Tag Archives: Crude Oil

Oil hits 2016 highs driven by falling supply and weaker dollar

Fuel prices are displayed at KazMunayGas gas station in Almaty

By Amanda Cooper

LONDON (Reuters) – Oil prices hit their highest in eight months on Tuesday, buoyed by the dollar nearing one-month lows and by falling Nigerian oil output after a spate of attacks on infrastructure.

Brent crude futures LCO were up 36 cents on the day at $50.91 a barrel by 1339 GMT, having hit an intraday peak of $51.30 earlier in the day, their highest since October.

U.S. crude oil futures CL gained 32 cents to trade at $50.01 a barrel, having touched a fresh 2016 peak of $50.37, their highest since October last year.

The price of oil has nearly doubled since January, when it hit its lowest since late 2003, boosted largely by a spate of unplanned outages that have eroded production in Canada, Venezuela, Libya and Nigeria, along with a steady decline in higher-cost U.S. shale output.

Yet analysts say the rally may entice some shale production back online, potentially damaging the prospects for a more sustained price rise.

“I think that is a bit of a risk right now,” Petromatrix analyst Olivier Jakob said.

“Last year, there was also a rally into June and that came to an end when the U.S. rig count started to increase … if we have another increase this week and another next week, then it will be harder to sustain the rally because there will be a perception that we’re back to production economics,” he said.

Market watchers are bracing for signs of a pick-up in U.S. oil production after weekly data from Baker Hughes showed U.S. drillers added rigs for only the second time this year, analysts said. RIG-OL-USA-BHI

Helping to reinforce Tuesday’s price rise was preliminary work to restart three of Total’s TOTF French oil refineries, stopped as part of nationwide strikes.

“With Brent staying above $50, oil is on an upward momentum with the restart of French refineries that were shut on strikes and pipeline attacks in Nigeria,” said Kaname Gokon at brokerage Okato Shoji in Tokyo.

Nigeria’s Bonny Light crude output is down by an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, according to one source.

Oil, along with the rest of the commodities complex, has also been supported by a weaker dollar.

Federal Reserve Chair Janet Yellen has indicated the U.S. central bank will raise interest rates, but has not given a sense of when. [USD/]

U.S. commercial crude oil inventories likely fell by 3.5 million barrels last week, marking a third straight weekly drop, a preliminary Reuters poll showed. The data by the American Petroleum Institute is due out at 2030 GMT. [EIA/S]

(Additional reporting by Osamu Tsukimori in Tokyo; Editing by William Hardy and David Evans)

Oregon derailment likely to reignite oil by rail safety concerns

Handout photo of smoke billowing from a derailed oil train near Mosier, Oregon

By Eric M. Johnson

(Reuters) – A Union Pacific train carrying crude oil derailed and burst into flames along Oregon’s scenic Columbia River gorge on Friday in the first major rail accident involving crude in a year.

While no injuries were reported, the train remained engulfed in flames six hours after the derailment, officials said. The accident has already renewed calls for stronger regulation to guard communities against crude-by-rail accidents.

Union Pacific Corp, owner of the line, said 11 rail cars from a 96-car train carrying crude oil derailed about 70 miles (110 km) east of Portland, near the tiny town of Mosier.

Oil spilled from one car, but multiple cars of Bakken crude caught fire, said Oregon Department of Transportation spokesman Tom Fuller. Firefighters were still fighting the flames several hours later.

The crude was bought by TrailStone Inc’s U.S. Oil & Refining Co and bound for its refinery in Tacoma, Washington, some 200 miles (322 km) northwest of the derailment, the company said.

Television footage showed smoke and flames along with overturned black tanker cars snaking across the tracks, which weave through the Columbia River Gorge National Scenic Area.

“I looked outside and there was black and white smoke blowing across the sky, and I could hear the flames,” said Mosier resident Dan Hoffman, 32, whose house is about 100 meters (328 ft) from the derailment. “A sheriff’s official in an SUV told me to get the hell out.”

