Tag Archives: Oil

U.S. oil losses from Hurricane Ida rank among worst in 16 years

By Sabrina Valle and Arpan Varghese

HOUSTON (Reuters) -Hurricane Ida’s damage to U.S. offshore energy production makes it one of the most costly since back-to-back storms in 2005 cut output for months, according to the latest data and historical records.

Ida’s 150 mile-per-hour (240 kph) winds cut most offshore oil and gas production for more than a week and damaged platforms and onshore support facilities. About 79% of the region’s offshore oil production remains shut and 79 production platforms are unoccupied after the storm made landfall on Aug. 29.

Some 17.5 million barrels of oil have been lost to the market to date, with shutdowns expected to continue for weeks. Ida could reduce total U.S. production by as much as 30 million barrels this year, according to energy analysts.

Offshore U.S. Gulf of Mexico wells produce about 1.8 million barrels of oil per day, 16% of the daily U.S. total.

“There could be volumes that are offline for a considerable amount of time,” said Facts Global Energy (FGE) consultant Krista Kuhl. “It’s just too early to tell.”

The losses are reducing U.S. exports at a time when oil prices are trading at about $70 a barrel because of continued curbs by producing-nations group OPEC and market expectations for demand.

At least 78% of Gulf of Mexico oil and natural gas were offline on Tuesday, nine days after Ida hit the Gulf Coast, causing wind and water damages to platforms and refineries, government data showed.

Hurricanes Katrina and Rita in 2005 remain the worst hit to Gulf Coast energy facilities. The back-to-back storms caused production losses that continued for months, removing about 162 million barrels of oil over three months, FGE said.

Production in the U.S. Gulf of Mexico that year dropped 12.6%, to 1.28 million barrels per day (bpd), from the prior year, according to data for the Energy Information Administration (EIA). Total U.S. oil production fell 4.7%, EIA data showed.

Restoring output after Ida will hinge on the time needed to repair a key offshore oil and gas transfer facility. Royal Dutch Shell on Monday said it continued to assess damage to its West Delta-143 offshore platform, which transfers about 200,000 barrels of oil and gas per day from three offshore oil fields.

A group of thunderstorms in the south-central Gulf of Mexico was expected to move northeast. The storms have a 30% chance of developing into a tropical cyclone in the next two days, the National Hurricane Center said on Tuesday.

(Reporting by Sabrina Valle in Houston and Arpan Varghese in Bengaluru; Editing by Bill Berkrot and Aurora Ellis)

Oil slides 2% on worries about weak demand

By Nia Williams

CALGARY, Alberta (Reuters) – Oil prices fell on Tuesday on concerns about weak demand in the United States and Asia, although ongoing production outages on the U.S. Gulf Coast helped to limit losses.

Industry analysts said a strengthening U.S. dollar also weighed on crude prices. A strong dollar makes oil more expensive for holders of other currencies.

U.S. West Texas Intermediate crude was down $1.45 or 2.1% from Friday’s close at $67.84 a barrel at 1648 GMT. There was no settlement price for Monday due to the Labor Day holiday in the United States.

Brent crude futures fell 93 cents, or 1.3%, to $71.30 a barrel by, after falling 39 cents on Monday.

The U.S. economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections.

Analysts said the oil market was still assessing the data from Friday as well as Saudi Aramco’s move on Sunday to cut October official selling prices (OSPs) for all its crude grades sold to Asia by at least $1 a barrel.

The deep price cuts, a sign that consumption in the world’s top-importing region remains tepid, come as lockdowns across Asia to combat the Delta variant of the coronavirus have clouded the economic outlook.

“There’s some concern about demand going forward because of a weak jobs report in the U.S. and COVID fears. The market is catching a bad mood,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Oil prices found some support from strong Chinese economic indicators and continued outages of U.S. supply from Hurricane Ida.

China’s crude oil imports rose 8% in August from a month earlier, customs data showed, while China’s economy got a boost as exports unexpectedly grew at a faster pace in August.

More than 80% of oil production in the Gulf of Mexico remained shut after Ida, a U.S. regulator said on Monday, more than a week after the storm made landfall and hit critical infrastructure in the region.

