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Oil prices drop on high Saudi output, Goldman expects more falls

SINGAPORE Oil prices dipped on Tuesday as Saudi Arabia reported strong crude production figures and U.S. investment bank Goldman Sachs warned of further oil price declines. Tuesday’s falls continued price declines on Monday and the previous week, and they came after Brent climbed 40 percent from its January lows, with many analysts saying upward momentum looks to have come to an end as production around the world continues to outpace demand. Top oil exporter Saudi Arabia pumped 10.308 million barrels of oil per day in April, slightly less than in March but still close to record highs. Goldman Sachs said in a note that the recent price rally itself prevented a reduction of oversupply and would therefore lead to lower prices going forward. "While low prices precipitated the market rebalancing, we view the recent rally as premature with crude oil prices expensive relative to current and forecast fundamentals," the […]

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Oil Prices Fall as Dollar Strengthens

Oil prices slipped Monday as the U.S. dollar strengthened and investors eyed concerns about weak demand in the physical market. Light, sweet crude for June delivery settled down 14 cents, or 0.2%, to $59.25 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, fell 48 cents, or 0.7%, to $64.91 a barrel on the ICE Futures Europe exchange. The Wall Street Journal Dollar Index, which tracks the greenback against other major currencies, rose 0.3%. A stronger dollar makes oil, which is priced in dollars, more expensive for buyers using foreign currencies. Traders also considered weakness in the physical oil markets. Producers in West Africa, the North Sea and Azerbaijan are struggling to sell cargoes of oil in the spot market, even as the futures price for crude has rallied, said Morgan Stanley MS 0.99 % in a note. “The risks are growing that the commodity […]

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Exodus of oil ETF investors signals expected market weakness

NEW YORK Oil investors are hastening their exit from exchange-traded funds, a move that some analysts argue is a form of protection in light of weak market fundamentals ahead. Four of the largest oil-specific exchange traded funds, including the U.S. Oil Fund (USO), had outflows of $478 million in the three weeks to May 6, according to data from ThomsonReuters Lipper, marking the biggest withdrawal since the start of 2014. Oil’s value, which plummeted some 60 percent during a slump that started in June, has made a quick recovery recently. Just this week, it traded above $62 a barrel, its highest level in five months. Still, analysts and traders warn that the unravelling of ETF investments, which amassed nearly $6 billion, may be a warning sign of things to come. While market experts are increasingly mixed over how much ETF outflows effect the futures market directly, they say the […]

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Oil rallies as hedge funds are caught short: Kemp

LONDON Oil’s sharp rally since the middle of March has been driven by a race among bearish hedge funds to cover loss-making short positions rather than any great bullishness about the outlook. On the eve of the rally, hedge funds and other money managers had amassed record short positions in WTI-linked futures and options amounting to 209 million barrels of oil. But in the seven weeks between March 17 and May 5, hedge funds cut their shorts by almost 116 million barrels to 93 million, a decline of more than 55 percent. Over the same period, hedge funds added only 7 million barrels of net new longs, a 2 percent increase from 381 million to 388 million, according to the U.S. Commodity Futures Trading Commission (CFTC). Hedge fund short covering coincides almost precisely with the rise in front-month WTI prices, from a recent low of $42 per barrel on […]

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Natural Gas Gives Back Gains as Supply Surplus Looms

By Christian Berthelsen Natural gas futures handed back a chunk of recent gains as weakening supply-and-demand fundamentals begin to catch up with a market that had rallied on short-term factors. Robust domestic gas production and an anticipated stretch of larger-than-average additions to gas stockpiles this month are expected to return supplies to a surplus for the first time in 18 months. If that happens, the U.S. would finally overcome the severe supply deficit created by heavy demand for gas-fired heating during the frigid winter of 2014. "We’re producing more gas in the market than we’re burning," said Aaron Calder, an analyst at Houston-based research consultancy Gelber & Associates. "That’s bearish and it’s putting downward pressure on the market." Natural gas futures fell sharply in early trading, recovered somewhat and then drifted down for the remainder of the session. The front-month June contract ended down 7.8 cents, or 2.7%, at […]

