Oil Falls More Than 10% To Lows Not Seen Since 1999

Crude oil futures fell on Monday, with U.S. futures touching levels not seen since 1999, extending weakness on the back of sliding demand and concerns that U.S. storage facilities will soon fill to the brim amid the coronavirus pandemic.

The oil market has been under pressure due to a spate of reports on weak fuel consumption and grim forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency.


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The volume of oil held in U.S. storage, especially at Cushing, Oklahoma, the delivery point for the U.S. West Texas Intermediate (WTI) contract, is rising as refiners throttle back activity due to slumping demand.

The front-month May WTI contract (CLc1) was down $2.62, or 14%, to $15.65 a barrel by 0142GMT. At one point, the contract had fallen as much as 21% to hit a low of $14.47 a barrel, the lowest since March 1999.

That contract is expiring on Tuesday, and the June contract , which is becoming more actively traded, fell $1.28, or 5.1%, to $23.75 a barrel. Brent (LCOc1) was also weaker, down 21 cents, or 0.8%, to $27.87 a barrel.

The plunge in crude oil prices reflects a glut at the main U.S. storage facilities at Cushing and a big drop in demand, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“It hasn’t reach capacity but the fear is that it will,” he said, adding that once the maximum capacity is reached, producers will have to cut output.

Production cuts from OPEC and its allies such as Russia will also kick from May. The group has agreed to reduce output by 9.7 million bpd to stem a growing supply glut after stay-at-home orders and business furloughs to curb the COVID-19 pandemic that has killed more than 164,000 people worldwide sap fuel demand.

The oil industry has been swiftly reducing production in the face of an estimated 30% decline in fuel demand worldwide. Saudi Arabian officials have forecast that total global supply cuts from oil producers could amount to nearly 20 million bpd, but that includes voluntary cuts from nations like the United States and Canada, which cannot simply turn on or off production in the same way as most OPEC nations.

Numerous majors have announced supply reductions, including Chevron Corp (NYSE:CVX), BP plc (LON:BP) and Total SA (PA:TOTF). But economic growth is sagging, and physical crude markets and an estimated record 160 million barrels of oil stored onboard ships suggest prices will keep falling.

“There’s still some concern that the 10 million barrels per day cut won’t be enough to offset demand destruction so the outlook for oil prices remain subdued,” McCarthy said.

North American exploration and production companies have cut their budgets by roughly 36% on a year-over-year basis, according to a Sunday note from James West, analyst at Evercore ISI, while international companies have cut budgets by 23%.



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Goldman: U.S. Measures Could Support Oil Prices Near Term

Supply restraint by core-OPEC producers could push second-quarter Brent oil prices up to $30 a barrel, while U.S. measures to support the market could underpin prices in the near term, Goldman Sachs (NYSE:GS) said in a research note.

Citing Wall Street Journal reports that the United States was considering intervening in the ongoing Saudi-Russian price war and Texas regulators may curb oil output, the U.S. investment bank said such action would reduce global and U.S. domestic supplies.



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U.S. crude oil prices rose more than $1 on Friday, extending steep gains from the previous session, after U.S. President Donald Trump said he would “get involved” in the price war at an “appropriate time”.

While any U.S. measures could support the oil market into the second half of the year, however, Goldman Sachs said accompanying supply cuts would still not be enough to offset the 8 million barrels per day (bpd) demand loss – brought about by countries slowing economic activity to halt the spread of the coronavirus which has caused nearly 10,000 deaths worldwide.

“Medium-term, the impact of such policies will depend on their political viability given the upcoming presidential election,” Goldman Sachs said in the note issued on Thursday.

U.S. production quotas could create a $5 to $10 upside to Goldman Sachs’ West Texas Intermediate price forecast of $40 to $45 a barrel in 2021, the bank said.

While a return to U.S. oil supply management policies of the 1970s and 80s would “help support prices in the third and fourth quarter above our $30 and $40 a barrel Brent forecast, they would simply replace OPEC’s artificial price support policy with another,” the bank said, referring to the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is a key member.



Oil extends recovery as Trump hints at intervening in Saudi-Russia price war

Oil prices recovered further on Friday, following steep gains in the previous session after U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia at an “appropriate time”.

Prices were also supported by United States’ plans to buy up to 30 million barrels of crude oil for its emergency stockpile by the end of June, while regulators in the country’s largest oil-producing state Texas were reportedly considering curtailing production.

The more active West Texas Intermediate (WTI) crude futures contract for May was up 43 cents, or 1.7% at $26.34 a barrel by 0540 GMT. The contract rose as much as 5.5% to $27.34 per barrel earlier in the session.

U.S. crude futures for April (CLc1) also rose 43 cents to $25.65 a barrel. The front-month April contract, which spiked 24% on Thursday, expires later on Friday.

“An astonishing rebound in crude oil prices overnight was primarily driven by U.S’s consideration to intervene in the oil market by increasing strategic reserves, while slashing some oil production,” said Margaret Yang, market analyst at CMC Markets.

“The underlying issue is that global energy demand is falling sharply as more countries join the ‘lockdown’ club. The severity of Covid-19 for the macro-economy could exceed anyone’s expectation, and it could last for a long period of time.”

Brent crude futures (LCOc1) climbed 28 cents, or about 1%, to $28.75 per barrel.

The international benchmark rose 14.4% on Thursday in its biggest one-day gain since September, but was on track for its fourth consecutive weekly drop on Friday.

U.S. crude and Brent have both collapsed about 40% in the last two weeks since talks between the Organization of the Petroleum Exporting Countries and its allies, including Russia, broke down, which led Saudi Arabia to ramp up supply.

The Trump administration is considering a diplomatic push to get Saudi Arabia to close its taps and using the threat of sanctions on Russia to force them to reduce output, the Wall Street Journal reported, quoting unidentified sources.


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“The outsized gains by WTI reflect the hope and not the reality of the U.S. shale industry. Russia and Saudi Arabia have zero interest in helping US shale survive. Just the opposite, in fact,” said Jeffrey Halley, senior market analyst at OANDA.

“Once this reality finally sets in, I expect the rally in oil to disappear as quickly as it began.”





Oil Jumps as Iran Tanker Blast

Oil jumped back above $60 a barrel after a reported explosion on an Iranian tankerFutures jumped by almost $1 a barrel after the Islamic Republic News Agency reported a National Iranian Oil Company tanker caught fire after a blast, taking the day’s gains to more than 2%. Prices were already higher after U.S. President Donald Trump said talks with Chinese counterparts are going “really well” and that they will continue on Friday, offering a glimmer of hope for global demand.


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The tanker explosion will spur fresh concern about potential conflict in the world’s most important crude-producing region after attacks on ships and drones earlier this year, and most recently a strike on Saudi Arabian energy infrastructure. Oil is still down about 19% from its peak in April as the prolonged U.S.-China dispute adds to a bleak economic outlook.

“The explosion points to potential geopolitical risks and that has once again surprised the market to the upside,” said Will Sungchil Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “It still remains to be seen whether prices will keep rising as investors are putting their focus on the trade talks and the gains won’t last long if the negotiations result in a no-deal.”

Brent crude for December settlement rose as much as $1.36, or 2.3%, to $60.46 a barrel on the London-based ICE (NYSE:ICE) Futures Europe Exchange. The contract is up 3.5% this week and traded at $60.44 a barrel at 7:37 a.m. in London.


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West Texas Intermediate for November jumped as much as $1.14, or 2.1%, to $54.69 a barrel on the New York Mercantile Exchange. The contract climbed 96 cents to $53.55 on Thursday, the highest level in more than a week. Prices are up 3.5% this week.

See also: Oil Market Next Year ‘a Mess’ for Shale Drillers, Seaport Says

Key Saudi Arabian oil-processing facilities were attacked on Sept. 14, a strike that curbed about 5% of global output and was blamed on Iran. In July, a U.S. ship down an Iranian drone, while oil tankers have been targeted in the Persian Gulf.


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OPEC And Allies Set To Extend Oil Supply Cuts


OPEC and its allies led by Russia are set to extend oil output cuts until March 2020 on Tuesday to try to prop up the price of crude as the global economy weakens and U.S. production soars.

The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.

Benchmark Brent crude (LCOc1) has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.


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But fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.



Brent was trading flat on Tuesday at around $65 per barrel after OPEC approved the supply-cut extension the previous day.

Monday’s OPEC meeting will be followed by talks with its allies on Tuesday. The gathering is due to start after 08:00 GMT.


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Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the existing OPEC+ pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.

Oil prices could stall as a slowing global economy squeezes demand and U.S. oil floods the market, a Reuters poll of analysts found.

Saudi Energy Minister Khalid al-Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.

“The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between (the United States and China) and the truce they have reached in their trade and the resumption of serious trade negotiations,” Falih said.


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The meeting on Tuesday will also discuss a charter for long-term cooperation between OPEC and non-OPEC producers.

U.S. Crude Extends Weekly Gains To 10%


Stock Market News TodayOil prices extended gains to a three-week high on Friday as escalating tensions between the U.S. and Iran added to a rally of nearly 10% in U.S. crude.

New York-traded West Texas Intermediate crude futures rose 45 cents, or 0.8%, at $57.52 a barrel by 7:56 AM ET (11:56 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S. gained 84 cents, or 1.3%, to $65.29.

WTI oil was on track for weekly gains of 9.5%, while Brent was up 5.3% from a week ago.


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U.S. President Donald Trump had authorized military strikes against Iran in response to the strike against a U.S. surveillance drone late Thursday, but called off the attack at the last minute, according to a New York Times report.

The report is the latest development in escalating tension between Washington and Tehran in the Gulf region where six oil tankers have been damaged by explosions in the past six weeks.


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“We continue to believe amid this growing tension in the Middle East, along with expectations of an OPEC+ deal extension, that oil prices will trend higher over the second half of the year,” ING commodities strategists Warren Patterson and Wenyu Yao said in a note.

OPEC producers have postponed their official meeting to July 1 with non-members joining the following day. “A weaker U.S. dollar, with a more dovish Fed only adds further support,” they added.


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In other energy trading, gasoline futures surged 3.4% at $1.8465 a gallon by 7:58 AM ET (11:58 GMT), while heating oil jumped 1.9% at $1.9197 a gallon.

Lastly, natural gas futures traded up 1.1% at $2.208 per million British thermal unit.


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Crude Oil Production Cuts: Iraq, OPEC’s Second-Largest Producer, And Russia, Failed To Respect Their Commitments In The First Two Months Of The Year

OPEC and a group of 10 oil-producing nations led by Russia are deepening their crude production cuts, but remain split on whether the curbs should remain in place through the end of the year, officials said Sunday.

Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, met with Russia and a few other countries to review how the 24-nation coalition is complying with a December agreement to withhold 1.2 million barrels a day from global markets.

The broad coalition implemented cuts in February that achieved about 90% of the amount it agreed to, Saudi Energy Minister Khalid al-Falih said at a press conference following the group’s technical meeting. In March the cuts will be “above 100% easily,” he said, meaning the coalition will hold back slightly more than the 1.2 million daily barrels.

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The output cuts were meant to shore up oil prices in the midst of a global glut of crude. The effort has led to a more than 25% rise in price of Brent oil, the global benchmark, since the year began.

Iraq, OPEC’s second-largest producer, and Russia, the cartel’s largest external ally, failed to respect their commitments in the first two months of the year. But Russian Energy Minister Alexander Novak said his country is now complying with agreed-upon reductions of 230,000 barrels a day. He said the delays were due to freezing weather conditions.



His Iraqi counterpart, Thamir Ghadhban, said Baghdad was sharply reducing exports. Even so, a divide emerged among the coalition on when the output cuts should end. The current agreement expires in June, and the group disagrees about the impact of U.S. sanctions on OPEC members Venezuela and Iran.

The Trump administration banned Iran’s oil exports beginning in November but granted waivers to a limited number of countries to allow for continued crude purchases. The administration is due to decide on whether to extend the waivers by May. Washington also prohibited the purchase of crude from the Venezuelan regime of Nicolás Maduro in January.

Production levels from Iran and Venezuela “have not declined precipitously—to the point where we see there are still inventory builds,” Saudi Arabia’s Mr. Falih said. “We need to stay the course certainly until June,” he said, adding that the output cuts may have to be pursued until the end of 2019.

Russia’s Mr. Novak said uncertainty over the implementation of U.S. sanctions blurred the group’s planning on future curbs. “We don’t know what will happen in April, so we can’t forecast the second half,” he said.

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China-U.S. Trade – Oil Prices Pressed Higher, Marking Fresh Three-Month Highs On Friday


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Oil prices pressed higher, marking fresh three-month highs on Friday, as investors celebrated a meeting between U.S. President Donald Trump and China’s top trade representative, Vice Premier Liu He.

New York-traded West Texas Intermediate crude futures rose 50 cents, or 0.88%, at $57.46 a barrel by 9:39 AM ET (14:39 GMT), after touching $57.81 earlier, its best level since November of last year. Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 32 cents, or 0.48%, to $67.39, backing off of $67.72, which was also its best level in three months.



Markets interpreted the fact that Trump agreed to meet with Liu at 2:30 PM ET (19:30 GMT) on Friday as a sign that trade discussions were progressing and the implementation of an increase in U.S. tariffs on Chinese products on March 1 would likely be delayed.

Investors have feared that the standoff between the U.S. and China could negatively impact economic growth, diminishing the demand for oil from the world’s two largest consumers. Apparent progress in negotiations this year along with OPEC-led efforts to slash production has supported the rally in oil prices, with gains of more than 20% in 2019.


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Some analysts remained cautious, however, amid a wide range of pending issues, including sanctions on Venezuela and Iran, a bottleneck in the Canadian production pipeline and maintenance difficulties in Saudi Arabia.

“Slower global growth, a resurgent dollar and record U.S. production are all weighing on prices and causing any rallies to stall relatively quickly,” OANDA market analyst Craig Erlam said. “It has recovered from its selloff late last year, but not as much as you may have expected and there does seem to be a reluctance to hop on board,” Erlam added.

Investors are also wary of escalating production in the U.S., which the Energy Information Administration reported Thursday had hit a record high of 12 million barrels per day last week. In that light, investors will pay close attention as Baker Hughes releases its weekly rig count data, an early indicator of future output, at 1 PM ET (18:00 GMT).

In other energy trading, gasoline futures slipped 0.03% to $1.6139 a gallon by 9:41 AM ET (14:41 GMT), while heating oil advanced 0.16% to $2.0396 a gallon. Lastly, natural gas futures lost 0.22% to $2.691 per million British thermal units.


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Venezuela Shifts Oil Ventures’ Accounts To Russian Bank, PDVSA’s Move Comes After The United States Imposed New Financial Sanctions


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By Corina Pons | Stock.Market@News.Today

Venezuela’s state-run oil company PDVSA is telling customers of its joint ventures to deposit oil sales proceeds in an account recently opened at Russia’s Gazprombank. PDVSA’s move comes after the United States imposed tough, new financial sanctions on Jan. 28 aimed at blocking Venezuela’s President Nicolas Maduro’s access to the country’s oil revenue.

Supporters of Venezuelan opposition leader and self-proclaimed interim president Juan Guaido said recently that a fund would be established to accept proceeds from sales of Venezuelan oil. The United States and dozens of other countries have recognized Guaido as the nation’s legitimate head of state. Maduro has denounced Guaido as a U.S. puppet seeking to foment a coup.

Today’s Stock Market News – Venezuela Shifts Oil Ventures’ Accounts To Russian Bank
Today’s Stock Market News – Venezuela Shifts Oil Ventures’ Accounts To Russian Bank

PDVSA also has begun pressing its foreign partners holding stakes in joint ventures in its key Orinoco Belt producing area to formally decide whether they will continue with the projects, according to two sources with knowledge of the talks. The joint venture partners include Norway’s Equinor ASA, U.S.-based Chevron Corp and France’s Total SA.

“We would like to make formal your knowledge of new banking instructions to make payments in U.S. dollars or euros,” wrote PDVSA’s finance vice president, Fernando De Quintal, in a letter dated Feb. 8 to the PDVSA unit that supervises its joint ventures.

Even after a first round of financial sanctions in 2017, PDVSA’s joint ventures managed to maintain bank accounts in the United States and Europe to receive proceeds from oil sales. They also used correspondent banks in the United States and Europe to shift money to PDVSA’s accounts in China.

State-run PDVSA several weeks ago informed customers of the new banking instructions and has begun moving the accounts of its joint ventures, which can export crude separately. The decision was made amid tension with some of its partners, which have withdrawn staff from Caracas since U.S. sanctions were imposed in January.


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The sanctions gave U.S. oil companies working in Venezuela, including Chevron and oil service firms Halliburton Co, General Electric Co’s Baker Hughes and Schlumberger NV, a deadline to halt all operations in the South American country.

The European Union has encouraged member countries to recognize a new temporary government led by Guaido until new elections can be held. Europe also has said it could impose financial sanctions to bar Maduro from having access to oil revenue coming from the region. Maduro has overseen an economic collapse in the oil-rich OPEC country that has left many Venezuelans malnourished and struggling to find medicine, sparking the exodus of an estimated 3 million Venezuelans.

Sanctions designed to deprive Maduro of oil revenue have left an armada of loaded oil tankers off Venezuela’s coasts that have not been discharged by PDVSA’s customers due to payment issues. The bottleneck has caused problems for PDVSA to continue producing and refining oil without imported diluents and components.

PDVSA also ordered its Petrocedeno joint venture with Equinor and Total to halt extra-heavy oil output and upgrading due to a lack of naphtha needed to make the production exportable, as the sanctions prohibit U.S. suppliers of the fuel from exporting to Venezuela.


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Venezuela Oil Sanctions Likely to Hit Some U.S. Refiners. Profit margins for turning heavy crude into gasoline and diesel have slumped to the lowest level in more than a year


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By  | Jennifer A Dlouhy

Refiners in Texas and Louisiana would be hard hit by sanctions on Venezuelan crude under consideration at the White House, a move that would leave U.S. oil companies struggling to find alternative supplies.

President Donald Trump recognized Juan Guaido as the interim president of Venezuela on Wednesday in the most provocative move yet against the leftist regime of Nicolas Maduro. Maduro responded by breaking diplomatic relations with the U.S., giving American diplomats 72 hours to leave the country.



The Trump administration has drafted a slate of sanctions but hasn’t decided whether to deploy them, said people familiar with the matter. Earlier this month, White House officials warned U.S. refiners that sanctions were being considered, and advised them to seek alternative sources of heavy crude. Some U.S. refiners worried about sanctions experimented with alternatives last year before ultimately returning to Venezuelan crude.

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The hardest-hit would be Citgo Petroleum Corp., the refining arm of Petroleos de Venezuela SA, or PDVSA, the state-run oil company. Citgo imported the most Venezuelan crude in the first 10 months of 2018, followed by Valero Energy Corp.


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Royal Dutch Shell Plc and Phillips 66 haven’t processed Venezuelan crude in their U.S. refineries since the U.S. imposed financial sanctions against the country and PDVSA in August 2017. Marathon Petroleum Corp., Total SA and Motiva Enterprises LLC cut intake by more than a half during that period, and as Venezuelan oil production slumped to the lowest levels seen since the 1940s.

Oil companies have urged the Trump administration not to limit imports of Venezuelan oil, warning the action could disadvantage Gulf and East Coast refiners designed to handle the country’s heavy crude, while also causing gasoline prices to rise.



Shutting off Venezuela imports would exacerbate a drought of the heavy, high-sulfur oil that’s preferred by Gulf Coast refiners and normally sells at a discount to higher-quality crude. Prices are already surging, after OPEC and its allies cut supply and the Canadian province of Alberta forced producers to do the same to stem global and regional gluts. Mars Blend crude rose to a five-year high versus the U.S. benchmark Wednesday, according to data compiled by Bloomberg, while the profit margin for processing Mexican Maya oil sank to the lowest in four years.

Alternatives aren’t readily available. Mexico, whose production is mired in a prolonged slump, has already increased shipments to the U.S. Gulf, surpassing Venezuela last year as the region’s top supplier. Meanwhile, Ecuadorean and Colombian crude often heads to the U.S. West Coast, leaving American refiners competing with each other.

Refiners have told allies in the White House and on Capitol Hill that a unilateral crude oil ban will disadvantage U.S. refiners without advancing U.S. policy objectives in Venezuela, because India, Russia and China will continue buying the country’s oil, according to two people familiar with the discussions.


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Profit margins for turning heavy crude into gasoline and diesel have slumped to the lowest level in more than a year. If refiners can’t find affordable replacements for Venezuelan oil, they may be forced to reduce production rates, according to a person familiar with the matter. That could push up fuel prices, something that the U.S. president has been particularly sensitive to.

Oil headed for its biggest weekly gain in over two years. Still, prices are about 30 percent lower than their highs in October


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Oil headed for its biggest weekly gain in over two years. Futures in New York have advanced 10 percent this week, as Saudi Arabia pledged that a producer coalition it’s leading will keep the market in balance. Still, prices are about 30 percent lower than their highs in October even after a rebound since Christmas Eve thrust crude back into a bull market. That signals investors need reassurance that the group will curb supply sufficiently and demand will hold up.