(Additional reporting by Ahmad Ghaddar in London and Yuka Obayashi in Tokyo; Editing by Jane Merriman and Edmund Blair)

Oil companies evacuate workers as storm heads for U.S. Gulf of Mexico

HOUSTON (Reuters) -Royal Dutch Shell and Chevron on Thursday began evacuating non-essential personnel from offshore U.S. Gulf of Mexico platforms ahead of a storm expected to enter the Gulf this weekend.

A storm brewing in the Caribbean Sea could become a major hurricane this weekend and strike the U.S. Gulf Coast by Sunday, the National Hurricane Center said. Hurricanes with winds of up to 111 miles per hour (178 km) are classified as major and can bring devastating damage onshore.

“This storm has the potential for rapid increases in intensity before it comes ashore” because of extremely warm waters off Louisiana, said Jim Foerster, chief meteorologist at DTN, which provides weather information to offshore oil and transportation companies.

Shell said evacuations covered all eight of its Gulf of Mexico properties and a floating production and storage vessel was being moved out of harms way. Chevron said its Gulf of Mexico oil and gas production remained at normal levels.

“Water temperatures are 85 degrees to 88 degrees Fahrenheit (29-31 C), that’s anomalously high, 3 to 5 degrees higher than it normally would be,” said DTN’s Foerster. A projected path over warm waters will result in heavy rains and flooding as it nears the central Gulf Coast, he said.

(Reporting by Gary McWilliams; editing by David Evans and David Gregorio)

Oil up 3% on stronger demand outlook; Mexican oil rig outage

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil prices rose 3% on Tuesday, extending sharp gains on a bullish demand outlook after U.S. regulators issued their first full approval for a COVID-19 vaccine and Mexico suffered a large production outage due to a fire on an oil platform.

Brent crude oil futures were up $2.25, or 3.3%, at $71.00 a barrel by 2:20 p.m. ET (1720 GMT) while U.S. West Texas Intermediate (WTI) gained $1.92, or 2.9%, to $67.56.

Last week, both benchmarks notched their biggest weekly losses in more than nine months. On Monday, both jumped more than 5%, boosted by a weaker dollar.

A resurgent pandemic has fueled health system concerns; however, “economically harmful containment measures seem rather unlikely,” said Julius Baer analyst Norbert Rucker, citing the effectiveness of vaccines.

On Monday, the U.S. Food and Drug Administration issued full approval for the Pfizer/BioNTech two-dose vaccine, having authorized it for emergency use last December. Officials hope to convince unvaccinated Americans the shot is safe and effective.

Analysts said China’s apparent success in fighting the spread of the Delta variant of the coronavirus also boosted demand sentiment, with no cases of locally transmitted infections in the latest data.

“Concerns are easing that we will not see a global shutdown due to the Delta variant,” said Gary Cunningham, director of market research at Tradition Energy in Stamford, Connecticut.

Also supporting oil prices was a fire on an oil platform off Mexico on Sunday that has cut state-run Pemex’s oil production by about 25% since then. Five workers died and the fire halted 421,000 barrels per day of production.

Prices of heavy sour crude oil grades are rising on the U.S. Gulf Coast, traders said, as the market braces for a disruption of supplies from Mexico.

“The market is getting a tailwind from the PEMEX fire, which has greenlighted this rally,” said Bob Yawger, director of energy futures at Mizuho in New York.

Still, Yawger cautioned that the market could reverse course if U.S. government data on Wednesday shows gasoline inventories increased. Analysts polled by Reuters expect gasoline inventories to fall, but Yawger expects a gain, which could signal a demand lull.

Data from trade group the American Petroleum Institute is expected Tuesday at 4:30 p.m. ET (2030 GMT), with official data from the Energy Information Administration released on Wednesday at 10:30 a.m. ET (1430 GMT).

The U.S. Department of Energy on Monday said it would sell up to 20 million barrels of crude from the Strategic Petroleum Reserve (SPR) oil stocks to comply with legislation, with deliveries to take place between Oct. 1 and Dec. 15.

Meanwhile, Indian refiners’ crude throughput in July bounced to its highest in three months as fuel demand rebounded and buoyed prices.

