Tag Archives: Oil

Wall St. flat as earnings fail to excite investors

Wall Street

By Abhiram Nandakumar

(Reuters) – U.S. stock indexes were flat on Friday after poor quarterly reports from technology bellwethers Microsoft and Alphabet outweighed gains from steadying oil prices.

Microsoft was the biggest drag on all three major indexes.

Crude rose about 1 percent on signs of strong gasoline consumption in the United States. [O/R]

With recent economic data indicating a sluggish pace of economic growth globally and crude prices hovering near five-month highs, earnings have become a swing factor for stocks.

The S&P 500 has staged a sharp recovery from a steep selloff earlier this year and is inching toward its all-time high, helped by a recent rebound in oil, a cautious Federal Reserve and companies beating tempered expectations.

The index is up half a percent for the week, having posted gains on the first three days.

“We’re back to the every other day theory, bouncing around a little, but I don’t see too strong a sentiment either way,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“It’s still a very cautious environment,” Brown said, adding that the negative tone from the quarterly reports were expected.

At 9:42 a.m. ET, the Dow Jones industrial average was up 11.91 points, or 0.07 percent, at 17,994.43, the S&P 500 was down 1.52 points, or 0.07 percent, at 2,089.96 and the Nasdaq Composite was down 35.84 points, or 0.72 percent, at 4,910.05.

Eight of the 10 major S&P sectors were higher, but the index was under pressure by a 1.4 percent decline in the technology sector

Alphabet and Microsoft were down 3.7 and 6.5 percent respectively after both missed profit and revenue estimates.

S&P 500 companies are seen posting a 7.2 percent fall in first-quarter profit, according to Thomson Reuters I/B/E/S, and shares of companies failing to beat the already lowered expectations are getting hammered.

McDonald’s rose 0.7 percent to $126.63 after the company’s profit beat estimates.

General Electric was off 1.1 percent at $30.63 after it reported lower organic revenue.

Caterpillar shares were down 0.6 percent at $78.16 after its results.

Starbucks slipped 3 percent after missing sales expectations, while Visa was down 2.3 percent after it cut full-year revenue forecast.

Advancing issues outnumbered decliners on the NYSE by 1,885 to 761. On the Nasdaq, 1,460 issues rose and 740 fell.

The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 19 new highs and six lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Don Sebastian)

IEA expects OPEC production will fall this year

An oil pump jack can be seen in Cisco, Texas, August 23, 2015. REUTERS/Mike Stone

By Sarah McFarlane

LONDON (Reuters) – Crude prices firmed on Thursday after the International Energy Agency (IEA) said non-OPEC production would fall this year by the most in a generation and help rebalance a market dogged by oversupply.

IEA chief Fatih Birol said low oil prices had cut investment by about 40 percent over the past two years, with sharp falls in the United States, Canada, Latin America and Russia.

Benchmark Brent crude futures were up 12 cents at $45.92 a barrel by 1204 GMT. U.S. crude futures were 4 cents higher at $44.22. Both have gained about 70 percent from lows hit between January and February.

“It looks very strong at the moment, sentiment is bullish, technicals look fine, so I rather see prices rising further from here,” Commerzbank analyst Carsten Fritsch said.

The drop in supply from some producers, however, could be offset by increased output in countries such as Russia and Iran.

Russia’s energy minister said it might push oil production to historic highs and Iran has reiterated its intention to reach output of 4 million barrels per day after a global deal to freeze output collapsed and Saudi Arabia threatened to flood markets with more crude.

Libya could also rapidly ramp up oil production as soon as stability returns, the head of Libya National Oil Corporation (NOC) told an oil summit in Paris.

Nigeria will hold talks with Saudi Arabia, Iran and other producers by May, hoping to reach a deal on an output freeze at the next OPEC meeting in June, where it is expected to be a key item on the agenda.

“The focus of the market is primarily on price-supportive news and that’s just an indication of how sentiment is,” Saxo Bank senior manager Ole Hansen said.

Hansen said fund flows into commodities had been strong this week, driven by a weaker dollar.

The U.S. currency hit 10-month lows against some commodity-related currencies earlier this week. The Thomson Reuters Core Commodity Index rose to its highest since early December. [MKTS/GLOB]

“This whole recovery has been driven by supply being capped and supply is price sensitive and again we’re back to levels where we could see some of these producers breathe again,” Hansen said.

