US to release oil from reserves after OPEC+ rebuffs call for more crude

WASHINGTON - The United States said on Tuesday it would release 50 million barrels of oil from strategic reserves in a coordinated move with China, India, South Korea, Japan and Britain to cool prices after OPEC+ producers rebuffed calls for more crude.

The White House issued the statement after a source in the US administration said Washington had been hashing out a plan with major Asian energy consumers to drive down prices from near three-year highs. Britain had not previously been mentioned.

US President Joe Biden, facing low approval ratings amid rising inflation ahead of next year's congressional elections, has repeatedly called on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to pump more oil.

But the group has rebuffed the requests, as members have already been struggling to meet its existing targets for production increases and amid fears a resurgence of coronavirus cases could once again drive down demand.

The release from the US Strategic Petroleum Reserve would be in the form of a loan sale to companies, which must return the crude at a later date, and was the first time the United States had coordinated a release with some of the world's largest oil consumers, US officials said.

OPEC+ states, including US allies in the Gulf, meet again on Dec. 2 to discuss policy but have shown no sign of any change in tack to heed US calls.

The unprecedented effort by Washington to team up with major Asian economies to lower energy prices sends a warning to OPEC and other big producers that they need to address concerns about high crude prices, up more than 50 percent so far this year.

An OPEC+ source, speaking before the group's December meeting, said a release from reserves would complicate the maths for OPEC+, as it monitors the market on a monthly basis.

Suhail Al-Mazrouei, energy minister of the United Arab Emirates, one of OPEC's biggest producers, said earlier Tuesday he saw "no logic" in increasing UAE supply to global markets.

(Reporting Timothy Gardner; Additional reporting by Sonali Paul in Melbourne and Ghaida Ghantous in the United Arab Emirates; Writing by Richard Valdmanis and Edmumd Blair; Editing by Carmel Crimmins)

-reuters

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 up as Kuwait revives hope for output freeze deal

SINGAPORE, Singapore—Oil prices climbed in Asia Wednesday after Kuwait said an agreement to freeze output during a producers’ meeting this month could still be reached despite conflicting statements by participants.

But analysts said the rebound would not likely last owing to a painful supply glut and weak demand caused by the slowing world economy.

At around 0430 GMT Wednesday, US benchmark West Texas Intermediate for delivery in May was up 97 cents, or 2.70 percent, at $36.86 and Brent crude for June was 68 cents, or 1.80 percent, higher at $38.55.

Both contracts eked out an increase on Tuesday, but prices are still well below the $40 level reached last month following a rally driven by hopes of an agreement during the April 17 producers’ meeting in Doha.

Prices dived after Saudi deputy crown prince Mohammed bin Salman said last week his country will only agree to limit output if rival producers such as Iran followed suit.

But Iran, which has been raising production since the West lifted nuclear-linked sanctions in January, has insisted it should not be the one to cut back.

Key OPEC member Kuwait, however, said a freeze deal can still be reached without Tehran, Bloomberg News reported.

It quoted Kuwait’s OPEC governor Nawal al-Fezaia as saying that major producers have no option but to reach an agreement and that a freeze could set a floor price.

Ric Spooner, chief market analyst at CMC Markets in Sydney, said traders are likely to wait for the results of the meeting before making big bets.

“Given the welter of statements… people are probably just going to ignore (the comments) until they get the results of the meeting,” Spooner told AFP by telephone.

Comments by International Monetary Fund chief Christine Lagarde that global economic recovery is still “too slow” and “too fragile” further added to the gloom in the saturated oil market as it is bad news for demand, analysts said.

source: business.inquirer.net

Oil stays below $40 after OPEC decides against output cut

SINGAPORE, Singapore — Oil stayed below $40 a barrel in Asia Monday after the OPEC cartel decided against slashing high output levels and traders turned their focus to a US central bank meeting next week.

US benchmark West Texas Intermediate for delivery in January was down 37 cents at $39.60 and Brent crude for January was trading 12 cents lower at $42.88 a barrel at around 0210 GMT.

At a meeting in Vienna on Friday, the Organization of the Petroleum Exporting Countries (OPEC) decided against cutting its oil output to lift prices, its president and Nigerian oil minister Emmanuel Ibe Kachikwu said.

OPEC, whose members together pump out more than one third of world oil, is currently producing above its official target of 30 million barrels per day despite a global crude supply glut that has battered prices for more than a year.