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Crude’s direction in coming weeks may be determined by whether the Organization of Petroleum Exporting Countries and allies including Russia implement output cuts they have promised for the first six months of 2019. Also crucial will be the outcome of trade negotiations between the U.S. and China — the world’s two biggest economies.

A deal between the nations could boost flagging global growth that underpins oil demand. “Oil has had a good rally as Saudi Arabia’s willingness to move forward with cutting output was clearly delivered to the market,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “But the trade negotiations between the U.S. and China still add some uncertainty to global financial and oil markets, possibly leading to corrections in prices in the shorter term.”

West Texas Intermediate for February delivery traded 20 cents higher at $52.79 a barrel on the New York Mercantile Exchange as of 4:01 p.m. in Singapore on Friday. Futures rose 0.4 percent on Thursday, in their ninth straight daily advance and longest winning streak in nine years.

Brent for March settlement was up 18 cents at $61.86 a barrel on the ICE Futures Europe Exchange in London. It’s risen 8.4 percent this week after gaining 9.3 percent, the most in two years, in the previous week. The global benchmark crude traded at a premium of $8.73 a barrel to WTI for the same month.



Saudi Arabia attempted to assure the market that the production curbs by the OPEC+ coalition will be in place, stating that the world’s top oil exporter has already curtailed its output. The Middle Eastern producer’s energy minister, Khalid Al-Falih, also said that the pledged reductions of 1.2 million barrels a day are “more than sufficient to balance the market.”

While recent progress seen in U.S.-China talks has lifted investor sentiment, global financial markets are still struggling to decipher what exactly may have been promised in their negotiations this week. China’s Ministry of Commerce said on Thursday that the talks between the two sides were “extensive, in-depth and detailed” and laid foundation for a resolution. Chinese Vice Premier Liu He is likely to travel to the U.S. later this month to meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.


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Meanwhile, dovish commentary by Federal Reserve Chairman Jerome Powell and his deputy Richard Clarida has added to positive investor sentiment. They said that the central bank will be especially cautious about pushing ahead with interest-rate increases after raising them four times last year.

Oil prices climbed around 3 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world’s two largest economies would resolve their trade standoff


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Oil prices climbed around 3 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world’s two largest economies would resolve their trade standoff.

U.S. West Texas Intermediate (WTI) crude oil futures (CLc1) were at $51.36 per barrel at 15:00 GMT, up $1.58, or 3.17 percent, the first time this year that WTI has topped $50. International Brent crude futures (LCOc1) were up $1.63, or 2.78 percent, at $60.35 per barrel.

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Both crude price benchmarks added to Tuesday’s 2 percent gains and have now been on the rise for eight straight days – their longest rally since June 2017. “After a dreadful December for risk markets, crude oil continues to catch a positive vibe,” said Stephen Innes at futures brokerage Oanda in Singapore, citing tensions between the superpowers which have cast a pall over the world economy.

The trade talks in Beijing were carried over into an unscheduled third day on Wednesday, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China’s markets.

“Talks with China are going very well!” U.S. President Donald Trump tweeted, without elaborating. State newspaper China Daily said on Wednesday that Beijing was keen to put an end to its trade dispute with the United States, but that any agreement must involve compromise on both sides.

Stephen Brennock, analyst at London brokerage PVM Oil, warned against excessive optimism. “Buyers have placed all their betting chips on the US and China resolving their trade spat,” he said.

“A failure to secure a meaningful breakthrough in the coming days will therefore spark a turnaround in sentiment. It is also worth noting that the global economic outlook continues to darken,” he added.

The World Bank expects global economic growth to slow to 2.9 percent in 2019 from 3 percent in 2018, it said in a semi-annual report released late on Tuesday.



More fundamentally, oil prices have been receiving support from supply cuts started at the end of 2018 by the Organization of the Petroleum Exporting Countries and allies including Russia.

The OPEC-led cuts are aimed at reining in an emerging supply overhang, in part because U.S. crude output surged by around 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.


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Official U.S. fuel storage data from the Energy Information Administration is due at 18:00 GMT on Wednesday.

Iran says despite U.S. sanctions, it has found new ‘potential’ oil buyers


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All countries that were granted a waiver from the United States to continue buying a certain amount of Iranian oil imports are complying with U.S. sanctions, a senior Iranian energy official said on Saturday.

The United States withdrew from a nuclear deal with Iran last year and snapped sanctions in place to choke Iran’s oil and banking industries, while temporarily allowing eight customers to keep buying crude from the Islamic Republic.

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“China, India, Japan, South Korea and other countries that were granted waivers from America to import Iranian oil are not willing to buy even one barrel more from Iran,” Amir Hossein Zamaninia, Iran’s deputy oil minister for trade and international affairs, was quoted as saying by the Oil Ministry‘s news agency SHANA.

However, without giving details, Zamaninia said: “Despite U.S. pressures on Iranian oil market, the number of potential buyers of Iranian oil has significantly increased due to a competitive market, greed and pursuit of more profit.”

The 180-day exemptions were also granted to Italy, Greece, Taiwan and Turkey. Washington seeks to bring Iranian oil exports to zero in order to curb Tehran’s missile and nuclear programs and counter its growing military and political influence in the Middle East.



Iran has urged European countries, which are still committed to the nuclear deal, to oppose the sanctions by creating a financial mechanism that facilitates payments of Iranian oil sales.

Oil prices rose on the final day of the year, mirroring gains in stock markets


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Oil prices rose about 2 percent on the final day of the year on Monday, mirroring gains in stock markets, but were on track for the first annual decline in three years amid lingering concerns of a persistent supply glut.

Hints of progress on a possible U.S.-China trade deal, with U.S. President Donald Trump saying he had a “very good call” with Chinese President Xi Jinping, helped bolster sentiment for oil.

Brent crude futures was up 83 cents at $54.05 a barrel by 0932 GMT, after rising by over a $1 a barrel in early trade to a high of $54.55 a barrel. U.S. West Texas Intermediate crude futures were at $45.99 a barrel, up 66 cents, or 1.4 percent, from their last close. WTI also rose more than a $1 in early trade, reaching $46.38 a barrel.


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Both contracts are down more than a third this quarter, the steepest decline since the fourth quarter of 2014. For most of 2018, oil prices were on the rise, driven up by healthy demand and supply concerns, especially around the impact of renewed U.S. sanctions against major producer Iran, which were introduced in early November.

Brent crude, seen as a global benchmark for oil prices, rose by almost a third between January and October, to a high of $86.74 per barrel.

That was the highest level since late 2014, the start of a deep market slump amid bulging global oversupply, and many leading analysts and traders at the time said they expected crude to hit $100 per barrel again by the end of 2018.

Instead, Brent prices have wiped out all of 2018’s gains, plunging by almost 40 percent from the year’s high, in what has been one of the steepest oil market sell-offs of the past decades.

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The slump came after Washington gave unexpectedly generous sanction waivers to Iran’s biggest oil buyers and as concerns over a global economic slowdown amid the Sino-American trade dispute dented the outlook for oil demand.

“It was the bailout of Iran that really pricked the bubble that was the crude oil market,” said Sukrit Vijayakar, director of energy consultancy Trifecta. “For the immediate future, in the absence of anything new, the first pressure point for oil markets would come around May 2019 or a month or so earlier when the ‘extensions of  (Iran) waivers’ would be discussed.”

The current downward pressure on oil prices should likely taper off from January, analysts said, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia start curbing production by 1.2 million barrels per day (bpd).


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The market, however, might still remain under some pressure from swelling production in the United States, which has emerged as the world’s biggest crude producer this year, pumping 11.6 million bpd.

“The key swing producers within OPEC+ do have meaningful spare capacity and are able to use it if they deem it necessary. That said, it is nonetheless a difficult tool to use correctly in a world where forecasters tend to routinely underestimate U.S. production by several hundred thousand barrels per day,” JBC Energy consultancy said in a daily note.

Outside the United States, production in Russia and Saudi Arabia also hit record levels this year.

Oil production from seven major U.S. shale basins is expected to climb to more than 8 million barrels per day (bpd) by the end of the year for the first time


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Oil prices fall for third straight session amid supply glut worries. Oil production from seven major U.S. shale basins is expected to climb to more than 8 million barrels per day (bpd) by the end of the year for the first time, the U.S. Energy Information Administration said on Monday.

Brent crude prices dropped more than $1 on Tuesday, falling for a third straight session, as reports of inventory builds and forecasts of record shale output in the United States, now the world’s biggest producer, stoked worries about oversupply.

Concerns over future oil demand amid weakening global economic growth and doubts over the effectiveness of planned production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) also pressured prices, traders said.


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International benchmark Brent crude oil futures were at $58.62 per barrel at 06:15 GMT, down 99 cents, or 1.66 percent, from their last close. Brent, which has slipped more than 4 percent in the past three sessions, fell to as low as $58.10 a barrel on Tuesday, down more than $1.50 from the previous day’s close.

U.S. West Texas Intermediate (WTI) crude futures were down 91 cents or 1.82 percent at $48.97 per barrel. Both U.S. crude and Brent have shed more than 30 percent since early October due to swelling global inventories, with WTI now trading at levels not seen since October 2017.

“Rising U.S. shale production levels along with a deceleration in global economic growth has threatened to offset OPEC+ efforts as markets weigh the potential of looser fundamentals,” said Benjamin Lu Jiaxuan, an analyst at Singapore-based brokerage firm Phillip Futures.

Market confidence remains extremely delicate amidst looming economic uncertainties as investors contemplate on weaker fuel demand beyond 2018,” he said. Oil production from seven major U.S. shale basins is expected to climb to more than 8 million barrels per day (bpd) by the end of the year for the first time, the U.S. Energy Information Administration said on Monday.

Meanwhile, inventories at the U.S. storage hub of Cushing, Oklahoma, delivery point for the WTI futures contract, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape on Monday.

With oil prices falling, unprofitable shale producers will eventually stop operating and cut supply, although that will take some time, analysts said.

The United States has surpassed Russia and Saudi Arabia as the world’s biggest oil producer, with overall crude production climbing to a record of 11.7 million bpd.

Supply curbs agreed by OPEC and its Russia-led allies might not bring about the desired results, though, as U.S. output goes on increasing and Iran keeps pumping out more oil, analysts said. Some have also expressed doubts over Russia’s commitment to the cuts agreed with OPEC. Oil output from Russia has been at a record high of 11.42 million bpd so far in December.


