Oil prices gain on expectations OPEC+ will keep lid on output

SINGAPORE - Oil prices rose on Wednesday as investors bet OPEC and its allies would largely agree to extend their supply curbs into May, while strong growth in China's manufacturing activity this month sent out more signals of economic recovery.

Brent crude futures for May, which expires on Wednesday, rose 46 cents, or 0.7 percent, to $64.60 a barrel at 0635 GMT, after falling 1.3 percent on Tuesday. The more active Brent contract for June was up 52 cents, or 0.8 percent, at $64.69 a barrel.

The benchmark has shed more than 2 percent so far this month, compared with a 18 percent rise in February.

US West Texas Intermediate (WTI) crude futures climbed 51 cents, or 0.8 percent, to $61.06 a barrel, after falling 1.6 percent in the previous session.

"Oil prices appear to be underpinned by upbeat Chinese Purchasing Manager's Index (PMI) data from the National Bureau of Statistics (NBS), which underscored the growth momentum of the world's second-largest economy," said Margaret Yang, a strategist at Singapore-based DailyFX.

"Against the backdrop of lowered energy demand in Europe due to a third viral wave, OPEC+ and its allies are likely to extend the current production cut into May until the growth prospects show signs of improvement."

China's manufacturing activity expanded at the quickest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays. 

But OPEC+ has raised concerns that rising numbers of coronavirus infections globally and lockdown measures will impact the recovery in demand for oil, according to a report from the group's experts panel meeting seen by Reuters. 

The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are set to meet on Thursday, following a month in which oil prices have whipsawed on concerns about extended pandemic lockdowns in Europe, slow vaccine rollouts and rising COVID-19 cases in India and Brazil, pitted against growing optimism on growth in the United States.

OPEC+ last month surprised the market by agreeing to extend supply curbs, with small exceptions for Russia and Kazakhstan, at a time when fuel demand appeared to be recovering.

"All eyes will be on OPEC+ meeting for May output decisions and considering the surge in COVID-19 cases and lockdowns being implemented in parts of Europe, and the strength in dollar, it may pressure prices by another 2 to 3 percent," said Sunilkumar Katke, head of currencies and commodities at Axis Securities.

Under existing curbs, OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have cut just over 7 million barrels per day (bpd), while Saudi Arabia has made an additional voluntary reduction of 1 million bpd.

Saudi Arabia is prepared to back an extension of the supply cuts into June, including its own voluntary cut, to boost prices, a source briefed on the matter told Reuters this week. 

(Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Simon Cameron-Moore and Richard Pullin)

-reuters

Oil goes below $48 as Saudis defend stance

NEW YORK, United States – Oil prices tumbled Tuesday to fresh 5.5-year lows as Saudi Arabia blamed weak global economic growth and said it would stick to its guns on production policy.

US benchmark West Texas Intermediate for delivery in February sank $2.11 to $47.93 a barrel, a low last witnessed in late April 2009.

Brent North Sea crude for delivery in February dived $2.01 to $51.10 per barrel, the lowest level since early May 2009.

“The market is still worried that there are no signs that the supply glut will start falling,” Nordea Markets analyst Thina Margrethe Saltvedt told AFP.

James Williams of WTRG said the weakness in the market could take prices below $40 a barrel.

“Basically, there are continuing concerns about OPEC not cutting back, particularly Saudi Arabia, and US production continuing to grow,” he said.

Saudi Arabia’s Crown Prince Salman, in a speech on behalf of ailing King Abdullah Tuesday, said weak growth was to blame for the price fall, which has sliced deeply into the income of the world’s largest exporter.

“This development is not new in the oil market, and the kingdom has in the past dealt with it firmly and wisely,” he said, adding that Saudi Arabia will maintain its “same approach” towards the market.

That appeared to confirm Riyadh’s determination to defend its market share rather than reduce output, even if that pushes prices lower.

On Monday Saudi Arabia reportedly cut its European and US export prices in order to maintain market share.

source: business.inquirer.net

Oil firms seen to hike fuel prices by 50¢

MANILA, Philippines—Domestic oil prices are going up again following weeks of softness as global output appears steady despite surging demand from growing economies such as China—leading to concerns of an oil supply squeeze.

Beginning Tuesday morning, oil firms are expected to hike fuel prices by an average of 50 centavos per liter, industry sources said.

The estimated price increases will range from 45 to 55 centavos per liter for diesel and from 25 to 55 centavos for gasoline.

Excluding expected adjustments this week, the year-to-date net increase for gasoline and diesel stand at 69 centavos per liter and P2.23 per liter, respectively.

But as of Monday afternoon, oil firms had yet to make official announcements on a price increase.

Amid the market buzz, transport groups have expressed concern over the price hikes this week.

In a statement, the militant transport group Piston said oil prices should remain low due to expected weakness in US demand as a budget standstill has prompted the world’s largest economy to suspend non-essential government services.

The Department of Energy’s Oil Monitor noted that supply concerns had eased over diplomatic developments in oil-producing Iran and the ongoing US government shutdown, which began on Oct. 1.

But China thirsts for more oil. Increasingly consumer-driven economic growth in the world’s No. 2 economy had it overtaking the United States as the largest oil buyer in the international market. As China’s industries and motorists demand more fuel for power and for transport, global supplies are in for a squeeze, according to analysts.

source: business.inquirer.net