Oil prices down as supply glut, trade war concerns weigh on markets

Oil prices dipped on Tuesday, easing after strong gains in the previous session when hopes that trade disputes between the United States and China could be resolved buoyed global markets.

Despite a softening of trade concerns, oil markets still face an abundance of supplies that puts pressure on producers to keep their prices competitive in order not to lose market share.

U.S. WTI crude futures were at $63.26 a barrel at 0031 GMT, down 16 cents, or 0.3 percent, from their previous settlement.

Brent crude futures were at $68.52 per barrel, down 13 cents, or 0.2 percent.

The dips came after a more than 2 percent rally on Monday during European and American trade hours.

"Oil prices rose sharply (on Monday) as a weaker U.S.-dollar and easing concerns about the trade war saw investor appetite return," ANZ bank said.

Oil prices steady near 2-year highs as market tightens amid Opec cuts

Oil prices steadied near two-year highs on Thursday as supply cuts by Opec and other major exporters tightened the market and drained inventories.

Benchmark Brent crude was down 20 cents at $60.29 per barrel by 1345 GMT. On Wednesday, Brent reached $61.70, its highest intraday level since July 2015. The contract is up by more than a third from its 2017-lows in June.

US light crude was unchanged at $54.30, almost 30 percent above its 2017-lows in June.

"The upswing in oil prices appears to have ended for the time being," said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

Some investors had booked profits after the recent price rally, traders said, but the market outlook remained upbeat.

Confidence has been fuelled by an effort this year lead by the Organization of the Petroleum Exporting Countries and Russia to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.

Saudi Arabian Energy Minister Khalid al-Falih said on Thursday supply and demand balances were tightening and oil inventories falling, while compliance with the OPEC-led pact to curb supplies had been "excellent".

Overall, oil markets have been slightly undersupplied this year, resulting in inventory drawdowns.
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Opec calls on US shale oil producers to slash global supply, prop up prices

Opec's Secretary General Mohammed Barkindo on Tuesday called on US shale oil producers to help curtail global oil supply, warning extraordinary measures might be needed next year to sustain the rebalanced market in the medium to long term.

"We urge our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle," said Barkindo.
The comments by the Organisation of the Petroleum Exporting Countries official came during a speech delivered at a conference in New Delhi.

While Opec and some other producers, including Russia have cut supplies this year in order to prop up prices, US production has soared by almost 10 per cent this year, driven largely by shale drillers. Barkindo said he hoped that new producers, not just US shale drillers, would join production cuts.

On Monday, Saudi Arabia cut crude oil allocations for November by 560,000 barrels per day (bpd), in line with the kingdom's commitment to the Opec-led supply reduction pact.

Still, the top oil exporter plans to ship slightly above 7 million bpd next month, up from low levels during summer when domestic demand was at its peak.
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Oil prices set for biggest third-quarter gain in 13 years

Oil rose was on course for its largest third-quarter gain in 13 years as prices rose on Wednesday after the Iraqi oil minister said that OPEC and its partners are considering extending or deepening output cuts aimed at reducing a global supply glut.

Brent crude futures were up 48 cents at $55.62 a barrel by 1020 GMT, while US. West Texas Intermediate (WTI) crude futures rose 54 cents to $50.02.

The oil price is on course for a rise of 15.5 percent this quarter, which would make this year's performance the strongest for the third quarter since 2004.

"An improving macroeconomic backdrop should spur oil demand growth over the next couple of quarters, and if OPEC increases its adherence to production cuts, higher prices will come," ANZ Research said in a note.

"All things being equal, we still expect oil prices to test new highs (for 2017) by the end of the year."

The Organization of the Petroleum Exporting Countries and other producers are considering a range of options, including an extension of cuts, but it is premature to decide on what to do beyond the agreement's expiry in March, Iraqi oil minister Jabar al-Luaibi told an energy conference on Tuesday.
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Oil prices plunge as drop in US inventories encourage more production

Oil prices rose to near eight-week highs on Wednesday, as a fall in US inventories bolstered expectations that the long-oversupplied market was moving toward balance.

Brent crude futures rose 40 cents to $50.60 a barrel by 1213 GMT, after rallying more than 3 percent on Tuesday.

U.S. West Texas Intermediate futures climbed 50 cents to $48.39 a barrel.