French bank BNP Paribas said any hope of the oil market rebalancing from the current surplus relied on a predicted decline in U.S. oil production.

“The U.S. accounts for the bulk of non-OPEC’s 2016 oil supply contraction of 700,000 barrels per day forecast. If the decline in the U.S. oil supply proves insufficient to tighten balances, then … the oil price will remain low,” it said.

In refined products, China’s exports of diesel and gasoline soared, spilling surplus fuel onto a market that is already well supplied, and threatening to cut Asian benchmark refining margins further.

(Additional reporting by Henning Gloystein in Singapore and Osamu Tsukimori in Tokyo; editing by David Evans and David Clarke)

Iran determined to regain oil market share

A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Gulf

LONDON (Reuters) – Iran is determined to recover its share of the world oil market following the lifting of sanctions, and can withstand low prices since it has sold oil for as little as $6 a barrel in the past, a source close to Iranian oil policy said.

The source was speaking after Russia, one of the participants at last weekend’s meeting of oil producing nations which failed to deliver an agreement to freeze output, indicated it could raise supply.

“We paid for our barrels with our centrifuges,” the source said, referring to Iran’s acceptance of curbs on its nuclear program in order for Western sanctions on Tehran to be lifted.

“We are going to get our share back. For us, oil is only 12 percent of our GDP. We used to sell oil in the war (between Iran and Iraq in the 1980s) at $6 a barrel.”

He added any agreement to restrain supply at the next OPEC meeting in June depended on Saudi Arabia and non-member Russia.

“If June is going to produce an agreement, you have to ask Saudi Arabia and Russia. They are the problem.”

(Reporting by Alex Lawler; Editing by Dmitry Zhdannikov and Mark Potter)

Wall Street rose Monday while investors brace themselves

Traders work on the floor of the NYSE

(Reuters) – Wall Street rose on Monday, with the Dow touching highs not seen since July, as Hasbro and Disney lifted the consumer discretionary sector while investors braced for a flurry of quarterly earnings reports through the week.

Chevron climbed 1.25 percent as crude prices steadied from earlier losses caused by the collapse of talks among major producers to tackle a stubborn global surplus.

A recent rebound in oil and signs that the U.S. economy was recovering have helped stocks rally from a steep selloff earlier this year that had pushed the S&P 500 down as much as 10.5 percent.

The index is now up 2.3 percent in 2016 and only about 2 percent short of its all-time high, while the Dow breached 18,000 for the first time since July 21.

That came despite bleak expectations for first-quarter earnings reports, many of which flow in this week. Earnings of S&P 500 companies are seen falling 7.7 percent on average, with the energy sector weighing heavily, according to Thomson Reuters I/B/E/S.

Investors will closely watch IBM and Netflix as they hand in their reports after the bell. Netflix was down 3.2 percent.

“This is a market where beating and exceeding does not guarantee you a higher stock price, but missing guarantees you’re going to get killed on the downside,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa. “That’s the sign of a fragile market.”

At 2:31 pm, the Dow Jones industrial average was up 0.49 percent at 17,985.53 points and the S&P 500 had gained 0.52 percent to 2,091.54. The Nasdaq Composite added 0.34 percent to 4,955.09.

All of the 10 major S&P sectors were higher, led by a 1.2 percent rise in energy. The consumer discretionary sector was up 0.84 percent, led by Hasbro. The toymaker jumped 5.7 percent after reporting better-than-expected quarterly profit and revenue.

Disney rose 2.7 percent after “Jungle Book” dominated the weekend box office, grossing more than $100 million.

Advancing issues outnumbered decliners on the NYSE by 2,066 to 913. On the Nasdaq, 1,925 issues rose and 888 fell.

The S&P 500 index showed 19 new 52-week highs and one new low, while the Nasdaq recorded 52 new highs and 16 lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)

OPEC cuts 2016 oil demand growth forecast

A fuel pump is pictured at Agil gas station in Tunis,Tunisia February 3, 2016. REUTERS/Zohra

By Alex Lawler

LONDON (Reuters) – OPEC on Wednesday cut its forecast for global oil demand growth in 2016 and warned of further reductions citing concern about Latin America and China, pointing to a larger supply surplus this year.

