OIL, NATURAL GAS

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RIGZONE

"Oil Continued Longest String of Losses in Five Months"


by Bloomberg | Ari Hawkins

Tuesday, August 17, 2021

Oil fell for a fourth day, marking its longest run of losses since March, pressured by a rising dollar and economic data illustrating the U.S. recovery’s uneven path.

Futures declined 1% on Tuesday.

The dollar climbed, weakening the appeal of commodities priced in the currency.

U.S. retail sales fell in July by more than forecast, while factory production strengthened the most in four months.

Data from China on Monday revealed a slowdown in the economy last month.

“Poor data coming out of China is ground zero for reignited global concern surrounding Covid-19,” says Phil Flynn, senior market analyst at Price Futures Group.

“Although indicators in the U.S. shows a better situation than China, as the second largest economy, what happens in the region has huge market impact.”

After a vigorous rally in the first half of the year, crude’s advance has been checked in recent weeks.

The delta variant has spurred fresh curbs on mobility in many nations including China, harming energy consumption.

Against that backdrop, JPMorgan Chase & Co. has been among banks reducing oil price forecasts.

“China is the world’s engine for participated demand growth,” says Thomas Finlon, director of Energy Analytics Group LLC.

“When demand shows signs of a downturn, you can be sure the effects will spread.”

Prices:

WTI for September delivery fell 70 cents to settle at $66.59 a barrel.

Brent for October slipped 48 cents to end session at $69.03 a barrel.

While demand has been challenged, the Organization of Petroleum Exporting Countries and its allies including Russia have stayed the course in relaxing their output curbs imposed in the early phase of the pandemic.

Supplies will rise by 400,000 barrels a day this month.

With prices softening, OPEC+ delegates said they don’t see a need to accelerate the revival of output, despite a call from U.S. President Joe Biden last week for the cartel to restore more production to bring gasoline prices down.

The group’s next regular meeting is set for Sept. 1.

(With assistance from Saket Sundria and Grant Smith.)

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Re: OIL, NATURAL GAS

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Investing,com

"Oil Inventories Fell by 1.2M Barrels Last Week: API"


By Yasin Ebrahim

Aug 17, 2021

Investing.com - U.S. crude stockpiles fell by less than expected last week, keeping worries about demand front and center just as China appetite for oil appears to be slowing amid rising Covid-19 cases.

West Texas Intermediate, the benchmark fell 66 cents to $66.41 a barrel on the news, after settling down 70 cents to $66.59 a barrel.

U.S. crude inventories decreased by about 1.16 million barrels for the week ended Aug. 13.

That compared with a draw of 816,000 barrels reported by the API for the previous week.

Economists were expecting a draw of about 1.3 million barrels.

China, the world’s largest energy consumer, reported that daily crude processing in July fell to its lowest level in nearly 15 months, exacerbating investor concerns that demand is on the backfoot and will be dealt a further blow by travel restrictions brought on by rising Covid-19 cases.

The API also showed that gasoline inventories declined by about 1.2 million last week, compared with a 1.1 million draw in the prior week, and distillate stocks increased by about 502,000 barrels.

The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies declined by about 1.1 million barrels last week.

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Re: OIL, NATURAL GAS

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"Oil Settles Lower On Weak Demand Signals"


by Bloomberg | Ari Hawkins

Wednesday, August 18, 2021

Crude in New York dropped to the lowest since May after a surprise increase in U.S. gasoline inventories signaled fuel demand is under threat with the delta variant menacing the nation.

West Texas Intermediate ended its session down 1.7% to settle at $65.46 a barrel, the fifth straight daily decline.

Futures briefly dipped below $65 for the first time since May in after-hours trading.

Minutes from the latest Federal Reserve meeting suggested that tapering of monthly asset purchases could begin as soon as this year, a move that could strengthen the dollar and lower the appeal of commodities priced in the currency, said Phil Flynn, senior market analyst at Price Futures Group Inc.

Domestic gasoline stockpiles inventories climbed by 696,000 barrels, the first increase in more than a month, according to data released by the Energy Information Administration on Wednesday.