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“If Russia can be a bystander, it benefits them greatly,” said Hue Frame, portfolio manager at Frame Funds in Sydney. “Although they will see a reduction in profitability, they will gain market share, which is generally more important in the oil market.”

Oil prices edged higher on Thursday, buoyed by a drawdown in U.S. crude stockpiles and indications that the trade war between the United States and China, is easing


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Oil prices edged higher on Thursday, buoyed by a drawdown in U.S. crude stockpiles and indications that the trade war between the United States and China, the world’s two largest economies and the top two oil consumers, is easing.

Crude oil prices have also been supported by OPEC-led supply curbs announced last week, although gains were capped after the producer group lowered its 2019 demand forecast. International Brent crude oil futures (LCOc1) were at $60.36 per barrel at 0733 GMT, up 21 cents, or 0.4 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $51.25 per barrel, up 10 cents, or 0.2 percent.

In a sign that China is willing to lower trade tensions with United States, the country made its first major U.S. soybean purchases in more than six months on Wednesday, helping investors breathe a sigh of relief across broader stock markets, and pushing oil prices up.

A drop in U.S. crude stocks also boosted oil, which has been riding higher on expectations that the OPEC-led planned output cuts would re-balance the market in 2019, analysts said. U.S. crude inventories fell by 1.2 million barrels in the week to Dec. 7, compared with expectations for a decrease of 3 million barrels. [EIA/S]

The agreement of a reduction in output of 1.2 million barrels per day at last week’s OPEC meeting should see the market push into (supply) deficit in H1 2019,” ANZ analyst Daniel Hynes said.

“Rising U.S. output, weaker economic growth and the production cut agreement roll-off will see a balanced market in H2,” Hynes said. ANZ expects Brent to reach $75 a barrel in the first quarter of 2019.

The Organization of the Petroleum Exporting Countries (OPEC) said demand for its crude in 2019 would fall to 31.44 million barrels per day (bpd), 100,000 bpd less than predicted last month and 1.53 million bpd less than it currently produces.

This adds to the concerns of several market watchers that the decision led by the group to cut production might not be enough to override a glut and push prices higher.

A combination of factors such as production cuts by OPEC and non-OPEC producers such as Russia and further sanctions-related declines in Iranian exports, however, would likely keep oil markets tight in the first half of next year, Jefferies analyst Jason Gammel said.



“But… U.S. (production) growth will almost inevitably re-accelerate in 2H19 as incremental pipeline capacity is installed in the Permian Basin. This means that by early 2020 the market could move back into oversupply,” Gammel added.


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The United States, where crude production has hit a record 11.7 million bpd, is set to end 2018 as the world’s top oil producer, ahead of Russia and Saudi Arabia.

Major oil producers have reached a deal to cut oil production and boost the market, following two days of grueling negotiations


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◊ Major oil producers have reached a deal to cut oil production and boost the market.

◊ The alliance will to take 1.2 million barrels per day off the market.

◊ OPEC has agreed to exempt Iran from cutting production, Iranian Energy Minister Bijan Zangeneh said.


Major oil producers have reached a deal to cut oil production and boost the market, following two days of grueling negotiations and despite opposition from U.S. President Donald Trump. OPEC clinched the deal with allied oil-producing nations including Russia at its headquarters in Vienna, Austria on Friday. The gathering came after deep divisions in the energy alliance were laid bare at a closely-watched meeting on Thursday, with OPEC unable to agree on the terms of crude output cuts.

The alliance will take 1.2 million barrels per day off the market for the first six months of 2019. The 15-member OPEC cartel has agreed to reduce its output by 800,000 bpd, while Russia and the allied producers will contribute a 400,000 bpd reduction.

The deal is in line with expectations for the allies to throttle back output by 1 million to 1.4 million bpd. Brent crude, the international benchmark for oil prices, was trading at $63 a barrel, up 4.9 percent, at 11:15 a.m. ET (16:15 GMT). West Texas Intermediate (WTI) stood at $53.69, around 4.3 percent higher.

The meeting between OPEC and non-OPEC members comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. Oil prices have crashed around 30 percent over the last two months, ratcheting up the pressure on budgets in oil-exporting countries.

OPEC began capping supply in partnership with Russia and several other nations in January 2017 in order to end a punishing downturn in oil prices. The alliance reversed course and agreed to hike output in June after it removed more barrels from the market than it intended, largely due to the ongoing freefall in Venezuelan output and supply disruptions in Libya.


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The talks made progress on a critical front on Friday, with Russia agreeing to cut output. The 15-member OPEC group had delayed a decision on how many barrels it would take off the market until Moscow committed to a specific reduction.

Russia will reduce production by 2 percent from October’s output of 11.4 million bpd, equaling about 228,000-230,000 bpd, Russian Energy Minister Alexander Novak said. However, Novak warned that Russia would reduce supply gradually due to climactic conditions that affect its oil fields.

Discussions hit another impasse earlier on Friday because Saudi Arabia had refused to agree to an exemption for Iran, OPEC sources told Reuters. U.S. sanctions against Iran, OPEC’s third-largest producer, have already significantly reduced its exports. Iranian Energy Minister Bijan Zangeneh argued his country should not be forced to cut production in light of the sanctions, which are backed by the Saudis.

Ultimately, OPEC agreed to exempt Iran, along with Venezuela and Libya. The exemptions mean the remaining members will cut production by about 2.5 percent from October levels, said OPEC president and UAE Oil Minister Suhail Mohamed Al Mazrouei.



OPEC rescheduled its mid-year meeting for April so it can review market conditions and adjust its policy if necessary. The alliance did not release specific quotas for individual countries, but top OPEC exporter Saudi Arabia laid out its production path during a press conference.

Oil prices fell on Friday, pulled down by OPEC’s decision to delay a final decision on output cuts


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♦ International Brent crude oil futures fell below $60 per barrel early in the session, trading at $59.50 per barrel at 01:44 GMT.

♦ The OPEC meeting in Vienna ended without an announcement of a decision to cut crude supply.

♦ Oil producers have been hit by a 30-percent plunge in crude prices since October as supply surges just as the demand outlook weakens amid a global economic slowdown.

Oil prices fell on Friday, pulled down by OPEC’s decision to delay a final decision on output cuts, awaiting support from non-OPEC heavyweight Russia. International Brent crude oil futures fell below $60 per barrel early in the session, trading at $59.50 per barrel at 01:44 GMT, down 56 cents, or 0.9 percent from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $51.24 per barrel, down 25 cents, or 0.5 percent.

The declines came after crude slumped by almost 3 percent the previous day, with the Organisation of the Petroleum Exporting Countries (OPEC) ending a meeting at its headquarters in Vienna, Austria, on Thursday without announcing a decision to cut crude supply, instead preparing to debate the matter on Friday.


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“OPEC has decided to meet Friday again…(as) Russia remains the sticking point,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore. Analysts still expect some form of supply reduction to be decided.

“We are beginning to witness the outline of the next iteration of production cuts, with OPEC conforming to cut its own production by around 1 million barrels per day, with the cartel lobbying non-OPEC members to contribute more,” Japanese bank MUFG said in a note.

Supply surge, price plunge. Oil producers have been hit by a 30-percent plunge in crude prices since October as supply surges just as the demand outlook weakens amid a global economic slowdown.

Oil output from the world’s biggest producers – OPEC, Russia and the United States – has increased by 3.3 million bpd since the end of 2017, to 56.38 million bpd, meeting almost 60 percent of global consumption.

That increase alone is equivalent to the output of major OPEC producer the United Arab Emirates.

The surge is largely down to soaring U.S. crude oil production, which has jumped by 2.5 million bpd since early 2016 to a record 11.7 million bpd, making the United States the world’s biggest oil producer.



As a result, the United States last week exported more crude oil and fuel than it imported for the first time on records going back to 1973, according to data released on Thursday.

OPEC and Russia poised to impose steep production cuts despite US pressure


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> OPEC meets at its headquarters in Vienna, Austria, with the aim of reaching an accord over production levels for the next six months.

> The 15-member organization will then hold talks with allied non-OPEC partners on Friday, with markets widely-expecting the energy alliance to announce steep output reductions from January.

> Oil prices have crashed more than 30 percent over the last two months, ratcheting up the pressure on budgets in oil-exporting countries.


OPEC and its allies are expected to agree on the terms of price-boosting output cuts on Thursday, despite pressure from President Donald Trump to reduce the cost of crude.

The influential oil cartel meets at its headquarters in Vienna, Austria, with the aim of reaching an accord over production levels for the next six months. The 15-member organization will then hold talks with allied non-OPEC partners on Friday, with markets widely-expecting the energy alliance to announce steep output reductions from January.

The much-anticipated meeting comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. Oil prices have crashed around 30 percent over the last two months, ratcheting up the pressure on budgets in oil-exporting countries.


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International benchmark Brent crude was trading at $61.28 a barrel at around 8:15 a.m. London time, down around 0.5 percent, while West Texas Intermediate (WTI) stood at $52.63, more than 0.4 percent lower.

What’s going to happen?. OPEC kingpin Saudi Arabia has been leading calls for the group to trim output, amid surging supply and fears that an economic slowdown will erode fuel demand. The oil-rich kingdom has indicated it wants the group to curb output by at least 1.3 million barrels per day.

But, Russia has appeared reluctant to sign off on a reversal in production strategy. The non-OPEC heavyweight has warned the energy alliance must tread carefully this week to ensure it does not change course by 180 degrees whenever it meets.

On Thursday morning, OPEC was thought to be waiting on Russia before deciding the exact level of production cuts. Five unnamed delegates told Reuters ahead of the meeting that the group’s preferred level of supply cuts would effectively be conditional on Moscow’s contribution.

The likely outcome is OPEC and non-OPEC members agree to a supply cut of around 1.2 million to 1.4 million barrels per day. As always though, the hard part for the energy alliance is not figuring out a number, but rather how the group divvies up the cuts.

OPEC began managing crude supply in partnership with Russia and several other nations last year in order to end a punishing downturn in oil prices.

The Middle East-dominated group produces around 40 percent of the world’s oil and has a long history of adjusting production to guide the energy market. The energy alliance’s policy of capping output has drawn particular ire from Trump.



Donald J. Trump. Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!. The U.S. president is publicly in favor of low fuel prices and has urged Saudi Arabia to drive crude futures even lower at OPEC’s final meeting of the calendar year.

A magnitude 7 earthquake struck Alaska early Friday, shutting the state’s most important oil pipeline


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A magnitude 7 earthquake struck Alaska early Friday, shutting the state’s most important oil pipeline and potentially threatening crude exports. The temblor struck 13 kilometers north of Anchorage. The Alaska pipeline that carries crude from the Arctic coast to the marine terminal in Valdez was shut as a precaution, Michelle Egan, spokeswoman for Alyeska, said by phone.