U.S. crude stockpiles fell sharply last week as refineries boosted output, while gasoline inventories increased and distillate stocks decreased, the industry group the American Petroleum Institute said on Tuesday.

Crude inventories fell 10.2 million barrels in the week ending July 21 to 487 million, more than the expected decrease of 2.6 million barrels. Data from the U.S. Energy Information Administration on Wednesday could provide more support, with forecasts of a drop for a fourth week in a row.

Tuesday's stock draw added to hopes the long-awaited oil market rebalancing was underway. Saudi Arabia said on Monday it would limit oil exports to 6.6 million barrels per day (bpd) in August, down nearly 1 million bpd from a year earlier.
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Oil prices dip as prospect of deeper Opec output cut dims

Oil slipped to one-week lows Monday, as several OPEC and non-OPEC ministers met to discuss a pact to curb oil output but the prospect of the group delivering deeper cuts grew more distant.

Brent September crude futures fell 18 cents on the day to $47.88 a barrel by 0850 GMT. The price fell 2.5 percent on Friday after a consultancy forecast a rise in OPEC production for July.

NYMEX crude for September delivery fell 20 cents to $45.57 a barrel.

"Deeper production cuts have been ruled out, but on the agenda will be caps for exempted OPEC members Libya and Nigeria," PVM Oil Associates analyst Stephen Brennock said.

"Faith in the oil market rebalancing is waning by the day and the sooner the Saudis admit the need to do more, the sooner prices can begin their journey on the road to recovery," he said.

Several ministers from the Organization of the Petroleum Exporting Countries and other non-OPEC producers are meeting in the Russian city of St Petersburg to review market conditions and examine any proposals related to their pact to cut output.

Saudi Energy Minister Khalid al-Falih said there would be no discussion of deeper oil output cuts, but said there would be a discussion on output caps for Nigeria and Libya.
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The G20's economic leadership deficit

Few have heard of the Baltic Dry Index. It measures the demand for bulk shipping carriers, used for international trade. It usually attracts little attention. But nine years ago this index had the undivided attention of the 20 most powerful leaders in the world.

It was when the global financial system was on a precipice. Stock markets were crashing. Credit markets were freezing. Rolling failures across financial institutions were shattering confidence. Unable to wait for monthly trade data, the Baltic Dry Index showed in real-time what many leaders feared: global trade and commerce were grinding to a halt.

Leaders faced the real prospect of another Great Depression. But they were determined not to make the mistakes of the past. They resisted a return to protectionism. They slashed interest rates and buttressed the International Monetary Fund and development banks. Over the next three years, they implemented US$5 trillion of co-ordinated fiscal stimulus, the largest in history.

That leadership is needed again today. The risks leaders face at the latest G20 meeting in Hamburg, Germany, might not be as serious as those the leaders who met in Washington faced back in 2008. But the risks are present, and leaders are disengaging with the G20’s ever-expanding agenda. They are more likely to use the G20 for cheap political point scoring than for advancing cooperation on critical global challenges.

Australia can play a role in helping the G20 to deliver this leadership.

Economic challenges

Protectionist measures are on the rise. Protectionist rhetoric is rising faster. The World Trade Organisation shows that the stock of trade-restrictive measures is growing, up 8.5% in the 12 months to May 2017 alone.
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The writing is on the wall for Opec: It needs to cut more

Brent and WTI are in bear territory, having crashed 22% from the year's highs. You can call crude over-sold, you can put it down to technical and algorithmic trading. But you can't ignore the fact that it is more than just fickle, volatile sentiment this time: the OPEC/non-OPEC cuts may be removing up to 1.7 million b/d from the market, but the growth in US, Libyan and Nigerian output is putting more than 1.5 million b/d back, leaving net reduction at less than 200,000 b/d.

Of course, the producer group could continue advising patience to the world for the elusive evidence of a decline in global oil inventories, as it has being doing for the past few months. But this week proved that no one is listening any more.

Crude’s clumpy cascade this week into bear market territory could be put down to algorithmic and technical selling, but for the purposes of this discussion, the mechanism behind the latest downward spiral is moot. OPEC needs to respond not to the crude traders’ seeming paranoia, but to the fact that its current quantum of cutbacks have been all but neutralised.