Meanwhile, crude stockpiles declined by a larger-than-forecast 3.23 million barrels.


“After the EIA data came out, the market initially reacted positively, but as traders assessed the fundamentals with respect to demand risk, they changed their tune,” said Bart Melek, head of global commodity strategy at TD Securities.

“The stronger dollar had an additional impact, but what it comes down to is that the market is reeling from delta’s continued threat to consumption.”

The report followed an industry-funded American Petroleum Institute tally on Tuesday that saw a 1.16-million decline in crude inventories with supplies at the Cushing, Oklahoma, hub dropping by 1.74 million.

The group also pegged the drop in gasoline stockpiles at almost 2 million.

The surprise gasoline build is “certainly weighing on the market,” said Matt Sallee, who helps manage about $8 billion at Tortoise.

Crude surged during the first half of the year as vaccination rollouts increased confidence about the pace of economic recovery.

But the rally was knocked off course in recent weeks amid signals in the U.S. and China suggesting the spread of Covid-19’s delta variant may be hurting energy demand.

Prices:

WTI for September delivery fell $1.13 to settle at $65.46 a barrel in New York.

Brent for October ticked lower by 80 cents to end session at $68.23.

Despite lower headline prices, Brent’s nearest timespread widened to settle at a backwardation of 46 cents Wednesday.

That structure — where the nearest contracts are more expensive than those at later dates — has started to indicate a stronger market in recent days, after slumping to an 11-week low on Monday.

“The $100-a-barrel predictions we saw earlier in the summer were rendered completely inaccurate as Asian demand continues to be muted,” said Jay Hatfield, chief executive officer of Infrastructure Capital Management.

“Delta notwithstanding, an overall stockpile decline indicates some positive long-term fundamentals for oil.”

(With assistance from Sheela Tobben, Saket Sundria and Alex Longley.)

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Re: OIL, NATURAL GAS

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RIGZONE

"Oil Treads Into Longest Losing Streak in 18 Months"


by Bloomberg | Ari Hawkins

Thursday, August 19, 2021

Oil fell for the sixth day in a row to the lowest level since May after the U.S. Federal Reserve on Wednesday signaled it was set to start tapering asset purchases within months.

West Texas Intermediate futures ended the session down 2.7%, dipping below $64 a barrel amid a broader commodity selloff as the prospect of reduced stimulus shook markets.

The delta virus variant for air travel is denting demand, with enthusiasm for air travel waning in the both the U.S. and Japan.

Asia’s physical market is softening with muted buying from China and a move by India to sell oil from its strategic reserves.

“The dollar is seeing considerable strength as the Fed moves to cool the economy,” said John Kilduff, a partner at Again Capital LLC.

“Oil was already seeing downward pressure as the market reeled from softened demand coming out of China, and waning commodities appeal is encouraging the slump further.”

Oil’s rally in the first half of the year has lost momentum since July amid the threat to demand posed by the spread of the delta variant.

At the same time, OPEC+ pushed ahead with gradually restoring supplies.

The combination of factors has led leading analysts to lower price forecasts for the last half of the year.

To cushion the U.S. economy from the blow inflicted by the pandemic, the Fed has been buying $120 billion of assets every month, buoying commodities.

The minutes of the bank’s July meeting showed a potential pullback in its monthly bond purchases, as most participants now judged it could be appropriate to start reducing the pace of stimulus.

“Economic growth concerns, stronger dollar and a risk-off environment are not helping oil,” said Giovanni Staunovo, an analyst at UBS Group AG.

“Demand will continue to recover in an uneven way over the coming weeks and the oil market remains under-supplied."

"So that should still support prices down the road.”

Prices:

WTI for September delivery fell $1.77 to settle at $63.69 a barrel in New York.

It slipped as much as 4.3% earlier.

Brent for October settlement declined $1.78 to end session at $66.45 a barrel.

Road traffic remains depressed in various Southeast Asian countries as various levels of lockdowns are still in place.