(Additional reporting by Jessica Jaganathan in Singapore and Ahmad Ghaddar in London; Editing by John Stonestreet, David Goodman, David Gregorio and Jonathan Oatis)

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)

Oil falls in volatile session on concerns over COVID spread

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil fell on Tuesday in volatile trade as concern over rising cases of the Delta coronavirus variant weighed on prices while expectations of a lower U.S. inventories lent some support.

Benchmark Brent crude oil futures fell $1.22, or 1.7%, to $71.67 a barrel by 1236 GMT.

U.S. West Texas Intermediate (WTI) crude was down $1.42, or 2%, at $69.84 a barrel.

Both had risen more than 60 cents earlier in the session.

“The oil market continues to alternate between concerns about tight supply on the one hand and about looming demand outages on the other,” Commerzbank analysts said.

Despite recent fluctuations, Brent has risen more than 40% this year, helping earnings of oil firms.

BP, ConocoPhillips , Diamondback Energy Inc and Continental Resources Inc all reported strong second-quarter earnings this week.

Concerns over the spread of Delta variant in the United States and China, the top oil consumers, weighed on prices.

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.

“Delta-related concerns will likely keep oil markets volatile over the coming weeks, but at the same time we also see flying activity across Europe and the U.S. continue to grind higher, supporting oil demand,” Staunovo said.

Expectations of a return of Iranian crude to the markets also had a negative impact.

Iran’s new president, Ebrahim Raisi, said on Tuesday his government would take steps to lift “tyrannical” sanctions imposed by the United States on its energy and banking sectors.

Iran and six powers have been in talks since April to revive a nuclear pact. But Iranian and Western officials have said significant gaps remain.

The sixth round of indirect talks between Tehran and Washington adjourned on June 20, two days after Raisi was elected president. Parties involved in the negotiations have yet to announce when the talks will resume.

Meanwhile, a preliminary Reuters poll showed U.S. crude and product inventories likely declined last week, with both distillates and gasoline stockpiles predicted to have fallen for a third straight week.

(Reporting by Bozorgmehr Sharafedin in London Additional reporting by Naveen Thukral in Singapore; editing by David Holmes and Jason Neely)

Oil steady near $70/bbl on hopes of recovering demand

By Laura Sanicola

NEW YORK (Reuters) – Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 22 cents, or 0.3%, to $69.41 a barrel by 1:25 p.m. EST (1825 GMT) while U.S. West Texas Intermediate crude was at $65.85 a barrel, fell 17 cents, or 0.3%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

“Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

U.S. drillers are also holding back, cutting the number of oil and natural gas rigs operating for the first time since November, according to data from energy services firm Baker Hughes Co.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million barrels per day this year compared with 11.32 million bpd in 2020.

Earlier this week, the government revised down 2021’s decline expected in U.S. crude production. Output is seen falling 160,000 bpd to 11.15 million bpd, a smaller decrease than its previous monthly forecast for a 290,000-bpd drop.

(Additional reporting by Shadia Nasalla, Florence Tan; Editing by Marguerita Choy and David Gregorio)

Iran says U.S. move to seize oil shipment is ‘act of piracy’

DUBAI (Reuters) – Iran said on Monday that a U.S. move this month to seize a cargo of oil on the grounds that it came from Tehran was an act of piracy, adding that the shipment did not belong to the Iranian government.

Washington filed a lawsuit earlier this month to seize the cargo, alleging that Iran sought to mask the origin of the oil by transferring it to several vessels before it ended up aboard the Liberian-flagged Achilleas tanker destined for China.

Washington said the cargo contravened U.S. terrorism regulations.

“This shipment does not belong to the Iranian government. It belongs to the private sector,” Foreign Ministry spokesman Saeed Khatibzadeh told a weekly news conference.

He did not elaborate on what he meant by the private sector.

The Achilleas last reported its position on Sunday as anchored within the Galveston Offshore Lightering Area, which is outside the U.S. Gulf port of Galveston, Refinitiv ship tracking data showed on Monday.

A U.S. official said last week that Washington had sold more than a million barrels of Iranian fuel seized under its sanctions program last year.

Tensions have mounted between Washington and Tehran since 2018, when former U.S. President Donald Trump abandoned Iran’s 2015 nuclear deal with six major powers and reimposed sanctions on the country.

U.S. President Joe Biden has pledged to revive the nuclear deal if Tehran returns to full compliance with the accord.