While rail shipments have dipped from more than 1 million barrels per day in 2014 as a result of the lengthy slump in oil prices, the first such crash in a year will likely reignite the debate over safety concerns surrounding transporting crude by rail.

“Seeing our beautiful Columbia River Gorge on fire today should be a wake-up call for federal and state agencies – underscoring the need to complete comprehensive environmental reviews of oil-by-rail in the Pacific Northwest,” said U.S. Representative Earl Blumenauer of Oregon.

Ecology officials from Washington state said there was no sign of oil in the Columbia River or Rock Creek.

SAFETY MEASURES DELAYED

Since 2008, there have been at least 10 major oil-train derailments across the United States and Canada, including a disaster that killed 47 people in a Quebec town in July 2013.

The incident comes eight months after lawmakers extended a deadline until the end of 2018 for rail operators to implement advanced safety technology, known as positive train control, or PTC, which safety experts say can avoid derailments and other major accidents.

The measures included phasing out older tank cars, adding electronic braking systems and imposing speed limits, all meant to reduce the frequency and severity of oil train crashes.

The tank cars involved in Friday’s crash were CPC-1232 models, which elected officials have raised concerns about in the past even though they are an upgrade from older models considered less safe. On Friday, U.S. Senator Ron Wyden of Oregon repeated his call from last year for federal officials to look into whether the newer cars were safe enough.

“It’s clear with this crash – as it has been for years – that more must be done to protect our communities,” Wyden said.

Rail operators such as Union Pacific are required under federal law to disclose crude rail movements to state officials to help prepare for emergencies. The rule was put in place after a string of fiery derailments.

EVACUATIONS

Union Pacific hazardous materials workers responded to the scene along with contractors packing firefighting foam and a boom for oil spill containment.

In its latest disclosure with the state, Union Pacific said it moved light volumes of Bakken crude oil along its state network, which includes the Oregon line. In March, it transported six unit trains, which generally carry about 75,000 barrels each.

As emergency responders descended on the crash site, Interstate 84 was closed and residents were ordered to leave the area.

Brett VandenHeuvel, executive director of the Columbia Riverkeeper advocacy group, said the crash should raise concerns about Tesoro Corp’s proposed 360,000 barrels-per-day railport in Vancouver, Washington, which would be the country’s largest.

“We are very concerned about additional oil trains passing through our community because of their safety record, the risk of fires, of explosions, the risks of spills,” he said.

(Reporting by Jessica Resnick-Ault, Jarrett Renshaw, Devika Krishna Kumar, and Catherine Ngai in New York, Erwin Seba in Houston, Curtis Skinner in San Francisco and Eric M. Johnson in Calgary, Alberta; Editing by Matthew Lewis, Leslie Adler and Tom Hogue)

Oil prices fall as investors faith in rally wanes

By Amanda Cooper

LONDON (Reuters) – Oil prices fell on Tuesday, reflecting growing concerns that a two-month rally may be in danger of fizzling, while analysts forecast another rise to record levels for U.S. crude stockpiles.

The oil price has risen by more than 45 percent since mid-February ahead of a meeting next month of the world’s major producers to discuss an output freeze to support prices. But there is growing scepticism about the outcome of the meeting.

“The amount of verbal intervention, which has obviously helped the market greatly over the past two months, combined with a production slowdown in the U.S., has probably taken (oil) as far as it can, now the market really wants to see some action,” Saxo Bank senior manager Ole Hansen.

“We’re seeing more and more commentators raise the flag and saying ‘have we seen too much, too soon?’ in terms of the rally across the sector.”

Brent crude futures <LCOc1> fell by $0.96 to $39.31 a barrel by 1124 GMT (7.24 a.m. ET), having lost some six percent in the last six trading days, while U.S. crude <CLc1> fell 78 cents to $38.60.

OPEC and other major suppliers, including Russia, are to meet on April 17 in Doha to discuss an output freeze aimed at bolstering prices.

But with ballooning global inventories, signs some OPEC members are losing market share, plus little evidence of a strong pick-up in demand, analysts said oil is likely to trade in a range.