“Indicators for consumption coming out of the region have global influence,” said Stewart Glickman, energy equity analyst at CFRA Research.

“Where China goes, investors follow.”

(With assistance from Grant Smith and Saket Sundria.)

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Re: OIL, NATURAL GAS

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RIGZONE

"Oil Extended Losing Streak Friday to Seven Days, Longest since 2019"


by Bloomberg | Ari Hawkins

Friday, August 20, 2021

Oil capped the week with the longest losing streak since 2019 as the dollar strengthened after the Federal Reserve signaled it will start tapering stimulus and the virus resurgence raises doubts about demand growth.

West Texas Intermediate futures ended the session 2.2% lower, tumbling for a seventh day and extending the week’s decline to 8.9%.

Other raw materials including copper and iron ore fell on Thursday following the Fed’s signal.

The Bloomberg Dollar Spot Index has risen every day this week, making commodities priced in the currency less appealing.

The pandemic remains a threat to energy demand, especially across Asia, with key importer China restricting mobility to combat an outbreak.

“It’s an exceptionally rare event for oil to fall for such an extended period,” said Thomas Finlon, chief operating officer at Brownsville LLC, a trading and logistics firm in Houston.

“External factors including the ongoing effects of the delta variants’ growth and the behavior coming out of the federal reserve, is proving surprisingly significant to investors.”

Crude’s weakness comes amid fading expectations for further large inventory draws in the coming months.

Bank of America said prices will probably be range-bound in the second half of the year with more steep drops in stockpiles unlikely.

The price plunge may force the Organization of Petroleum Exporting Countries and its allies to pause their next planned production increase, according to Citigroup Inc.

“We have now priced down to a level reflecting more sideways inventories, with demand pain from Covid-19 together with more from OPEC+ on supply,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

“But OPEC+ should be in fairly good control of the market still.”

The pandemic continues to disrupt plans to restart economic activity, crimping mobility and demand for fuels.

In Australia, Sydney’s two-month long lockdown will be extended until at least the end of September.

In the U.S., more companies announced plans to keep workers at home as the virus spreads.

Brent crude is also sinking.

The international benchmark is headed for its longest run of losses in more than three years and close to falling below $65 a barrel for the first time since May.

Prices:

WTI for September delivery, which expires Friday, fell $1.37 to settle at $62.32 a barrel in New York.

Brent for October settlement declined $1.27 to end session at $65.18 a barrel.

Despite lower headline prices and the commodity being unable to shake investors’ risk averse mood as of late, Brent’s nearest timespread widened to 44 cents, an indicator of long term bullishness.

The number of people in the U.S. getting a first dose of a Covid-19 vaccine has risen to almost half a million a day, a level last seen at the end of May, as the overall vaccination rate in the U.S has increased to 60%.

“The people who are pessimistic about delta will tell you prices will continue to slump into the future,” said Phil Flynn, senior market analyst at Price Futures Group Inc.

“While that’s certainly possible, if we continue to see positive data coming out of the White House, and OPEC is able to modify production as needed, it’s very possible we’ll see a rise in the near future.”

(With assistance from Saket Sundria and Alex Longley)

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"Oil Soars Monday Following A Difficult Week"


by Bloomberg | Sheela Tobben

Monday, August 23, 2021

Oil rose the most in nine months, buoyed by a broader market rebound and signs of progress in checking the pandemic’s progress.

U.S. crude futures climbed 5.6% in New York on Monday, the biggest one-day advance since early November.

With concerns about China’s wealth crackdown easing, investors rushed into stocks and commodities.

Meanwhile, the world’s most populous nation quashed domestic virus cases to zero while U.S. regulators granted full approval to the nation’s most widely used Covid-19 vaccine.

“Today is a big snap back,” said Leo Mariani of KeyBanc Capital Markets Inc.

Oil’s scorching rally over the first half of the year ran into stiff headwinds in recent weeks on concerns the resurgent virus could prompt OPEC and its allies to pull back on supply increases.

Traders will be watching the Federal Reserve’s annual Jackson Hole symposium that starts later this week for clues to any changes in policy by central bankers.