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OPEC Sees Oil Price Below $100 a Barrel in the Next Decade

ENLARGE VIENNA—The Organization of the Petroleum Exporting Countries doesn’t see oil prices consistently trading at $100 barrel again in the next decade, a pessimistic assessment that has the group considering the return of production limits to influence the market, according to people familiar with its latest strategy report. The report, extracts of which were seen by The Wall Street Journal, predicts that oil prices will be about $76 a barrel in 2025 in its most optimistic scenario, a reflection of OPEC worries that American competitors will be able to cope with low prices and keep pumping out supplies. It also contemplates situations where crude oil costs below $40 a barrel in 2025. A price of “$100 is not in any of the scenarios,” said a delegate at an OPEC strategy presentation last week in Vienna. An OPEC representative declined to comment OPEC has been grappling with how to respond […]

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Saudi, Kuwait to shut joint oilfield for two weeks: Kuwaiti source

DUBAI A jointly operated onshore oilfield between Saudi Arabia and Kuwait will shut for two weeks of maintenance, a Kuwaiti industry source said on Monday, a move apparently aimed at giving the Gulf OPEC allies more time to solve a long-standing dispute. The scheduled closure of the Wafra onshore oilfield, operated by a Saudi Arabian division of U.S. oil major Chevron, will start on Monday night or Tuesday, the source told Reuters. The source declined to be named because of the commercial sensitivity of the matter. "It is planned maintenance starting from tonight or tomorrow," the source said, adding that production from the onshore fields in the Neutral Zone between Saudi Arabia and Kuwait was about 190,000 barrels per day. Last month, Saudi Chevron told its partner, Kuwait Gulf Oil Company, that it planned to shut down Wafra after failing to resolve various disputes with Kuwait, mainly related to […]

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China becomes world’s top crude buyer despite economy stuttering

SINGAPORE China overtook the United States as the world’s top importer of crude oil for the first time in April, and its purchases are expected to remain strong despite a slowing economy, with far-reaching consequences for global oil and commodities markets. The soaring imports came as a surprise as growth in the world’s second-largest economy was sputtering and its oil demand was expected to ease. However, low oil prices and China’s series of interest rate cuts – including one over the weekend – in a bid to stoke growth are factors boosting demand. China’s crude oil imports hit a record of almost 7.4 million barrels a day (bpd) last month, putting it ahead of the United States’ estimated imports of 7.2 million bpd for April, Reuters data show. While China may drop back to second place in some months ahead, it is clearly headed towards overtaking the United States […]

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China Focus: Experts say China’s interest rate cuts not start of QE

by Xinhua Writer Jiang Xufeng BEIJING, May 11 (Xinhua) — China’s central bank cut interest rates starting Monday in the face of inflationary pressure and economic headwinds, but experts say the step should not be interpreted as the start of quantitative easing (QE). The People’s Bank of China (PBOC) on Sunday announced it will cut the benchmark deposit and loan interest rates by 25 basis points. After the move, the third rate cut in six months, the one-year deposit rate stands at 2.25 percent, and the one-year lending rate at 5.1 percent. China’s consumer price index ( CPI ) edged up to 1.5 percent in April, but came in below market expectations. The producer price index (PPI), a measure of costs for goods at the factory gate and a leading indicator of CPI movements, plunged 4.6 percent year on year in April, marking the 38th straight month of declines […]

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China world’s biggest oil importer

China overtook the US as the world’s biggest importer of crude oil in April, the culmination of a seismic shift in global energy flows over the past decade. Chinese customs data showed crude oil purchases from overseas hit a new high of 7.4m barrels a day in April, equivalent to roughly one in every 13 barrels consumed globally and topping US imports of 7.2m b/d. The US routinely exports about 500,000 b/d. While China’s imports are not expected to consistently surpass those of the US until the second half of this year, the move illustrates how the US shale revolution has cut the country’s reliance on oil from overseas — and how China’s demand has grown even as its economy slows. Colin Fenton, managing partner at Blacklight Research, said China’s imports increased as it stockpiled oil . “It’s begun,” Mr Fenton said. “China’s crude imports have been above trend […]

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