Egan said she wasn’t aware of any damage to the line, which transported 530,000 barrels on Thursday, but said there isn’t yet a timeline on restart.

Alaska Air Group Inc. said it temporarily suspended operations at the Anchorage airport following the quake. “We understand there’s considerable damage being reported” at the airport, the company said in a statement. There was one oil tanker at the Anchorage port, the Pacific Beryl, which was delivering jet fuel from South Korea to ports in Alaska.

Alaska produced 494,000 barrels of oil a day last year, with most of it sent down the Alaska pipeline to Valdez, where it’s shipped out by tanker, usually to U.S. West Coast refineries. No tankers were at the terminal when the quake struck and “everything is fine down there,” Egan said. A few smaller vessels were moved away from the shoreline.

Alaskan oil production began to rise two years ago after almost three decades of declines from a peak of more than 2 million barrels a day in 1988, according to U.S. Energy Department data. The state was the sixth-largest oil producer in the U.S. in September down from third last year. It trailed Colorado, Texas, New Mexico, Oklahoma and North Dakota, states that have experienced a boom in shale fracking in the past decade.


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The recent uptick in production came amid new investments along the arctic coast and a push by President Donald Trump to expand drilling in the state. The U.S. administration is moving to expand the territory open for oil exploration in Alaska’s National Petroleum Reserve, a process that could shift drilling rigs closer to herds of caribou and flocks of threatened birds.

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In October, ConocoPhillips received approval to develop its Greater Mooses Tooth 2 project just a week after announcing the first production from the Greater Mooses Tooth 1 development.

Hilcorp Energy Co. operates oil platforms in Cook Inlet, not far from Anchorage, while Marathon Petroleum Corp. has a 63,000 barrel-a-day refinery in nearby Kenai. Neither company immediately responded to requests for comment.

Oil prices underwent a selloff on Thursday with U.S. crude falling below the $50 a barrel level for the first time in more than a year


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Oil prices underwent a selloff on Thursday with U.S. crude falling below the $50 a barrel level for the first time in more than a year amid persistent concerns about oversupply. New York-traded West Texas Intermediate crude futures fell 47 cents, or 0.93%, at $49.82 a barrel by 4:45 AM ET (9:45 GMT). That was its lowest level since Oct. 9, 2017. Brent crude futures, the benchmark for oil prices outside the U.S., traded down 74 cents, or 1.25%, to $58.35, after hitting its lowest level since Oct. 24, 2017.

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Prices came under renewed selling pressure after data on Wednesday showing that U.S. crude inventories increased again last week, hitting their highest levels in more than a year. In its weekly report, the Energy Information Administration said oil stockpiles increased by 3.57 million barrels to 450 million barrels.

Prices also remained under pressure after Russian President Vladimir Putin indicated that he is comfortable with current levels, casting doubt on OPEC’s ability to move ahead with significant production cuts. Putin said Wednesday that prices of around $60 per barrel were “absolutely fine” as the Russian budget would be balanced at $40.


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Saudi Arabia has been pushing OPEC and its non-OPEC allies, led by Russia, to agree to reduce production given the more than 30% decline in prices since last October.

Analysts believe that the group will announce a reduction of 1.1 million barrels per day when they meet in Vienna on Dec. 6-7. With the U.S. and Saudi Arabia producing at record levels and rising inventories in the U.S., investors have been concerned that OPEC will be unable to counteract increasing supply.

Traders will keep an eye on this weekend’s G20 summit where Putin is expected to meet on the sidelines with Saudi Arabia’s Crown Prince to discuss plans for output.

“We are now in contact with OPEC and if needed, we will continue this joint work,” Putin said referring to the current agreement to help stabilize markets.


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In other energy trading, gasoline futures dropped 0.74% to $1.3659 a gallon by 4:51 AM ET (9:51 GMT), while heating oil lost 0.70% to $1.8223 a gallon. Natural gas futures traded down 1.87% to $4.611 per million British thermal units

Toronto’s commodity-linked stock market set for rebound if oil prices recover


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Investors see value in Toronto’s commodity-linked stock market and expect it to rebound in 2019 as the global economy continues to grow and on hopes for the price of Canadian heavy crude to recover, a Reuters poll shows.

The median forecast of 28 portfolio managers and strategists polled was for a more than 9 percent increase in the S&P/TSX composite index from its Monday close to 16,425 by the end of 2019. The TSE dipped 0.3 percent to 14,967 on Tuesday. Of 10 investors who answered a separate question on the index’s valuation, six said it was cheap and four said it was fairly valued. None said it was expensive.

“We view the equity market in Canada to be attractively valued not only against its own history but also relative to the S&P 500 Index,” said Philip Petursson, chief investment strategist at Manulife Investments. The price-earnings ratio, a measure of valuation, for the TSX is 14.2, according to Refinitiv Eikon data, much less than the 18.6 price multiple for the S&P 500.

Toronto’s index has declined 9.5 percent since it notched a record high of 16,586.46 in July as a slump in oil prices, rising global trade tensions and higher bond yields offset a boost to sentiment from a deal to revamp the North American Free Trade Agreement. Since the start of the year, the index is down more than 7 percent.



Investors expect economic growth to remain strong enough for companies to continue to increase profits even if some expect earnings growth to be slower.

“We are staying quite positive for the coming quarters,” said Mathieu D’Anjou, a senior economist at Desjardins Securities. “Profit levels are high and we are expecting a generally positive economic context next year and a rebound in Canadian and international oil prices.”

The price of oil has slumped more than 30 percent since October while a large discount for Canadian heavy crude has added to the headwinds for Canada’s energy sector. Western Canadian Select (WCS) traded last month as much as $52.50 per barrel below West Texas Intermediate light oil, the biggest differential in data going back to 2010, according to Shorcan Energy Brokers. The discount has since narrowed to about $37.

“If energy differentials can narrow we could see another move higher in the energy group,” said Greg Taylor, a portfolio manager at Purpose Investments. “Energy stocks look attractive at these levels as the companies continue to improve their operations in the low price environment.”

The energy sector has fallen 22 percent since the start of the year, while financials, which account for about one-third of the weight of the TSX, have declined 7 percent. U.S. crude was up 0.7 percent to $52.03 on Tuesday.

Competition for deposits among Canada’s biggest banks is heating up for the first time since the global financial crisis, leading to higher funding costs that could crimp profit growth in their domestic businesses over the next two years, analysts said.

The Bank of Canada has been raising interest rates to help cool the domestic economy, which has been operating near capacity. But auto production, one of the country’s biggest industries, could be hurt after General Motors Co (NYSE:GM) said on Monday it would close its plant in Oshawa, Ontario, east of Toronto.

Still, Canada’s housing market has not had the hard landing some investors have feared and the federal government announced measures last week that could help make businesses more competitive at a time when the United States is aggressively cutting taxes. Ottawa will reduce the average overall tax rate in Canada on new business investment to 13.8 percent from 17.0 percent, the lowest level in the Group of Seven large industrialized nations.


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Oil prices plunged to their lowest since late 2017 on Friday in choppy trading, weighed down by an emerging crude supply overhang and a darkening economic outlook


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Oil prices plunged to their lowest since late 2017 on Friday in choppy trading, weighed down by an emerging crude supply overhang and a darkening economic outlook. To counter bulging supply, the Organization of the Petroleum Exporting Countries (OPEC) is expected to start withholding output after a meeting planned for Dec. 6.

International benchmark Brent crude oil futures fell their lowest since December 2017 at $61.52 per barrel, before recovering to $62.13 by 0741 GMT. That was 47 cents, or 0.8 percent below their last close. U.S. West Texas Intermediate (WTI) crude futures slumped 2.3 percent, to $53.38 a barrel. Prices earlier fell to as low as $52.82, only 5 cents about the $52.77 level reached on Tuesday, which was the lowest since October 2017.



Amid the plunge, Brent and WTI price volatility has jumped in November to approach levels not seen since the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009.


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The divergence between U.S. and international crude comes as surging North American supply is clogging the system and depressing prices there, while global markets are somewhat tighter, in part because of reduced exports from Iran due to newly imposed U.S. sanctions.

Overall, however, global oil supply has surged this year, with the top-three producers – the United States, Russia and Saudi Arabia – pumping more than a third of global consumption, which stands at around 100 million barrels per day (bpd).

The market is currently oversupplied,” said U.S. investment bank Jefferies on Friday, adding that “an oversupplied market has a difficult time setting a (price) floor.” High production comes as the demand outlook weakens on the back of a global economic slowdown.

Shanghai stocks fell the most in five weeks on Friday, by 2.5 percent, amid worries over China’s economic growth and doubts over the chances of President Xi Jingping and U.S. President Donald Trump achieving a de-escalation in the Sino-U.S. trade war when they meet next week.



Oil prices have plunged by around 30 percent since their last peaks in early October, as global production started to exceed consumption in the fourth quarter of this year, ending a period of undersupply that started in the first quarter of 2017, according to data in Refinitiv Eikon. Adjusting to lower demand, top crude exporter Saudi Arabia said on Thursday that it may reduce supply.

“We will not sell oil that customers don’t need,” Saudi Energy Minister Khalid al-Falih told reporters. Saudi Arabia is pushing OPEC to cut oil supply by as much as 1.4 million bpd to prevent a supply glut.



 

The group officially meets on Dec. 6 to discuss its supply policy. U.S. bank Morgan Stanley (NYSE:MS) said it saw “a far greater probability that OPEC reaches an agreement to balance the market in 2019” than not, adding that this would likely support oil prices “in the high-$50s, at least near term.”

It’s a volatile time for oil, with crude prices up 4% after a 7% plunge just a day earlier. Some warn, however, that a bull trap might be forming with the market’s latest rebound.


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WTI was up $1.93, or 3.61%, at $54.36 per barrel by 12:35 PM ET (16:35 GMT). In Monday’s session, it fell around 7% to a 13-month bottom of $52.77. Brent, the global benchmark for oil, rose $1.36, or 2.17% to $63.89. On Monday, it hit a nine-month bottom of $61.73.

Both rose more than 1% in early Wednesday trade on estimates by industry group American Petroleum Institute of a drawdown in crude stockpiles last week instead a build. The previous session’s 7% slide also prompted some short-covering and bargain-hunting for crude, traders said.

But what few anticipated was the market extending gains after the U.S. Energy Information Administration (EIA) showed a ninth-straight week of crude builds last week, and more than forecast. “It’s a surprise on a few different fronts,” said Tariq Zahir, managing member at New York’s Tyche Capital Advisors.