“We’ve seen quite some pressure in recent weeks with Covid dominating headlines again,” said Hans van Cleef, senior energy economist at ABN Amro Bank.

“So that could also explain a big part of today’s support."

"Bargain hunting and a spillover from the positive sentiment in other asset classes.”

Prices:

West Texas Intermediate for October delivery gained $3.50 to settle at $65.64 a barrel in New York.

Brent for October settlement rose $3.57 to $68.75.

The delta variant has also weakened the oil futures curve.

The prompt timespread for Brent was 44 cents a barrel in backwardation -- where near-dated contracts are more expensive than later-dated ones.

That compares with 92 cents at the end of July.

Goldman Sachs Group Inc. said in a note that prices had “overshot timespreads to the downside, suggesting an oversold market.”

(With assistance from Alex Longley and Elizabeth Low.)

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"Oil Continues Rise As China Beats Down Covid Cases"


by Bloomberg | Sheela Tobben

Tuesday, August 24, 2021

Oil extended gains from the biggest jump in five months as China’s success in stamping out virus flare-ups boosts optimism of a demand recovery.

U.S. oil futures rose 2.9% while Brent topped $71 a barrel.

China has rapidly brought local virus cases down to zero and road traffic is showing signs of recovery.

The country also reopened its Ningbo port, one of the busiest in the world, after a two-week shutdown.

“The developments out of China are reigniting expectations that oil demand would start to rise again,” said Phil Flynn, senior market analyst at Price Futures Group Inc.

Meanwhile, a fire on a Mexican oil platform wiped out more than 400,000 barrels a day of the nation’s output, roughly equivalent to what OPEC+ will discuss adding back to the market when it meets next month.

Covid’s resurgence has interrupted oil’s rally and prompted speculation that OPEC+ may reassess its current plan to return additional barrels to the market when it meets Sept. 1.

Goldman Sachs Group Inc., however, reiterated that the demand impact from delta would be transient, while UBS Group AG sees Brent crude recovering to $75 a barrel on market tightness.

This week’s rally has coincided with a sharp strengthening in timespreads that indicate prompt demand.

The difference between the nearest two December Brent futures contracts jumped by $1 a barrel in the past two days.

Gains in the global benchmark increased its premium to WTI to the widest since April.

Prices:

West Texas Intermediate for October delivery rose $1.90 to $67.54 a barrel in New York.

Brent for October gained $2.30 to $71.05, settling above $71 for the first time since Aug. 12.

Later this week, investors will also be considering the Jackson Hole symposium -- being held virtually from Thursday -- which may offer insights into how the Federal Reserve plans to scale back stimulus.

Despite the positive strides against the Delta variant, hurdles still remain to restoring demand.

Chinese airlines plan to operate the fewest flights in August since February, according to data from Cirium.

In Malaysia, rising infections are threatening to aggravate shortages of semiconductors and other components that have hammered automakers for months.

(With assistance from Elizabeth Low and Alex Longley.)

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Investing.com

"Oil Inventories Fell by 1.6M Barrels Last Week: API"


By Yasin Ebrahim

Aug 24, 2021

Investing.com - U.S. crude stockpiles fell by less than expected last week, but the bullish sentiment on energy since the start of the week remained intact amid signs China has curbed the latest wave of Covid-19.

West Texas Intermediate, the benchmark climbed to $67.51 a barrel on the news, after settling up $1.90 to $67.51 a barrel.

U.S. crude inventories decreased by about 1.6 million barrels for the week ended Aug. 20.

That compared with a draw of 1.2 million barrels reported by the API for the previous week.

Economists were expecting a draw of about 2.4 million barrels.

The API also showed that gasoline inventories declined by about 985,000 last week, compared with a 1.2 million draw in the prior week, and distillate stocks increased by about 245,000 barrels.

The official government inventory report due Wednesday is expected to show weekly U.S. crude supplies declined by about 2.7 million barrels last week.

