

Saudi Arabia said earlier this week that supply curbs started in late 2018 by the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers including Russia, would bring the oil market into balance.

“We believe further price appreciation will occur during 2019, although the year will be marked with continued volatility,” analysts at Fitch Solutions said on Friday.

“The main factors we believe that will support higher prices are the winding down of sanction waivers for Iran and continued strong demand growth from emerging markets outside of China.”

Asia’s Iranian oil imports were set to rise from December onwards as the United States granted temporary waivers to some countries from sanctions against Iran’s oil exports. The waivers are due to expire around the start of May.

Iranian Oil Minister Bijan Zanganeh said on Thursday that the U.S. sanctions against his country were “fully illegal” and Tehran would not comply with them.

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Oil rises by over 1 percent on U.S., China trade talk optimism

SINGAPORE (Reuters) – Oil prices rose by around 1 percent on Wednesday, extending gains from the previous session on hopes that Washington and Beijing may soon resolve trade disputes that have cast a dark shadow over the global economy.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $50.42 per barrel at 0752 GMT, up 64 cents, or 1.3 percent, from their last settlement. That marked the first time this year that WTI has topped $50 a barrel.

International Brent crude futures LCOc1 were up 69 cents, or 1.2 percent, at $59.41 per barrel.

Both crude price benchmarks had already gained more than 2 percent in the previous session.

“Crude continues to extend gains as early reports from Beijing regarding trade negotiations are fueling optimism around successful trade talks between the U.S. and China,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

“After a dreadful December for risk markets, crude oil continues to catch a positive vibe,” Innes said.

The oil price jumps were in line with Asian stock markets, which climbed to 3-1/2 week highs on Wednesday.

Trade talks in Beijing between the world’s two biggest economies entered a third day on Wednesday, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China’s markets.

State newspaper China Daily said on Wednesday that Beijing is keen to put an end to its trade dispute with the United States, but that it will not make any “unreasonable concessions” and that any agreement must involve compromise on both sides.

If no deal is reached by March 2, Trump has said he will proceed with raising tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports at a time when China’s economy is slowing significantly.

Citing the trade tensions, the World Bank expects global economic growth to slow to 2.9 percent in 2019 from 3 percent in 2018.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,” World Bank Chief Executive Officer Kristalina Georgieva said in a semi-annual report released late on Tuesday.

More fundamentally, however, oil prices have been receiving support from supply cuts started at the end of 2018 by a group of producers around the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude oil output C-OUT-T-EIA surged by around 2 million barrels per day (bpd) in 2018, to a record 11.7 million bpd.

Official U.S. fuel storage data from the Energy Information Administration (EIA) is due at 1800 GMT on Wednesday.

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Oil prices up on U.S.-China trade talk hopes, OPEC cuts

LONDON (Reuters) – Oil prices rose on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world’s two biggest economies, while OPEC-led supply cuts also tightened markets.

Brent crude futures LCOc1 gained 69 cents, or 1.22 percent, to $58.02 per barrel by 1325 GMT.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 climbed 59 cents, 1.22 percent, to $49.11 per barrel.

U.S. Commerce Secretary Wilbur Ross said on Monday that there was a “very good chance” of reaching a settlement, while China’s Foreign Ministry said Beijing had the “good faith” to resolve trade friction with the United States.

Some analysts warned, however, that the relationship between the superpowers remained shaky and tensions could flare anew.

“Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10 percent to 25 percent cannot be excluded,” Tamas Varga of PVM Oil Associates said. “For now, however, optimism prevails.”

There is also concern that a worldwide economic slowdown will dent fuel consumption, leading the hedge fund industry to cut significantly its bullish positions in crude futures.

S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively. “Our lower oil price assumptions reflect slowing demand and rising supply globally,” said S&P Global Ratings analyst Danny Huang.

OPEC VS SHALE

Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, as well as non-member Russia.

Saudi-based Arab Petroleum Investments Corp, a firm specializing in funding petroleum projects, estimated in a report on Tuesday that oil prices are likely to trade at $60 to $70 per barrel by mid-2019.

But looming over the OPEC-led cuts is a surge in U.S. oil supply – now the world’s top producer – driven by a steep rise in onshore shale drilling.

