Tag Archives: fuel demand

Oil prices fall as Delta variant spread weighs

By Ahmad Ghaddar

LONDON (Reuters) -Oil prices fell sharply to a two-week low on Wednesday as the spread of the coronavirus Delta variant in top consuming countries outweighed the impact of Mideast geopolitical tensions and a fall in U.S. inventories.

Brent crude oil futures were down $1.80, or 2.5%, to $70.61 a barrel by 1349 GMT. U.S. West Texas Intermediate (WTI) crude fell $2.15, or 3.1%, to $68.41 a barrel. Both contracts were trading at their lowest since July 21.

“Worries continue to grow over the spread of the Delta variant in China, which has weighed heavily on oil prices in recent days,” analysts at bank ING said.

The United States and China, the world’s two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts anticipate will limit fuel demand at a time when it traditionally rises in both countries.

In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.

An expected fall in U.S. oil inventories failed to arrest losses.

U.S. crude inventories fell by 879,000 barrels for the week ended July 30, according to two market sources, citing figures from industry group American Petroleum Institute (API).

Gasoline inventories fell by 5.8 million barrels and distillate stocks fell by 717,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity.

Official Energy Information Administration numbers are due later on Wednesday.

Tensions in the Mideast Gulf also supported prices.

On Tuesday, three maritime security sources claimed Iranian-backed forces seized an oil product tanker off the coast of the United Arab Emirates, though Iran denied the reports.

This is the second attack on a tanker since Friday in the region, which includes the Strait of Hormuz. The United Kingdom and the United States are also blaming Iran for the earlier incident, in which drones crashed into the vessel and killed two sailors. Iran denies the reports.

(Additional reporting by Naveen Thukral in Singapore; editing by Jason Neely and Barbara Lewis)

India demand fears, weak Japan crude imports knock oil prices 2%

By Laila Kearney

NEW YORK (Reuters) – Oil prices were down 2% on Friday, falling from six-week highs as investors unloaded positions after weak Japanese crude import data and on worries about fuel demand in India, where COVID-19 infections have soared.

U.S. crude and global benchmark Brent were set for their biggest daily drops in about three weeks, but were still on track for monthly gains of about 8% and 6%, respectively. Fuel demand worldwide is mixed but consumption is rising in the United States and China.

Brent crude fell by $1.30, or 1.9%, at $67.26 a barrel by 12:48 p.m. EDT (1648 GMT), the last day of trading for the front-month June contract. U.S. West Texas Intermediate crude for June was at $63.67 a barrel, down $1.34, or 2.1%.

“The tug of war between summer demand growth prospects and worsening COVID infections is still in full swing,” JBC Energy analysts wrote on Friday.

India, the world’s third largest oil consumer, is in deep crisis, with hospitals and morgues overwhelmed, as the number of COVID-19 cases topped 18 million on Thursday.

Japan’s – another major crude oil importer – imports fell 25% in March from a year earlier to 2.34 million barrels per day, according to government figures. However, the country’s factory activity expanded at the fastest pace since early 2018.

“There are still several major countries struggling mightily with the COVID-19 and of course there is a humanitarian crisis developing in India,” said John Kilduff, partner at Again Capital. “These are two big sources of demand that are taking a hit.”

OPEC oil output rose in April due to more supply from Iran, countering the cartel’s pact with allies to reduce supply.

A Reuters survey forecast that Brent would average $64.17 in 2021, up from last month’s consensus of $63.12 per barrel and the $62.3 average for the benchmark so far this year.

(Additional reporting by Shadia Nasralla and Florence Tan; Editing by Kirsten Donovan and David Gregorio)

Oil hits 11-month high near $57 on tight supply expectations

By Laura Sanicola

NEW YORK (Reuters) – Oil hit an 11-month high just below $57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.

Brent crude was up 90 cents, or 1.6%, at $56.56 a barrel by 1118 EST (1618 GMT) after touching its highest since last February at $56.75. U.S. West Texas Intermediate (WTI) gained 82 cents, or 1.6%, to $53.07.

Saudi Arabia plans to cut output by an extra 1 million barrels per day (bpd) in February and March to keep inventories in check.

The Saudi cut is part of an OPEC-led deal in which most producers will hold output steady in February. Last year’s record cuts from OPEC and its allies helped oil recover from historic lows reached in April. Some analysts believe the oil complex is underestimating supply levels.

“Storage at Cushing is only 10.2 million barrels below the all-time record high, so there is no problem with supply here in the U.S., but the complex is responding positively to this chatter about undersupply,” said Bob Yawger, director of energy futures at Mizuho.

Oil also gained on expectations for a drop in U.S. crude stockpiles. Analysts expect crude inventories to fall by 2.7 million barrels for a fifth straight week of declines.

The first of this week’s two supply reports, from the American Petroleum Institute, is due at 4:30 p.m. EST (2130 GMT).

The market is also being supported by the prospect of increased economic stimulus in the United States. President-elect Joe Biden, who takes office on Jan. 20, has promised “trillions” in extra pandemic-relief spending.

However, oil price gains were capped by demand concerns as coronavirus cases rise around the world.

Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday and Japan is to widen a state of emergency beyond Tokyo.

(Additional reporting by Alex Lawler and Jessica Jaganathan; Editing by Kirsten Donovan, David Goodman and David Gregorio)

Hurricane’s heavy rains to dampen fuel demand, offshore sites closed

By Erwin Seba

HOUSTON (Reuters) – More than one-quarter of U.S. Gulf of Mexico offshore oil and gas production remains shut due to Hurricane Sally, and as it moves inland, it is expected to cut fuel demand in the U.S. southeast as forecasters warn of life-threatening flooding.

The storm made landfall on Gulf Shores, Alabama, as a Category Two hurricane on Wednesday morning. Oil prices rose early Wednesday, attributed in part to the expectation of a temporary drop in U.S. production.

Nearly 500,000 bpd of offshore crude oil production and 759 million cubic feet per day (mmcfd) of natural gas output were shut in the U.S. Gulf of Mexico, according to the U.S. Interior Department. That’s roughly one-third of the shut-ins caused by Hurricane Laura, which landed further west in August.

Oil and chemical ports along the Mississippi River were moving to reopen with restrictions and some offshore operators were preparing to return workers to offshore platforms on Thursday.

The hurricane was between Gulf Shores and Pensacola, heading northeast at 3 mph (5 kph), with sustained winds of 100 mph (160 kph), the National Hurricane Center said in an update at around 7 a.m. CDT (1200 GMT).

OIL PRICES RISE

Crude oil futures rose more than 2% on Wednesday, extending the previous session’s gains caused by the shut-ins and an industry report forecasting a drop in U.S. crude stockpiles.

“Even if the weather keeps production shut for a couple of days, the sheer volume of its size is enough for the market to breathe a bit,” said Rystad Energy senior oil markets analyst Paola Rodriguez-Masiu in a comment.

The NHC earlier warned Sally could drop 10 to 20 inches (25-50 cm) of rain and up to 30 inches in some spots. It warned of “catastrophic and life-threatening” flooding along portions of the northern Gulf Coast.

(Reporting by Erwin Seba in Houston and Stephanie Kelly in New York; editing by xxx)