“It is very unfortunate that such an act of piracy is happening under the new U.S. administration … a solution should be found to stop such acts of piracy by anyone for any reason,” the spokesman Khatibzadeh added.

(Additional reporting by Jonathan Saul in London; Writing by Parisa Hafezi; Editing by Susan Fenton)

Oil jumps 2%, hits highest in year as producers limit supply

By Jessica Resnick-Ault

NEW YORK (Reuters) – Oil prices rose more than 2% on Tuesday, reaching their highest in 12 months after major producers showed they were reining in output roughly in line with their commitments.

The U.S. and global benchmarks rallied as optimism about more U.S. economic stimulus added to market bullishness from supply cuts.

Brent crude was up $1.22, or 2.2%, at $57.57 a barrel by 12:03 EST (1703 GMT) for its third straight day of gains, touching $58.05, the highest levels since January last year.

U.S. oil gained $1.26, or 2.3%, to $54.81, after touching a session high of $55.26, the highest in a year.

The rally began as OPEC production increases were less than expected.

OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.

Voluntary cuts of 1 million bpd by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March.

Russian output increased in January but is in line with the supply pact, while in Kazakhstan oil volumes fell for the month.

The rally picked up steam as the U.S. Congress looked ready to adopt an economic stimulus package, and as cold U.S. weather boosted heating oil demand.

“You got the U.S. economic stimulus package that no one thought we would get,” said Bob Yawger, director of energy futures at Mizuho in New York.

A cold snap and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude.

However, energy giant BP flagged a difficult start to 2021 amid declining product demand, noting that January retail volumes were down about 20% year on year, compared with a decline of 11% in the fourth quarter.

Oil demand is nevertheless expected to recover in 2021, BP said, with global inventories seen returning to their five-year average by the middle of the year.

(Additional reporting by Noah Browning and Aaron Sheldrick; Editing by David Evans, David Goodman and David Gregorio)

Oil slips on coronavirus fears, strong dollar

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices fell slightly on Monday as a stronger dollar, fears over soaring COVID-19 cases around the world and the slow pace of vaccination against the coronavirus outweighed a better-than-expected quarterly rebound for China’s economy.

Brent crude was down 23 cents, or 0.4%, at $54.87 per barrel at 1720 GMT, and West Texas Intermediate U.S. crude fell 19 cents, or 0.4%, to $52.17.

“Corona-induced economic fears, a stronger U.S. dollar and more pessimistic investor sentiment are all playing their part in the fact that Brent is trading … around $3 lower than last Wednesday,” said Commerzbank analyst Eugen Weinberg.

The benchmarks had rallied in the past few weeks, buoyed by COVID-19 vaccine rollouts and a surprise cut in output by Saudi Arabia. But the slow pace of vaccination has raised doubts over how soon economies could recover.

A UK official said Britain’s vaccine rollout was limited by a “lumpy” manufacturing process, and Pfizer Inc said it was distributing fewer doses of its vaccine in Europe in January than originally contracted.

“Vaccination campaigns, although ongoing, are lagging the speed needed to fast-track a global recovery in the first quarter and the comeback for oil demand will be slow,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

The U.S. dollar strengthened for a third consecutive day on Monday to a four-week high, weighing on crude prices. Oil is usually priced in dollars, so a stronger dollar makes crude more expensive for buyers with other currencies.

Security concerns ahead of this week’s U.S. presidential inauguration are also dragging on investor sentiment, said PVM Oil analyst Tamas Varga.

“In addition to the coronavirus running amok, this week’s tense presidential inauguration can also cause unease amongst investors,” he said.

Oil prices clawed back some losses after Chinese data showed the economy of the world’s biggest oil importer picked up speed in its recovery from the pandemic.

Prices also found support in a drop in Libyan oil output, with Waha Oil Company reducing production by up to 200,000 barrels per day because of maintenance on the main pipeline that links the Al-Samah and Al-Dhahra oilfields to Es Sider port.

(Reporting by Bozorgmehr Sharafedin in London; Additional reporting by Aaron Sheldrick in Tokyo and Rod Nickel in Winnipeg, Manitoba; Editing by Jason Neely, Mark Potter and Jane Merriman)