The Organization of the Petroleum Exporting Countries also said top exporter Saudi Arabia kept output steady in March – a sign Riyadh is serious about a plan to be discussed this weekend to freeze output and support prices – while OPEC supply overall rose only slightly.

World demand will grow by 1.20 million barrels per day (bpd) in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously.

It also cited the impact of warmer weather and the removal of fuel subsidies in some countries.

“Economic developments in Latin America and China are of concern,” OPEC said. “Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward.”

OPEC’s view contrasts with that of the U.S. Energy Information Administration, which on Tuesday raised its demand forecast slightly.

A third closely watched oil report, from the International Energy Agency, is due on Thursday.

A big slowdown in demand could complicate producers’ efforts to bolster prices by freezing output. The plan, to be discussed on Sunday in Doha, has helped oil prices <LCOc1> to rally above $41 a barrel from a 12-year low close to $27 hit in January.

OPEC’s refusal to cut output in late 2014 helped accelerate a drop in prices, which is slowing the development of relatively expensive rival supply sources such as U.S. shale oil and other projects worldwide.

In its report, OPEC said it expected supply from outside the group to fall by 730,000 bpd this year, more than the 700,000-bpd drop expected previously. But it reiterated that producer efforts to maintain output were making the forecast uncertain.

Despite the slightly larger non-OPEC decline expected, OPEC projects demand for its crude will average 31.46 million bpd in 2016, down 60,000 bpd from last month’s forecast.

The 13-member group pumped 32.25 million bpd in March, the report said citing secondary sources, up 15,000 bpd from February.

Saudi Arabia told OPEC it kept output in March steady at 10.22 million bpd. Riyadh in February struck a preliminary deal with fellow OPEC members Venezuela and Qatar, plus non-OPEC Russia, to freeze output.

Iran, which wants to regain market share after the lifting of Western sanctions on Tehran rather than freeze output, told OPEC it raised output by a minor 15,000 bpd to 3.40 million bpd.

The report points to a 790,000-bpd excess supply in 2016 if the group keeps pumping at March’s rate, up from 760,000 bpd implied in last month’s report.

(Reporting by Alex Lawler; editing by Keith Weir and Jason Neely)

Oil held around its lowest in a month

A worker grabs a nozzle at a petrol station in Tehran, Iran

By Amanda Cooper

LONDON (Reuters) – Oil held around its lowest in a month on Monday as investors ditched some of their bullish bets on another price rise and the chances that top exporters will agree to rein in overproduction appeared to fade.

Iran will continue increasing oil production and exports until it reaches the market position it enjoyed before the imposition of sanctions, Oil Minister Bijan Zanganeh was quoted as saying by the semi-official Mehr news agency.

Saudi Arabia, which spearheaded an initial proposal in February for producers to limit output, said last week that it would not join any effort to do so unless Iran were on board, while Russia reported its highest oil production in 30 years.

This has cast doubt on the ability of the world’s largest exporters to reach an when they meet in Doha this month to discuss how to align global supply and demand.

Hedge funds last week cut their bullish holdings of crude oil futures for the first time in six weeks. [CFTC/]

Brent crude futures were 14 cents higher at $38.81 a barrel by 1232 GMT, still close to their lowest for a month but 40 percent above their in mid-February level.

U.S. crude futures were 22 cents higher at $37.01.

“It’s not very strange to see a wave of profit-taking and some unwinding of long positions, and some people even saying they could reposition for a move towards lower prices,” said ABN Amro’s chief energy economist, Hans van Cleef.

“That’s part of a normal cycle that I think can continue this week. We might see $36 or $37 … Prices are coming down because of speculation Saudi Arabia will not join (the freeze deal) and that’s probably what we’ll see over the next three weeks – more speculation and more verbal intervention.”

Oil prices have fallen by more than 65 percent since mid-2014, when booming U.S. shale oil output and supply from within and outside OPEC created one of the largest global surpluses of crude in modern times.

Some analysts believe that even freezing production around record highs will help to reduce the surplus, given that demand is expected to continue to grow this year.

“Most of the negative news is in the price and for oil prices to weaken materially, something big would have to happen,” Gain Capital analyst Fawad Razaqzada said in a note.

U.S. production is proving more resilient to low oil prices than many expected, despite reduced drilling for new reserves as well as a jump in bankruptcies. [RIG/U]

“Given this backdrop, and the potential for an oil-freeze deal this month, the global supply-demand imbalance is likely to fade as we progress towards the latter part of this year,” Razaqzada added.