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"Oil Rose On Bullish Crude and Gasoline Inventory Reports"


by Bloomberg | Sheela Tobben

Wednesday, August 25, 2021

Oil rose for a third session after a U.S. government report showed that crude and gasoline inventories fell despite fears that the delta variant’s spread would sap demand.

Futures in New York advanced 1.2% on Wednesday to the highest in more than a week, buoyed by bullish stockpile data.

Domestic crude supplies slid to the lowest since January 2020, according to data from the Energy Information Administration.

Gasoline inventories dropped more than expected.

Crude inventories declining at a time when net petroleum imports are rising, “is a bullish sign, indicating that the delta variant isn’t impacting oil demand, at least not for crude and gasoline,” said Brian Kessens, a portfolio manager at Tortoise Capital Advisors.

Oil has had a volatile August.

The stellar year-to-date rally cooled in the first half of the month as concerns grew that the virus’s delta variant would hit consumption, while the Federal Reserve flagged plans to taper stimulus measures.

Since then, prices have recovered, with banks from Goldman Sachs Group Inc. to UBS Group AG underlining bullish calls on the market.

The EIA also reported that stockpiles at the Cushing, Oklahoma, storage hub, rose for the first time since early June, reversing 10 consecutive draws.

Gasoline inventories declined by 2.24 million barrels last week.

Fuel consumption rose to the highest in a month, defying expectations that a resurgent virus would keep more American at home and chill demand.

Prices:

West Texas Intermediate crude for October delivery rose 82 cents to settle at $68.36 a barrel in New York, the highest since Aug. 13.

Brent for October settlement climbed $1.20 to end the session at $72.25 a barrel, the highest in three weeks.

Despite the positive outlook for oil demand, the crude market will very likely continue to face headwinds from the Delta variant as it will take time for the full Pfizer Vaccine approval to increase vaccination rates and as technical barriers from chart trading, said Bart Melek, head of global commodity strategy at TD Securities.

(With assistance from Grant Smith.)

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"Oil Dips as Covid Still Clouds Outlook


by Bloomberg | Elizabeth Low

Thursday, August 26, 2021

(Bloomberg) -- Oil dropped after the biggest three-day gain since March, with the latest Covid-19 resurgence still clouding the outlook for fuel demand.

Futures in New York fell below $68 a barrel after rising almost 10% over the past three sessions.

Shrinking U.S. stockpiles, a rebound in Indian demand and China’s containment of its latest outbreak are providing some positive signs for the market, but restrictions on mobility still remain in place in many regions due to the fast-spreading delta variant of the coronavirus.

Oil has been volatile this month, clawing back some losses this week after the worst streak of declines since October 2019.

The European Union will discuss on Thursday whether to reimpose curbs on U.S. visitors as cases spike, while the market will be looking for any changes to production policy from the OPEC+ alliance when the group gathers on Sept. 1.

“The persistent spread of the delta variant is weighing on transport fuel demand, particularly in Asia-Pacific markets where vaccination rates are low,” said Victor Shum, vice president of energy consulting for IHS Markit in Singapore.

“The oil price rally this week cannot be sustained.”

Investors will also be keenly watching the Jackson Hole meeting from Thursday for insights on how the Federal Reserve will ease stimulus.

The dollar edged higher, making raw materials such as oil more expensive for investors.

Prices

West Texas Intermediate for October delivery lost 0.6% to $67.93 a barrel on the New York Mercantile Exchange at 7:45 a.m. in London after rising 1.2% on Wednesday.

Brent for October settlement fell 0.4% to $71.97 on the ICE Futures Europe exchange after gaining 1.7% on Wednesday.

The prompt timespread for Brent has firmed in a bullish backwardation structure -- where near-dated contracts are more expensive than later-dated ones -- following some weakness due to the virus resurgence.

The spread was $1.03 a barrel, compared with 38 cents on Monday.

U.S. crude stockpiles fell by 2.98 million barrels last week, according to Energy Information Administration data.

Gasoline inventories slid by 2.24 million barrels, compared with the median estimate in a Bloomberg survey for a 1.5-million barrel decline.

Cushing supplies rose marginally.

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