U.S. Interior Department to recall some furloughed workers for Gulf oil lease work

(Reuters) – The U.S. Interior Department intends to temporarily recall some workers furloughed by the partial federal government shutdown to prepare an upcoming Gulf of Mexico oil lease sale, using funds left over from last year, according to a department document.

The move would add to the administration’s push on its energy portfolio despite the partial shutdown triggered last month by President Donald Trump’s refusal to sign funding legislation that excludes money for his proposed border wall with Mexico.

“If the lapse in appropriations extends past January 15, additional personnel will be designated as exempt to complete work to publish Proposed Notice for Gulf of Mexico Sale 253 and Final Notice of Sale and Record of Decision for Gulf of Mexico Sale 252,” Interior said in its shutdown contingency plan.

“These employees will be designated as exempt for only the amount of time needed to complete this work. They will be funded through carryover,” it said.

The Interior Department’s Sale 252 is scheduled for March, and will offer some 78 million acres (31.5 million hectares)

across the Gulf of Mexico region. Recent lease sales in the Gulf of Mexico have drawn relatively weak interest from oil and gas drillers doing well in lower-cost onshore plays, despite the administration’s efforts to pump up the region with lower royalty rates.

The Interior Department is already keeping some personnel working on other energy efforts it says are exempted from the shutdown, including the Trump administration’s push for the expansion of oil drilling on sensitive, federally owned lands in Arctic Alaska.

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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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Saudi energy minister says oil market on 'right track'

ABU DHABI (Reuters) – Saudi Arabia’s Energy Minister Khalid al-Falih said on Sunday the oil market is “on the right track” and will quickly return to balance, but oil producers are willing to do more if needed.

“If we look beyond the noise of weekly data and speculators’ herd-like behavior, I remain convinced that we’re on the right track, and that the oil market will quickly return to balance,” said Falih, addressing an oil conference in Abu Dhabi.

“If we find that more needs to be done, we will do so in unison with our OPEC and non-OPEC partners where collaboration is essential too,” he added.

The Organization of the Petroleum Exporting Countries (OPEC), and other leading global oil producers led by Russia, agreed in December to cut their combined oil output by 1.2 million barrels per day starting from January to prevent a supply glut and boost sagging prices.

Falih said that secondary sources suggest OPEC production in December was already more than 600,000 barrels per day lower than in November.

“We in Saudi Arabia went beyond our commitment, and have lowered both production and exports,” he said.

Falih later told reporters that he sees no need for an extraordinary OPEC meeting before April, when the group is set to decide its output policy for the rest of 2019.

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Mexico City pipeline hit by 'sabotage' amid crackdown on fuel theft

MEXICO CITY (Reuters) – A major fuel pipeline that supplies Mexico City remained closed after two ruptures in a single day, the president said on Friday, as the government works to stem shortages that have frustrated motorists and triggered economic risks.

President Andres Manuel Lopez Obrador’s offensive against fuel robbers marks the leftist’s first attempt to tackle entrenched corruption since taking office on Dec. 1.

Criminal groups have tapped pipelines and stolen tanker trucks carrying diesel and gasoline in the oil-producing country for years, costing the government billions of dollars.

The government will assign 8,300 police and 1,400 security vehicles over the next 48 hours to safeguard fuel trucks so they can deliver to gas stations, said Mexico’s National Chamber of Freight Transport (CANACAR).

A key pipeline running from the port of Tuxpan in the Gulf coast state of Veracruz to Mexico City was shut down on Thursday night and repairs were underway, Lopez Obrador said on Friday.

The pipeline was hit at daybreak on Thursday and repaired, only to suffer another rupture at 11 p.m., he said.

“There’s sabotage,” he said. “Let’s see who gets tired first.”

The series of disruptions to the pipeline in recent days had caused shortfalls in supply for Mexico City and surrounding states.

Cars lined up by the dozen at stations throughout the capital on Friday, many before dawn, fearing that the shortages that fanned into the megacity this week from nearby states could persist.

Local television showed angry protesters blocking a major roadway in Mexico City’s Iztapalapa neighborhood.

The head of Mexico’s central bank said on Thursday that the economy and inflation rate could be negatively affected if fuel distribution problems persist.

The closure of a pipeline from the Salamanca refinery in the central state of Guanajuato last weekend cut off supply for numerous gas stations.

Lopez Obrador later said the military had discovered a 3-km (1.9 mile)-long “hose” that was funneling fuel out of storage tanks from the facility to a secret storage area.

The president also confirmed some congestion at key ports where imported motor fuels arrive, noting that some tanker ships were awaiting to discharge cargos, but he did not provide details.

Bottlenecks at Mexico’s main Gulf coast and Pacific coast ports have increased during this week, and now prevent almost 10 million barrels of gasoline and diesel from discharging on schedule, further complicating distribution, according to Refinitiv Eikon data.

On Tuesday, 24 vessels were backed up at ports, while that number has grown to 39 by Friday.

Six tankers loaded with liquefied petroleum gas, used mostly for heating, are also waiting to discharge.

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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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