(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and David Goodman)

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)

Crude oil drops, dollar gains as markets watch central banks

NEW YORK (Reuters) – Oil prices fell on Monday as Iran dashed hopes of a coordinated production freeze, while the dollar rose ahead of a policy meeting at the U.S. central bank.

A gauge of stocks across the globe ticked up, with Wall Street weighed by commodity shares as Europe rose partly on a positive view of the auto industry.

Attention switched this week to policy decisions from the Bank of Japan, the U.S. Federal Reserve and the Bank of England, among others. They follow last week’s interest rate cut, asset-purchase program extension and new cheap loans for banks pledge at the European Central Bank.

The Fed, which ends its two-day policy meeting on Wednesday, has said it is on track to raise rates gradually in 2016, but doing so will hinge on the health of the economy. Recent data has shown above-forecast jobs creation but wage growth remains a concern.

The euro, which rose last week after ECB President Mario Draghi signaled further rate cuts were unlikely, fell 0.5 percent on Monday to $1.1098. The yen was flat against the greenback while sterling fell 0.6 percent to $1.4302. The dollar index rose 0.5 percent.

“It’s the combination of a market that overextended in the opposite direction because of Draghi’s ‘no more rate cut’ comment and just some corrective natural price action into the risk of (a Fed meeting) that could be a little bit more hawkish,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

On Wall Street, the S&P 500 was weighed by declines in basic materials and energy shares as commodity prices fell. As they also wait on the release of economic data, including U.S. retail sales, investors continued to interpret the ECB’s move.

“To me, it’s one of those days were the (stock) market is doing its best to digest some of those factors and to see what’s next,” said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

Equity volume on U.S. exchanges was the lightest so far this year.

The Dow Jones industrial average rose 15.82 points, or 0.09 percent, to 17,229.13, the S&P 500 lost 2.55 points, or 0.13 percent, to 2,019.64 and the Nasdaq Composite added 1.81 points, or 0.04 percent, to 4,750.28.

The pan-European FTSEurofirst 300 index, which had climbed 2.7 percent on Friday, ended up 0.67 percent with an index of auto and auto parts shares up 1.56 percent. MSCI’s gauge of stocks across major markets ticked up 0.1 percent. Nikkei futures rose 0.4 percent.

Brent crude oil, whose rise has helped buoy stocks in recent weeks, fell below $40 a barrel, as U.S. crude stockpiles continue to mount and Iran maintained little interest in a global production freeze.

“We feel that the bulk of this stronger than expected 5-6 week price advance has been seen and that prices will be shifting into a near term consolidation phase,” said Jim Ritterbusch of Chicago energy consultancy Ritterbusch & Associates.

Brent last traded at $39.61, down 1.9 percent. U.S. crude fell 3 percent to $37.34 per barrel.

The benchmark 10-year U.S. Treasury note rose 4/32 in price to yield 1.9627 percent from 1.977 percent on Friday.

Spot gold fell 1.1 percent, last trading at $1,234. Copper dropped 0.3 percent.

(Additional reporting by Laila Kearney, Dion Rabouin, Barani Krishnan and Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Meredith Mazzilli)

Oil below $37 as record U.S. inventories overshadow output freeze plan

By Alex Lawler

LONDON (Reuters) – Oil fell further below $37 a barrel on Wednesday as U.S. crude stockpiles rose to a new record, underlining the extent of a supply glut and countering support from producer efforts to tackle it.

Crude inventories rose by 10.4 million barrels, the U.S. government’s Energy Information Administration (EIA) said in its weekly report released at 1530 GMT (10:30 a.m. EST), much more than analysts had expected. [EIA/S]

Global benchmark Brent crude <LCOc1> was down 45 cents at $36.36 a barrel by 1548 GMT (10:48 a.m. EST). On Tuesday, it reached $37.25, the highest in almost two months. U.S. crude <CLc1>, also known as WTI, was down 55 cents at $33.85.

“Today’s EIA data will do very little to help oil’s recent bounce,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

“In short, it’s difficult to make a bullish case. Signs that the glut in oil and reversal of the building trend will subside any time soon seems distant.”

The inventory rise was even larger than the 9.9 million-barrel increase reported on Tuesday by industry group the American Petroleum Institute (API). The API report had weighed on prices earlier in the session.