“We feel the gains we see today will be limited and could reverse, especially if a risk-off attitude develops and the dollar gets some strength,” said Zahir, who expects U.S. crude futures to break below its landmark $50 support soon.


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The EIA data showed that crude oil inventories increased by 4.85 million barrels in the week to Nov. 16, vs. a forecast build of 2.5 million barrels.

The report also showed that gasoline inventories fell by 1.30 million barrels, compared to expectations for a draw of 0.2 million barrels, while distillate stockpiles dropped by just 0.08 million barrels, compared to forecasts for a decrease of 2.75 million.


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Today’s Stock Market News

“The crude build aside, the real eye opener was the smaller-than-expected draw in distillates, which basically tantamounts to a no-draw, surprising given the cold spell we currently have in the Midwest and East Coast,” Zahir said.

Most traders have a bleak outlook for oil despite OPEC hinting over the past week that it might decide to cut production by as much as 1.4 million barrels per day when it meets in Vienna on Dec. 6. Many dispute such a wide cut happening as OPEC leader Saudi Arabia has only offered to reduce 0.5 million bpd on its own and would need non-member Russia’s cooperation for the balance, a plan Moscow has resisted so far.



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President Donald Trump’s persistent calls on OPEC not to cut production and to keep oil prices low has also weighed on the market as the U.S. president is seen as key for Saudi Arabia to avoid sanctions for its alleged role in the murder of Saudi-born U.S. resident and journalist Jamal Khashoggi.

“I think we have a very noisy couple weeks ahead of us, and a volatile market that is making it increasingly difficult to express a view in a limited loss format,” said Elliot Klapper, managing director for commodities at Goldman Sachs (NYSE:GS), in a note to clients.

Oil prices drop as a deteriorating economic outlook and a surge in U.S. production outweighed expected supply cuts by the OPEC


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“Upside potential has shown to be shaky as bullish movements lose steam,” said Benjamin Lu of Singapore-based brokerage Phillip Futures. Oil prices are almost a quarter below their recent peaks in early October, weighed down by surging supply, especially from the United States. U.S. crude oil production has soared by almost 25 percent this year, to a record 11.7 million barrels per day (bpd).

That comes amid widespread market expectations of an economic slowdown, which saw Asian stock markets tumble on Tuesday, adding to sharp losses on Wall Street the previous day. As a result, financial traders have become wary of oil markets, seeing further price downside risks from the growth in U.S. shale production as well as the deteriorating economic outlook.

Portfolio managers have sold the equivalent of 553 million barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013.



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Funds now hold a net long position of just 547 million barrels, less than half the recent peak of 1.1 billion at the end of September, and down from a record 1.484 billion in January. Concerned about an emerging production overhang similar to the one that led to a price slump in 2014, OPEC is pushing for a supply cut of 1 million to 1.4 million bpd.

“We expect OPEC to agree to a supply cut at its next official meeting on 6 December,” French bank BNP Paribas (PA:BNPP) said. The bank added that it expected Brent to recover to $80 per barrel before year-end. “In 2019, we expect WTI to average $69 per barrel and Brent $76 per barrel,” BNP said.

The International Energy Agency (IEA), which represents the interest of oil consumers, on Monday warned OPEC and other producers of the “negative implications” of supply cuts, with many analysts fearing that a spike in crude prices could erode consumption.

More New On Crude Oil : U.S. government deals allowing hundreds of thousands of barrels a day of Iranian oil to flow onto world markets are driving down prices.

After the Trump administration threatened a complete halt to Iranian oil exports, prompting other producers to boost output to compensate, the U.S. authorized exemptions to eight countries without disclosing the terms.


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Washington’s deals letting Tehran sell hundreds of thousands of barrels of oil prompts kingdom to advocate production cut, against Trump’s wishes. U.S. government deals allowing hundreds of thousands of barrels a day of Iranian oil to flow onto world markets are driving down prices and putting Saudi Arabia on a collision course with Washington as the kingdom scrambles to cut supply.

After the Trump administration threatened a complete halt to Iranian oil exports, prompting other producers to boost output to compensate, the U.S. authorized exemptions to eight countries without disclosing the terms. American officials now are forecasting a cut to Iranian crude sales by April of at least 40% to 900,000 barrels a dayfrom the country’s pre-sanctions level, say people familiar with the sanctions waivers.



 

Crude Volatility: The History and the Future of Boom-Bust Oil Prices (Center on Global Energy Policy Series)


The shifts are whipsawing oil markets and sparking U.S.-Saudi tensions. While Saudi Arabia wants to trim production to boost oil prices to about $80 a barrel in support of its economy, Saudi advisers say, President Trump warned against a production cut and called for lower prices. Continue To Read…

U.S. government deals allowing hundreds of thousands of barrels a day of Iranian oil to flow onto world markets are driving down prices


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Washington’s deals letting Tehran sell hundreds of thousands of barrels of oil prompts kingdom to advocate production cut, against Trump’s wishes. U.S. government deals allowing hundreds of thousands of barrels a day of Iranian oil to flow onto world markets are driving down prices and putting Saudi Arabia on a collision course with Washington as the kingdom scrambles to cut supply.

After the Trump administration threatened a complete halt to Iranian oil exports, prompting other producers to boost output to compensate, the U.S. authorized exemptions to eight countries without disclosing the terms. American officials now are forecasting a cut to Iranian crude sales by April of at least 40% to 900,000 barrels a day from the country’s pre-sanctions level, say people familiar with the sanctions waivers.

The shifts are whipsawing oil markets and sparking U.S.-Saudi tensions. While Saudi Arabia wants to trim production to boost oil prices to about $80 a barrel in support of its economy, Saudi advisers say, President Trump warned against a production cut and called for lower prices.

Saudi oil officials say they are considering advocating a production cut of as much as 1.4 million barrels a day at the Organization of the Petroleum Exporting Countries’s next meeting on Dec. 6. But OPEC officials say they are having difficulty calculating how much to produce due to the U.S. secrecy on its Iran sanctions efforts. That opacity, they say, already tripped up an OPEC-Russia alliance formed to pump extra oil into markets to stabilize supplies and prices.

In just over a month, Brent—the global benchmark—fell more than 21%. The administration isn’t saying how much Iranian oil the eight countries are allowed to buy. The countries have negotiated limits in secret, bespoke deals with the U.S. The lack of detail about the size of the waivers is “confusing for markets,” said Sara Vakhshouri, president of Washington-based consulting firm SVB Energy International.

Buyers too are withholding details of their agreed-to reductions. “It’s confidential,” India’s oil minister Dharmendra Pradhan said when asked about his country’s deal with Washington. U.S. officials say they won’t disclose their agreements with Iran’s oil buyers because they fear complaints that some were asked to cut more than others.

“We do not discuss the private diplomatic discussions that led to agreements with the various jurisdictions on the volume of oil imports,” a State Department spokesperson said. The Trump administration’s sanctions are aimed at containing the Islamic Republic’s regional influence and military capabilities, a goal Saudi Arabia shares.



But Saudi officials say they feel betrayed by the Trump administration’s lack of candor around the sanctions and are going to chart an oil policy that is more independent of American goals. They say Mr. Trump strong-armed Prince Mohammed into throttling up oil output to record levels to cool off prices ahead of the revival of tough sanctions on Iran’s petroleum industry on Nov. 5.

Mr. Trump told Saudi leaders there would be no exceptions from sanctions for Iranian oil buyers, the officials said, which would have potentially wiped over a million barrels of oil off the market and sent prices soaring. And if the Saudis didn’t raise production to make up for Iranian losses, Mr. Trump threatened to support a congressional bill allowing antitrust action against OPEC members, who he says act as a cartel, the advisers said.

Instead the Trump administration issued the exemptions—a move that relieved market worries about Iran’s supply outages and has sent oil prices skittering over the past week. “They feel they were used,” said a Saudi adviser of the kingdom’s leaders. The White House referred questions to the State Department, where officials pointed to comments Secretary of State Mike Pompeo made on Nov. 1.

The Kingdom of Saudi Arabia has been a great partner with us in pushing back on the Iranian regime in an effort to change its behavior by assisting and ensuring that there is sufficient crude oil in the marketplace,” Mr. Pompeo said.

Crown Prince Mohammed bin Salman’s attention has turned to his oil-dependent economy as the kingdom’s leadership faces its biggest crisis in a generation with the murder of journalist Jamal Khashoggi in Istanbul by a group of Saudi government operatives. In just over a month, oil prices have fallen far below the $88 a barrel that the International Monetary Fund says Saudi Arabia needs to balance its budget.

“Saudi Arabia has major financial commitments to meet and price drops don’t help. $80 a barrel is a sweet spot for the government,” said a senior Saudi energy adviser.



A strong economy is important as the kingdom wages an expensive war in Yemen and girds for an economic showdown with Iran. Oil revenue is even more important now, as the fallout from Mr. Khashoggi’s death has complicated Prince Mohammed’s attempts to ramp up non-petroleum sectors, said Adel Hamaizia an associate Middle East fellow at London’s Royal Institute of International Affairs.

The uproar has brought a “cocktail of problems,” said Mr. Hamaizia, a former Saudi government adviser. He said Saudi Arabia could postpone economic reforms, such as phasing out fuel subsidies, to lure industrial investors.

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More News On Crude Oil. Saudi Arabia, Others Inch Closer to Oil Output-Cut Pact. Saudi representatives said Sunday that the kingdom would slash its exports unilaterally next month, as a broader OPEC alliance debated — but didn’t agree to— a collective production cut.  Meanwhile, Russia, the world’s largest producer, sent mixed signals on whether it would pull back on supply—after moving in lockstep on such matters with OPEC for more than two years.

Russia’s oil minister Alexander Novak said he was open to crude production cuts if the coalition reaches a consensus, and would adhere to any decision it makes. But he also said Russian production had “reached a certain level where we have stabilized and we will be fluctuating around that level in coming months.”

Saudi Arabia, Russia and other producers met here in the United Arab Emirates capital over the weekend to debate whether reductions of about one million barrels a day might be necessary next year, with a decision expected at an OPEC meeting next month.

Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, and Russia, which heads an alliance of producers outside the cartel, agreed to boost production at a meeting in June over fears U.S. sanctions on Iran would trigger shortages.



Oil prices extended declines after the U.S. said last week that it would allow eight countries to continue buying sanctioned Iranian crude.

The U.S. oil market is scrambling to adjust to a deep selloff over the last several weeks


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The U.S. oil market is scrambling to adjust to a deep selloff over the last several weeks, with forward prices signaling a supply glut which could upend plans for producers and traders through 2019.