“Crude oil were no doubt compressed by the lack of an agreement at the OPEC, signaling that the supply glut will persist longer,” Bernard Aw, market strategist at IG Markets in Singapore.

“WTI is trading below the key $40 (mark) and it looks set to remain there.”

Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services firm EY, said market attention is now turned to a meeting of Federal Reserve policymakers and to the latest economic data from China, the world’s top energy consumer.

Traders are watching whether the Fed will raise interest rates, a move that will boost the dollar. A stronger US currency will make dollar-priced oil more expensive to holders of weaker units, denting demand and prices.

“While all eyes are now on the Federal Reserve as it meets next week for the last policy meeting this year to decide whether to raise its benchmark rate, economic data from China will set the tone of prices in the coming weeks,” Gupta said.

He said the dollar also got a boost from a strong US jobs report on Friday. The report strengthens the case for a Fed rate hike, analysts said.

source: business.inquirer.net

US stocks dip as oil pushes energy sector lower

NEW YORK—A slump in energy prices pushed the stock market back from record levels on Tuesday.

Energy stocks slid as the price of oil resumed its descent. Traders speculated that member nations of the oil-producing group OPEC would fail to agree on production cuts at an upcoming meeting in Vienna on Thursday. Oil has now dropped almost a third from a peak in June.

While lower oil prices are a long-term boon to consumers and industrial companies, they are a drag on stocks in the near term because energy companies account for about 10 percent of the overall market’s profits.

Despite the losses, the major indexes remain close to all-time highs.

Stocks have been drifting gradually higher this month, having rebounded sharply from a slump in October, as investors have grown more confident that actions from central banks around the world will help bolster the global economy. The gains are likely to continue for now, said Jim McDonald, chief investment strategist at Northern Trust.

“People’s sentiment is still pretty conservative,” McDonald said. “That means that the slow-and-steady market can continue longer than people anticipate.”

The Standard & Poor’s 500 index fell 2.38 points, or less than 0.1 percent, to 2,067.03. The Dow Jones industrial average dropped 2.96 points, or less than 0.1 percent, to 17,814.94. The Nasdaq composite gained 3.36 points, or 0.1 percent, to 4,758.25.

Stocks started the day with small gains after a report showed that the US economy grew at a solid 3.9 percent annual rate in the July-September period, faster than the 3.5 percent that was initially reported. The upward revision was due to higher estimates of spending by consumers and businesses, the Commerce Department said.

That positive report was tempered by news that US consumer confidence fell in November. The Conference Board says its consumer confidence index fell to 88.7, down from a seven-year high of 94.5 in October. The decline primarily reflected less optimism in the short-term outlook as consumers expressed less confidence in current business conditions.

Among individual stocks, Pall, a company that makes filters for the food and health care industries, was the leading gainer in the S&P 500. The company’s stock jumped $3.31, or 3.5 percent, to $98 after its earnings beat the expectations of Wall Street analysts.

Energy stocks slid along with oil prices following reports that the world’s biggest producers are unwilling to cut production to help stop a slump in the price of crude. The sector dropped 1.6 percent and is now down 3.2 percent for the year. It’s the only one of the 10 industry sectors in the S&P 500 that is down for the year.

Representatives from Venezuela, Saudi Arabia, Mexico and Russian state oil giant OAO Rosneft met Tuesday ahead of a meeting of the Organization of the Petroleum Exporting Countries in Vienna and didn’t announce any immediate plans to cut output, The Wall Street Journal reported.

Benchmark US crude fell $1.69 to close at $74.09 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many US refineries, fell $1.35 to close at $78.33 a barrel on the ICE Futures exchange in London.

In metals trading, the price of gold rose $1.40 to $1,197.10 an ounce. Silver rose 18 cents to $16.55 an ounce and copper fell four cents to $2.96 a pound.

US government bond prices rose. The yield on the 10-year Treasury note fell to 2.26 percent from 2.31 percent Monday. The dollar fell to 117.94 yen from 118.28 yen late Monday. The euro rose to $1.2472.

In other energy futures trading on the NYMEX:

— Wholesale gasoline fell 0.1 cent to close at $2.032 a gallon

— Heating oil fell 0.1 cent to close at $2.395 a gallon.

— Natural gas rose 13.1 cents to close at $4.282 per 1,000 cubic feet– Steve Rothwell

source: business.inquirer.net