Brent has risen 34 percent from a 12-year low of $27.10 hit on Jan. 20, adding to expectations that further declines may not be on the cards. An analyst at the International Energy Agency said on Tuesday prices appeared to have bottomed.

Crude has collapsed from more than $100 in mid-2014, pressured by excess supply and a decision by the Organization of the Petroleum Exporting Countries to abandon its traditional role of cutting production by itself to boost prices.

After more than a year of failing to agree any steps, OPEC and outside producers have stepped up diplomatic activity to fix the supply glut. Saudi Arabia, Qatar, Venezuela and non-OPEC producer Russia said on Feb. 16 they would freeze output.

The four countries have agreed to meet again in mid-March, Venezuelan Oil Minister Eulogio Del Pino said last week. The location for the talks has yet to be decided, OPEC delegates say.

In an early sign that Moscow will stick to the plan, Russia reported its oil output was little changed in February and oil company Rosneft <ROSN.MM> is even floating the idea of a domestic production cut, two industry sources said.

Saudi Arabia has yet to report its production, but a Reuters survey this week found no sign of an increase in February. <OPEC/O>

(Additional reporting by Barani Krishnan in New York and Osamu Tsukimori in Tokyo; Editing by Dale Hudson and Susan Fenton)

Wall Street closes strong; oil briefly dips below $30

NEW YORK (Reuters) – U.S. and European stock investors bought beaten-down shares on Tuesday, at least temporarily looking past another steep drop in oil prices that briefly sent U.S. crude below $30 a barrel.

Major U.S. stock indexes finished strong in a volatile trading session. The pan-European FTSEurofirst 300 index climbed 1.1 percent after four sessions of declines.

Volatile Chinese markets and the deepening oil slide have shaken sentiment in equities at the start of 2016. China stocks closed higher on Tuesday as the central bank tried to stabilize the yuan.

But oil prices slumped more than 2 percent, failing to sustain an initial rally and deepening a 1-1/2-year slide.

Tuesday’s rally may indicate that equity investors are setting aside oil and China as the main factors driving share prices, said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

“As the focus becomes more on the upcoming earnings … the focus turns away from China and oil, it allows investors to redeploy their assets into some equities that look reasonable,” Kuby said.

The Dow Jones industrial average rose 117.65 points, or 0.72 percent, to 16,516.22, the S&P 500 gained 15.01 points, or 0.78 percent, to 1,938.68 and the Nasdaq Composite added 47.93 points, or 1.03 percent, to 4,685.92.

Shares of Apple rose 1.5 percent after a broker upgrade, helping prop up Wall Street equities. After historically poor starts to the year for major U.S. indexes, investors were awaiting corporate earnings season to start in earnest later in the week, with large banks due to report.

“We saw a big decline in American markets,” Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts. “Now, we have seen it be pretty much stable. I think at this point perhaps we stabilize unless we see another down leg from China.”

In Europe, solid corporate updates from retailers boosted shares.

MSCI’s broadest gauge of stocks globally rose 0.3 percent after eight straight down sessions.

U.S. crude prices fell as low as $29.93 before settling down 3.1 percent at $30.44 a barrel. Benchmark Brent settled down 2.2 percent at $30.86 a barrel. U.S. crude prices have fallen 17 percent in 2016 alone.

Oil has been dragged lower by a glut, China’s weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for those using other currencies to buy oil.

“The momentum is too strong to the bearish side, even if fundamentally nothing has changed,” said Dominick Chirichella, a senior partner at Energy Management Institute.

The U.S. dollar rose for a third straight session as gains on Wall Street and calmer financial markets enhanced appetite for currencies that offer higher yield.

The dollar rose 0.3 percent against a basket of currencies. The euro slipped 0.06 percent against the dollar.

U.S. Treasury prices rose in choppy trading as oil prices resumed their decline, increasing appetite for safe-haven U.S. government debt.

Benchmark 10-year U.S. Treasury notes rose 13/32 in price to yield 2.112 percent, from 2.158 percent late on Monday.

Spot gold dropped 0.4 percent, falling for a third straight session, but the safe-haven metal pared earlier losses.

(Additional reporting by Gertrude Chavez-Dreyfuss, Tariro Mzezewa and Catherine Ngai in New York, Jamie McGeever and Simon Falush in London; Editing by Catherine Evans and Nick Zieminski)