U.S. crude futures (CLc1) plunged 7 percent on Tuesday, to settle at $55.69, their lowest level this year, down from a four-year high only a month ago. Tuesday marked a 12th straight session of declines, which is the longest losing streak on record, shaking a market that was bracing for supply shortfalls just a month ago.

“We were definitely in the bullish narrative for the past three months, and now we’re seeing that narrative shift,” said Michael Cohen, head of energy markets research at Barclays (LON:BARC). “If the narrative gets unwound or undermined, so, too, does the positioning by the market.”



In the biggest sign of the shift, an increasing number of later-dated futures contracts are trading at a premium to current prices. That is a signal that the market expects supply to outpace demand next year and into 2020.

That trend could inhibit producers from drilling and deal a blow to shale companies, which have raked in profits as U.S. production surged to a weekly record of 11.6 million barrels per day (bpd) in early November. Already, the Organization of the Petroleum Exporting Countries is considering a production cut to boost prices. Adding to concerns, the International Energy Agency said on Wednesday that supply will outpace demand in 2019.

“I think there’s a genuine shift,” one trader at a top commodities merchant said. “Everyone is talking about global oil builds in 2019.”


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Many traders saw $100 oil on the horizon just a month ago, but oil is now closer to $50 a barrel. U.S. production is expected to surpass the 12 million bpd milestone by mid-2019, according to U.S. Energy Information Administration forecasts. As prices fall and market structure weakens, U.S. shale producers may pare their drilling plans for 2019, said R.T. Dukes, research director for U.S. lower 48 upstream at Wood Mackenzie. “I think, instead of a big ramp-up into next year, we get flatter activity than what we might have seen otherwise,” he said.

Still, any changes would take time to alter the trajectory of production, especially as the largest oil companies, including Exxon Mobil Corp (N:XOM) and Chevron Corp (N:CVX), are increasing activity in U.S. shale plays. The weakening in 2019 contracts pushes the market’s structure, or curve, more firmly into contango, where forward prices are higher than spot prices.



Contango is a symptom of an oversupplied oil market or rising levels of inventories. It makes it more profitable for crude traders to store large volumes of oil for later, rather than sell for immediate use. The spread between U.S. crude futures expiring in December 2019 and December 2020 , a popular trade in oil markets, flipped from a premium to a discount of about 42 cents on Tuesday. It is the first time the spread traded in negative territory since October 2017.

U.S. crude for delivery in December 2018 plunged to trade as much as $1.43 a barrel below futures for delivery in June 2019 last week, the widest spread on record. The December 2018 contract dropped to trade as much as $2.10 per barrel below the December 2019 contract last week, the widest since early 2016.



A change in the market structure has ramifications for investors as well. When far-dated contracts trade below the spot price, funds and other investors benefit from what is known as “positive roll yield.”

In that situation, funds holding a contract shift into the next month’s contract before it expires, profiting from buying the cheaper later-dated futures. But with those contracts now more expensive, rolling the long positions forward is less lucrative and is one reason why traders have pulled back on bullish bets.

Today’s Stock Market News – A majority of OPEC and allied oil exporters support a cut in the global supply of crude


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OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi said on Sunday. “Many of us share this view,” the minister said when asked about the need for a cut. Asked if it could amount to 500,000 or one million barrels per day, he replied: “I think it is unfair for me to throw numbers now.”

He was speaking in Abu Dhabi where an oil market monitoring committee was held on Sunday, attended by top exporters Saudi Arabia and Russia. “We need a consensus,” he said, indicating that non-OPEC Russia would need to approve any decision. Oman is also not a member of the Organization of the Petroleum Exporting Countries.

Saudi Arabia is discussing a proposal to cut oil output by up to 1 million barrels per day by OPEC and its allies, two sources close to the discussions told Reuters on Sunday. The sources said the discussions were not finalized as much depended on the reduction in Iranian exports.



“There is a general discussion about this. But the question is how much is needed to reduce by the market,” one of the sources said, speaking in Abu Dhabi where a market monitoring committee is due to be held on Sunday, attended by top exporters Saudi Arabia and Russia. Asked by reporters in Abu Dhabi if the market is in balance, Saudi Energy Minister Khalid Al-Falih said: “We will find out. We have our meeting later.”

Al-Falih last month said there could be a need for intervention to reduce oil stockpiles after increases in recent months. The United States this month imposed sanctions curtailing Iran’s oil exports as part of efforts to curb Tehran’s nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.


More News On OPEC. Producers face a supply glut, despite the return of sanctions against Iran. Surging shale means the group will have to extend output cuts. It was meant to be a short, sharp shock. Instead, OPEC members are facing a long, slow grind with no end in sight.



The deal reached with several non-OPEC countries in 2016 to cut oil supply and drain excess inventories was meant to last just six months. But after last week’s ugly slide into a bear market for prices, the agreement looks likely to drag into a third year as the group faces having to make further cuts in 2019.

Taking 1.8 million barrels a day of oil off the market from January 2017 was meant to drain excess inventories by the middle of that year, restore prices to an undefined “acceptable” level and balance supply and demand. Instead, the glut persisted. Although better than expected, compliance with the agreement was not complete and it was not until the deal was extended and Saudi Arabia started cutting shipments to the U.S. in the middle of 2017 that prices really began to pick up.

A further extension to the deal helped to push prices up to $80 a barrel by mid-2018, earning tweeted rebukes from President Donald Trump that prompted a relaxation of the cuts and a surge in supply from those with the capacity to do so — principally Saudi Arabia and Russia. Total OPEC output is now the highest since before the cuts were introduced, even after allowing for changes in membership, while Russia’s hit a post-Soviet high of 11.4 million barrels a day last month.


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But the recovery in oil prices has been a double-edged sword for OPEC and friends. Sure, it has boosted revenues for most — Venezuela and soon Iran being the exceptions — but it has also lit a fire under U.S. shale oil production.

Stock Market News – OPEC and its allies led by Russia are weighing production cuts to halt a sharp slump in oil prices


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OPEC and its allies led by Russia are weighing production cuts to halt a sharp slump in oil prices during meetings being held this weekend in Abu Dhabi. Ministers from Saudi Arabia and Russia will lead key monitoring committee meetings due to start in the UAE capital on Sunday with output policy high on the agenda.

Their deliberations are being complicated by surging US shale output and waivers granted to eight customers of Iranian oil, which have helped drive Brent crude below $70/b. “We are worried about the situation of the market, the global economy, the demand and supply,” one delegate said as he left an advisory committee meeting Saturday.

OPEC and 10 non-OPEC partners led by Russia have boosted production since agreeing in June to increase supplies by a combined 1 million b/d from May levels to offset expected losses by sanctions-hit Iran and economically strained Venezuela. However, weaker market conditions have put the need to restrain output back on the group’s agenda.



NYMEX WTI futures have declined for 10 straight days, equaling the index’s longest losing streak and closing Friday at a 2018 low of $60.19/b. OPEC sources have indicated that the monitoring committee may recommend that the production increase be reversed and cuts reinstated. “The market has changed a lot in a short period of time,” another delegate said.

OPEC production has risen 820,000 b/d since May, according to the latest S&P Global Platts OPEC survey of analysts, industry officials and shipping data. Meanwhile, Russia reported earlier this month that it hit an all-time high of 11.41 million b/d in October, up about 440,000 b/d from May.



This comes as the US Energy Information Administration estimated that US output also hit a record high of 11.4 million b/d in October. Analysts with PVM Associates said in a note Friday that the price slump appears likely to continue, unless OPEC and its partners agree to cut production.

“Barring a U-turn in OPEC/non-OPEC production strategy, nuggets of price support will be sporadic at best and will provide little in the way of upside potential,” they said. The monitoring committee meeting is scheduled to start at 5:00 pm local time (1300 GMT). The committee comprises ministers from Saudi Arabia, Russia, Kuwait, Venezuela, Algeria and Oman. UAE energy minister Suhail al-Mazrouei, who holds the rotating OPEC presidency this year, is hosting the meeting.

More News On Crude Oil
Oil Short-Sellers Make a Comeback as OPEC Moves to Center Stage. The oil bears are back, and they’re looking at OPEC before making their next move. While money managers slashed bets on rising West Texas Intermediate crude prices for a ninth week in their longest retreat on record, short-selling jumped to the highest in more than a year. The rapid shift in sentiment sets the stage for an OPEC meeting on Sunday to discuss market conditions.



Investors will be waiting to see whether OPEC provides any indication that the group will trim production once again next year as futures plunge. A change in policy would follow President Donald Trump’s calls on the cartel to lower oil prices and ramp up output to make up for lost crude from Iran due to U.S.-imposed sanctions.

Among the reasons for the bearishness that has roiled the oil market are OPEC production at the highest since 2016, record U.S. output and waivers given to a number of importers of Iranian crude, including China.

Stock Market News – WTI has wiped out all of its gains for 2018. Oil touched the lowest level since February as it headed for the longest losing streak on record.


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WTI has wiped out all of its gains for 2018. The decline has been exacerbated by a U.S. decision to grant eight countries waivers to continue importing from Iran.


Crude Volatility: The History and the Future of Boom-Bust Oil Prices (Center on Global Energy Policy Series)


Futures in New York fell as much as 2.3 percent extending their losses to a 10th day. Prices are down more than 20 percent from a four-year high reached in early October. The drop comes two days before OPEC countries will meet with partners in Abu Dhabi, after signaling it may cut output again next year. Oil may get support as refiners return from seasonal, maintenance, boosting demand.



“I think refinery utilization rates are going to climb and when they do, that depletes crude inventories,” said Thomas Finlon, director of Energy Analytics Group LLC.

WTI has wiped out all of its gains for 2018. The decline has been exacerbated by a U.S. decision to grant eight countries waivers to continue importing from Iran, which it slapped with sanctions earlier this week. That decision, coupled with pledges by Saudi Arabia to pump more and gains in American supply, have turned fears of a supply crunch into talk of an oversupply.

“The focus is on negative sentiment in oil and negative momentum,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “It’ll be interesting to see if some stick with their shorts over the weekend with the OPEC meeting.”



West Texas Intermediate for December delivery fell 50 cents to $60.16 a barrel at 11:26 a.m. on the New York Mercantile Exchange. The contract is headed for about a 4 percent loss for the week and a fifth weekly decline. Total volume traded was 65 percent above the 100-day average. Brent futures for January settlement fell 62 cents to $70.03 a barrel on the London-based ICE Futures Europe exchange. Prices are also on course to fall for a fifth week. The global benchmark crude traded at a $9.72 premium to WTI for the same month.

A potential agreement by OPEC to return to output cuts would mark the second production U-turn for the group this year. For Saudi Arabia — the world’s biggest crude exporter — it would be the third time in recent years that the kingdom has delivered a supply surge only to quickly reverse it.