As a result, U.S. crude oil production C-OUT-T-EIA rose by 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

With drilling activity still high, most analysts expect U.S. oil production to rise further this year.

Consultancy JBC Energy said it was likely that U.S. crude production was “significantly above 12 million bpd” by early January.

(GRAPHIC: U.S. oil production & drilling levels – tmsnrt.rs/2GVNTmb)

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Oil prices up on trade talk hopes and OPEC cuts

LONDON (Reuters) – Oil prices rose on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world’s two biggest economies, while OPEC-led supply cuts also tightened markets.

International Brent crude futures LCOc1 gained 92 cents to $58.25 per barrel by 1130 GMT.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 climbed 74 cents to $49.26 per barrel.

“I think there’s a very good chance that we will get a reasonable settlement that China can live with, that we can live with,” U.S. Commerce Secretary Wilbur Ross said on Monday as officials from both countries held talks to end the spat.

Some analysts warned, however, that the relationship between Washington and Beijing remained shaky and that tensions could soon flare anew.

“Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10 percent to 25 percent cannot be excluded,” Tamas Varga of PVM Oil Associates said. “For now, however, optimism prevails.”

There is also concern that a worldwide economic slowdown will dent fuel consumption.

As a result, the hedge fund industry has cut significantly its bullish positions in crude futures.

S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively. “Our lower oil price assumptions reflect slowing demand and rising supply globally,” said S&P Global Ratings analyst Danny Huang.

OPEC VS SHALE

Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, as well as non-member Russia.

Saudi-based Arab Petroleum Investments Corp, a firm specializing in funding petroleum projects, estimated in a report on Tuesday that oil prices are likely to trade at $60 to $70 per barrel by mid-2019.

But looming over the OPEC-led cuts is a surge in U.S. oil supply, driven by a steep rise in onshore shale drilling.

As a result, U.S. crude oil production C-OUT-T-EIA rose by 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

With drilling activity still high, most analysts expect U.S. oil production to rise further this year.

Consultancy JBC Energy said it was likely that U.S. crude production was “significantly above 12 million bpd” by early January.

(GRAPHIC: U.S. oil production & drilling levels – tmsnrt.rs/2GVNTmb)

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Oil prices edge up on trade talk hopes and OPEC cuts

LONDON (Reuters) – Oil prices rose slightly on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world’s two biggest economies, while OPEC-led supply cuts also tightened markets.

International Brent crude futures LCOc1 gained 55 cents to $57.88 per barrel by 0945 GMT.

U.S. West Texas Intermediate (WTI) crude oil futures CLc1 also climbed 55 cents, to $49.07 per barrel.

“I think there’s a very good chance that we will get a reasonable settlement that China can live with, that we can live with,” U.S. Commerce Secretary Wilbur Ross said on Monday as officials from both countries held talks to end the spat.

Some analysts warned, however, that the relationship between Washington and Beijing remained shaky and that tensions could soon flare anew.

“Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10 percent to 25 percent cannot be excluded,” Tamas Varga of PVM Oil Associates said. “For now, however, optimism prevails.”

There is also concern that a worldwide economic slowdown will dent fuel consumption.

As a result, the hedge fund industry has cut significantly its bullish positions in crude futures.

S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively. “Our lower oil price assumptions reflect slowing demand and rising supply globally,” said S&P Global Ratings analyst Danny Huang.

OPEC VS SHALE

Crude prices so far in 2019 have been buoyed by supply cuts from the Organization of the Petroleum Exporting Countries including top exporter Saudi Arabia, as well as non-member Russia.

Saudi-based Arab Petroleum Investments Corp (APICORP), a firm specializing in funding petroleum projects, estimated in a report on Tuesday that oil prices are likely to trade at $60 to $70 per barrel by mid-2019.

But looming over the OPEC-led cuts is a surge in U.S. oil supply, driven by a steep rise in onshore shale drilling.

As a result, U.S. crude oil production C-OUT-T-EIA rose by 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

With drilling activity still high, most analysts expect U.S. oil production to rise further this year.

Consultancy JBC Energy said it was likely that U.S. crude production was “significantly above 12 million bpd” by early January.

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