“There is a rebalancing on the way, but we are still running a surplus and stocks are building up as far as we can see,” SEB commodities analyst Bjarne Schieldrop said.

“There is a clear risk for a pull-back in Brent crude oil with a return to deeper contango again. Long positioning in Brent is at record high and vulnerable for a bearish repositioning.”

Data on Monday from the InterContinental Exchange showed speculators hold the largest net long position in Brent futures on record. [O/ICE]

U.S. commercial crude oil stockpiles were expected to have reached record highs for a seventh straight week, while refined product inventories likely fell, a preliminary Reuters survey showed late on Monday. <API>

Barclays said in a note on Monday net flows into commodities totaled more than $20 billion in January-February, the strongest start to a year since 2011, and prices could fall 20 to 25 percent if that were reversed.

(Additional reporting by Aaron Sheldrick in TOKYO; Editing by Jane Merriman and Susan Thomas)

Oil set for weekly loss as huge supplies cut short rally

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma

By Barani Krishnan

NEW YORK (Reuters) – Oil prices fell to below $40 a barrel on Thursday, on track to their first weekly loss in over a month, pressured by record high U.S. stockpiles, weakening equity markets and a strong dollar.

With crude futures losing as much as 6 percent since Tuesday’s settlement – their biggest slide in two days since mid-February – analysts said the oil rally of the past five weeks that brought prices up from mid-$20 levels may be unraveling.

U.S. government data on Wednesday showed crude stockpiles jumped 9.4 million barrels last week – three times more than forecast by analysts in a Reuters poll.

A senior executive from the International Energy Agency, meanwhile, said a deal among a few OPEC producers and Russia to freeze production was likely to be “meaningless” as Saudi Arabia was the only one with the ability to raise output.

Brent crude’s front-month contact <LCOc1> was down 61 cents, or 1.5 percent, at $39.86 a barrel by 11:08 a.m. EST. It was on track to a 3 percent drop on the week, its biggest weekly slide since mid-January.

U.S. crude’s front-month <CLc1> fell 90 cents to $38.89. For the week, it was poised to lose about 2 percent, its first weekly loss since mid-February.

Earlier this week, both the benchmarks were up more than 50 percent from multi-year lows hit in January.

“A dose of reality (has) derailed the current perception (of a) rally, at least for the time being,” said Dominick Chirichella, analyst at New York’s Energy Management Institute.

The market will look out for a weekly reading on the U.S. oil drilling rig count due after 1:00 p.m. EST. A production indicator, the rig count rose last week after 12 weeks of cuts.

Shares on Wall Street <.SPX>, trading in tandem with crude most of this year, headed for their first weekly drop in six weeks. Financial markets were broadly risk averse with volumes thin ahead of the Good Friday and Easter break.

The dollar’s <.DXY> first weekly gain since late February also made oil and other commodities denominated in the greenback less affordable to holders of the euro and other currencies.

Trading houses were betting on oil being oversupplied at least two more years, while Russia looked to export more crude to Europe in April than any month since 2013.

Scott Shelton, energy broker at ICAP in Durham, North Carolina, feared of big builds in U.S. distillates, which include heating oil and diesel, as refineries emerge from maintenance. “We need to export large quantities of distillate,” he said. “Production has not fallen enough.”

(Additional reporting by Simon Falush in LONDON; Editing by Marguerita Choy)

Wall Street slightly lower as crude oil slips

By Abhiram Nandakumar

(Reuters) – Wall Street edged lower on Wednesday as oil prices slipped after data showed U.S. crude stockpiles touched record highs.

U.S. crude fell about 1 percent after a report from the American Petroleum Institute (API) showed that an increase in crude stockpiles was way above estimates. [O/R]

Wall Street closed sharply higher on Tuesday, helping the S&P 500 claw back most of its losses in the last two months. The index, which had fallen as much as 10.5 percent, is now down only about 3 percent for the year.

“The market got severely overbought yesterday,” said Jeffrey Saut, chief investment strategist at Raymond James Financial in Florida. “It would not be surprising to see stocks pull back a little bit here.”