OPEC and its non-OPEC collaborators are in a corner, but if the Saudi and Russian energy ministers stand behind their “whatever-it-takes” pledge of last month to rebalance the markets, the time has come to deepen the cuts. It won't be easy, but it is not impossible and a far more suitable option for OPEC than admitting defeat.
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US markets end flat as financials drop, defensives gain

US stocks were little changed on Wednesday as financials dropped after JPMorgan and Bank of America warned of revenue weakness, offsetting gains in defensive plays.

JPMorgan blamed lower volatility for a 15 percent decline in trading revenue in the current quarter compared with last year, while Bank of America said trading revenue in the second quarter was on track to be 10 to 12 percent lower than last year.

Financials rallied more than 20 percent in the wake of the US presidential election on hopes of fiscal stimulus and deregulation under President Donald Trump, but they have struggled in recent weeks. The sector is now down 0.3 percent on the year.

"All the things that Trump told us were going to happen, which was infrastructure spend, deregulation, tax reform, people don’t believe any of those will happen, certainly the magnitude and with the speed the market had originally priced in," said Ernesto Ramos, head of equities at BMO Global Asset Management in Chicago.

"That is why you’ve seen a lot of the move back, specifically banks."

Measures of market volatility are at rock-bottom, hitting trading desks at big banks. The US stock market's main gauge of investor anxiety closed at its lowest level in over two decades on May 8 and has not topped its long-term average of 20 since November. It did, however, hit a seven-day high of 11.30 on Wednesday.

JPMorgan shares lost 2.1 percent while Bank of America was down 1.9 percent as the two biggest weights on the S&P 500. Goldman Sachs fell 3.3 percent, the biggest drag on the Dow.

Defensive plays such as utilities, up 0.46 percent and telecoms, up 0.35 percent, were the bright spots as enthusiasm fades for sectors that would benefit from Trump policies.

Energy stocks, down 0.4 percent, also lost ground. Oil prices touched a three-week low as rising output from Nigeria and Libya fueled concerns that OPEC-led output cuts are being undermined. US crude settled down 2.7 percent at $48.32 a barrel and Brent settled 3 percent lower at $50.1.

The Dow Jones Industrial Average fell 20.82 points, or 0.1 percent, to 21,008.65, the S&P 500 lost 1.1 points, or 0.05 percent, to 2,411.81 and the Nasdaq Composite dropped 4.67 points, or 0.08 percent, to 6,198.52.

Shares of Michael Kors plunged 8.5 percent to $33.18. The luxury fashion retailer gave a bleak full-year forecast and said it would shut more than 100 full-price retail stores in the next two years.
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S&P 500, Nasdaq hit record highs as oil price rise boosts energy stocks

The Nasdaq Composite and the S&P 500 touched record highs in late morning trading on Monday as a rise in oil prices boosted energy stocks and investors shrugged off the impact of a global cyber attack.

Oil hit its highest in more than three weeks after top exporters Saudi Arabia and Russia said supply cuts needed to last into 2018, a step towards extending the Organisation of the Petroleum Exporting Counties (Opec)-led deal to support prices for longer than originally agreed.

Shares of oil majors Exxon and Chevron helped boost the S&P energy index, which was on track to close higher for the first time in three sessions.

"The rebound in oil prices and lack of bad news on the geopolitical front has led to a bit of a relief rally in equities," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"At this level, there isn't too big a correlation between oil and equities but since we've seen oil fall quite a bit in a month or so, today's rally in oil is helping the market grind higher."

At 10:53 am ET (14:53 GMT), the Dow Jones Industrial Average was up 89.46 points, or 0.43 per cent, at 20,986.07. The S&P 500 was up 12.54 points, or 0.52 per cent, at 2,403.44 and the Nasdaq Composite was up 30.37 points, or 0.50 per cent, at 6,151.61.

All the 11 major S&P 500 sectors were higher, with the energy and materials index leading the gainers.

Investors seemed to mostly shrug off fears from a successful missile test by North Korea and a cyber attack that disrupted operations at car factories, hospitals, shops and schools.

Shares of cybersecurity firms such as Fireye, Symantec and Palo Alto Networks were all up.

Cisco's 2.5 per cent rise provided the biggest boost to the Nasdaq and S&P.

US stocks slipped on Friday, ending the week lower as tepid economic data weighed on banks and worries deepened over department stores.
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