At 9:41 a.m. ET, the Dow Jones industrial average <.DJI> was down 34.25 points, or 0.2 percent, at 16,830.83.

The S&P 500 <.SPX> was down 2.64 points, or 0.13 percent, at 1,975.71 and the Nasdaq Composite index <.IXIC> was down 1.29 points, or 0.03 percent, at 4,688.31.

Eight of the 10 major S&P sectors were lower, led by the utilities sector’s <.SPLRCU> 1.3 percent decline. The materials sector <.SPLRCM> fell 0.65 percent.

Shares of Monsanto <MON.N> were down 5 percent at $87.85 after the company slashed its 2016 profit forecast. The stock was the second biggest drag on the S&P 500.

Data on Wednesday showed the U.S. private sector added a higher-than-expected 214,000 jobs in February, suggesting solid job growth despite market turmoil and worries about a slowing global economy.

The report serves as a precursor to the more comprehensive monthly jobs report by the U.S. Labor Department on Friday.

The U.S. economy continues to show signs of recovery even as China and euro-zone countries struggle to spark their sputtering economic growth engines, pushing central banks to adopt diverging monetary policies.

Investors are increasingly facing the prospects of higher interest rates from the U.S. Federal Reserve, while also expecting more monetary stimulus from the European Central Bank and the People’s Bank of China.

Zynga <ZNGA.O> was up 6.9 percent at $2.31 after the “Farmville” creator named a new chief executive and said founder Mark Pincus would be executive chairman.

The Fed will also issue its Beige Book report of anecdotes on business activity at 2 p.m. ET. San Francisco Fed President John Williams is slated to speak later in the day.

Declining issues outnumbered advancing ones on the NYSE by 1,361 to 1,271. On the Nasdaq, 1,102 issues fell and 1,057 rose.

The S&P 500 index showed two new 52-week highs and no new lows, while the Nasdaq recorded nine new highs and six new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva)

Oil reaches lowest price since 2003 as Iran sanctions lifted

(Reuters) – Oil prices slumped to a 2003 low below $28 per barrel on Monday as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.

Responding to Tehran’s compliance with a nuclear deal, the United States and major powers revoked international sanctions that had cut Iran’s oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), issued an order on Monday to increase production by 500,000 bpd, the country’s deputy oil minister said.

Worries about Iran’s return to an already oversupplied oil market drove down Brent crude to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was down 29 cents at $28.64 by 1:50 p.m. ET.

U.S. crude was down 48 cents at $28.94 a barrel, not far from a 2003 low of $28.36 hit earlier in the session. Trading volumes were thin with U.S. markets closed for the Martin Luther King Day holiday.

“You can’t say this was unexpected but the Iran news is an additional factor that’s working against oil prices,” said TD Securities analyst Bart Melek, who also pointed to global oversupply and concerns about demand from China.

He said oil could fall further if Chinese economic data released overnight, including GDP and retail sales data, points to more weakness in the economy.

“If we get nasty economic numbers from China there’s potential for another swoosh lower,” Melek said.

Analysts expect Iran will realistically be able to export an extra 500,000 bpd in the short term from storage, but there are doubts whether the state of Iran’s oil infrastructure will allow further boosts anytime soon.

SEB Markets assumes Iranian oil output will rise by 400,000 bpd to 3.2 million bpd in 2016, while Tehran has said it will add 1 million bpd to its existing output by the year-end.

Iran has at least a dozen Very Large Crude Carrier super-tankers filled and in place to sell into the market.

In a sign of the pain low prices are inflicting on oil producers, OPEC forecast that supply outside the organization would decline by 660,000 bpd in 2016, led by the United States. Last month OPEC predicted a drop of 380,000 bpd.

(Additional reporting by Ahmad Ghadder in London, Roslan Khasawneh and Henning Gloystein in Singapore and Osamu Tsukimori in Tokyo; Editing by David Goodman, Dale Hudson and Frances Kerry)