The decline comes after global oil supply has surged. U.S. crude production increased to a record 11.6 million barrels a day last week, according to Energy Information Administration data.



OPEC’s output in October reached the highest level since 2016, while Russia last month pumped 11.4 million barrels a day, a post-Soviet record. Producers meeting this weekend will have to contend with not only the threat of a glut, but also the risk to demand from faltering emerging-market economies and a trade war between the U.S. and China.

Stock Market News – Oil prices declined for a ninth straight session, bringing it 20% below its recent high


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U.S. oil prices traded in bear market territory intraday Thursday, with prices declining for a ninth straight session on worries over rising U.S. crude oil inventories and concerns of a global supply surplus that could overwhelm demand.

The market entered an intraday bear market when prices fell below $61.13 a barrel, dropping as low as $60.83 a barrel. Prices have since moved back slightly above the bear-market level. Light, sweet crude for December delivery was recently 0.5% lower at $61.32 a barrel on the New York Mercantile Exchange. Brent crude was down 0.9% at $71.45 a barrel.

Bear Market: A bear market generally is defined as a 20% decline from a recent peak, which in the case of the U.S. crude oil benchmark was a four-year high of around $76 a barrel reached on Oct. 3. Prices have fallen steadily since then, fueled by a U.S.


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government decision to soften oil sanctions on Iran. The market entered an intraday bear market Thursday morning in New York, when prices fell below $61.13 a barrel. Crude has closed lower for the past eight sessions through Wednesday, which is the longest losing streak since July 2014, when the yearslong oil downturn was just beginning.

EIA Data: One of the key factors in oil’s decline this week was the Energy Information Administration’s weekly inventory report released Wednesday. It showed that U.S. oil inventories rose for a seventh straight week to 432 million barrels, the most since June, and that crude oil production in the U.S. reached a record high. “The weekly EIA data release painted a rather bearish picture,” said JBC Energy. “Production rose to a fresh record high of 11.6 million barrels a day, up a massive 400,000 b/d week-on-week, while crude stocks built by almost 6 million barrels.”


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OPEC:Members of the Organization of the Petroleum Exporting Countries meet this weekend to discuss market fundamentals and possibly consider a cut to production levels to boost falling prices. “In view of the latest price slump and the oversupply that looks set to materialize next year, OPEC is thinking about cutting back oil production,” Commerzbank said in a note. Russia, along with OPEC nations led by Saudi Arabia, has been pumping more oil since the summer to offset the loss of Iranian barrels, which now looks likely to be smaller than was anticipated due to waivers granted to some buyers. Oil prices have fallen by around 14% over the past month.

AHEAD: Baker Hughes is set to release its weekly rig-count report Friday that details U.S. drilling activity.
OPEC Joint Ministerial Monitoring Committee meets on Sunday in Abu Dhabi.

Stock Market News – Saudi Arabia readies to boost supplies over Iran oil sanctions.


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Saudi Arabia readies to boost supplies over Iran oil sanctions. Analysts expect Iranian exports of some 2.5 million barrels per day to plunge by 1-2 million bpd when US sanctions take effect November 5. With Washington poised to curtail Iran’s oil exports, OPEC heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain, analysts say.

The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as US President Donald Trump aims to prevent an oil price hike. Analysts expect that Iran’s oil exports, which reach around 2.5 million barrels per day in normal times, to plunge by one million to two million bpd when sanctions take effect on November 5.

That is expected to strain an already tight market. Outages in Libya, Venezuela, Nigeria, Mexico, Angola and others forced OPEC and non-OPEC producers in June to abandon an agreed cut in output and boost supplies. “We are entering a very crucial period for the oil market,” the International Energy Agency said in a September report. “Things are tightening up.”

Saudi Arabia is the only producer with significant spare capacity of around two million bpd that can be tapped into to compensate for the loss of Iranian supplies. Even as relations soured between the West and Riyadh over the murder of the Washington Post contributor, Saudi Arabia said it had no plans to wage a retaliatory oil embargo.

Saudi Energy Minister Khalid al-Falih said his country, which raised output by 700,000 bpd to 10.7 million bpd in October, was prepared to further bump up production to 12 million bpd. “We have sanctions on Iran and nobody has a clue what Iranian exports will be,” he told the Russian news agency Tass last week.


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In addition, there are potential declines in Libya, Nigeria, Mexico and Venezuela, he said, also pointing to uncertainty over US shale oil production. Falih said the kingdom could turn to its huge strategic reserves of around 300 billion barrels to meet global demand. Anas al-Hajji, a Houston-based oil expert, said the fall in Iranian exports was tough to assess but he expected “less than what most analysts are talking about.”

“The Iranians have perfected their game working under sanctions. There will be a black market for Iranian crude, Hajji told AFP. Saudi Arabia’s neighbors the United Arab Emirates and Kuwait can also raise their output by up to 300,000 bpd if needed. ‘It’s unsustainableKuwaiti oil expert Kamel al-Harami said he doubts Riyadh can sustain production of 12 million bpd for a prolonged period.

OPEC is constrained by low spare capacity in a tight market under threat from unplanned outages, low investment and unpredictable geopolitical unrest. Iranian officials are betting on the unstable market conditions to beat US sanctions.

Mr. Trump both tries to decrease Iran’s oil exports significantly and also wants prices not to go up. These two can’t happen together,” Iranian Oil Minister Bijan Namdar Zanganeh said late September. Tehran sold oil to private buyers through its energy exchange for the first time on October 28, as part of efforts to counter the imminent return of sanctions.

Some estimates show Iran’s crude exports have already dropped by a third since May with even companies from traditional clients China and India abandoning purchases. Oil prices which rebounded from under $30 a barrel in early 2016 to a four-year high of over $86 a barrel in early October have fallen to around $75 due to fears of weaker global demand.


More News On Crude Oil Markets – Thousands of Iranians chanting “Death to America” rallied on Sunday to mark the anniversary of the seizure of the U.S. Embassy during the 1979 Islamic Revolution. Students attending the government-organized rally in the capital Tehran, broadcast live by state television, burned the Stars and Stripes, an effigy of Uncle Sam and pictures of President Donald Trump outside the former embassy compound.


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Hardline students stormed the embassy on Nov. 4, 1979, soon after the fall of the U.S.-backed shah, and 52 Americans were held hostage there for 444 days. The two countries have been enemies ever since. State media said millions turned out for rallies in towns and cities, swearing allegiance to the clerical establishment and Supreme Leader Ayatollah Ali Khamenei. The figure could not be independently confirmed by Reuters.

Rallies are staged on the embassy takeover anniversary every year. But rancour is especially strong this time following Trump’s decision in May to withdraw from world powers’ 2015 nuclear deal with Iran and reimpose sanctions on Tehran. The deal brought about the lifting of most international financial and economic sanctions in return for Tehran curbing its disputed nuclear activity under U.N. surveillance.

Trump said the deal was weak and favored Iran. The other signatories – Britain, France, Germany, Russia and China – remain committed to the accord. U.S. Secretary of State Mike Pompeo said the penalties set to return on Monday “are the toughest sanctions ever put in place on the Islamic Republic of Iran.”

Interviewed on “Fox News Sunday,” Pompeo said, “There’s a handful of places where countries already have made significant reductions in their crude oil exports and need a little more time to get to zero. And we’re going to provide that to them.” He did not elaborate. Pompeo noted that oil sanctions would be coupled with financial sanctions involving “over 600 designations of individuals and companies in Iran.”

The Iranian military said it would launch two days of air defense drills on Monday and assured Iranians that it could neutralize any threats, the state news agency IRNA reported. “We can assure our people that the enemy will not be able to carry out its threats against our country,” IRNA quoted Habibollah Sayyari, the coordinating officer, as saying.


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Among the anniversary events was an exhibition of cartoons in Tehran called “Donald Salman” – a reference to the close ties between the U.S. president and King Salman, ruler of Iran’s regional rival, Saudi Arabia. “It’s black humor, but the audience can also be brought to reflect on the contradictions in the behavior of Trump and (the royal house of) Al Saud,” artist Masoud Shojaei Tabatabai told state television in Tehran.

The restoration of U.S. sanctions on Monday targeting Iran’s oil sales and banking sector is part of an effort by Trump to force Iran to halt its nuclear and ballistic missile programs outright, as well as its support for proxy forces in conflicts across the Middle East.

Crude oil markets fell further on the news, adding to Thursday’s 3% drop and losses since Monday that culminated in their worst week since February.


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Oil Posts Biggest Weekly Drop Since February as U.S. Approves Iran Waivers. The Trump Administration seems to be achieving its tri-fold agenda of punishing Iran while balancing the world’s energy needs and keeping oil prices low, as crude markets posted on Friday their largest weekly loss since February.

Eight countries, including Japan, India, South Korea and China, will be given waivers to continue importing oil from Tehran once export sanctions against the Islamic Republic start this weekend, Bloomberg reported.

Secretary of State Michael Pompeo confirmed that it will be eight nations, but added that details will be announced on Monday. Crude oil markets fell further on the news, adding to Thursday’s 3% drop and losses since Monday that culminated in their worst week since February. U.S. WTI settled down 55 cents lower at $63.14 per barrel. For the week, it lost 6.6%.

U.K.Brent crude, the international benchmark for oil, was down 11 cents at $72.78 by 2:42 PM ET (18:42 GMT). Like WTI, it was also off 6.6% on the week. Data showing the first weekly drop in four for the U.S. oil rig count didn’t help, with just one rig reported off for this week.



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Just a month ago, Brent hit four-year highs above $86 and WTI scaled 2014 peaks of nearly $77. But all that changed in October, with U.S. crude losing 11% and the U.K. benchmark 9%, their most since July 2016. President Donald Trump has vowed to bring Iran’s crude exports to zero since he canceled an Obama-era deal with Tehran in 2015 that allowed the third-largest exporter in OPEC to continue its oil sales to the world in exchange for curbs on its nuclear program.

But the Trump administration is also aware that choking off about 2 million barrels per day (bpd) of exports averaged by Iran without alternatives will only send oil prices rallying again, as they did in the third quarter. High oil prices could be a problem for the president and his Republican colleagues in U.S. midterm elections due next Tuesday.

Saudi Arabia, OPEC’s top exporter, has said lately that it will pump as much as necessary to keep markets supplied and Russia, another major oil producer, has also said there will be no squeeze. The United States, which basically flooded the world with cheap crude in three previous years, causing a glut, is again ramping up production, reaching a record high of 11.346 million bpd in August.

With the selloff in oil not appearing to be over, some traders think WTI could break below $60 and Brent under $70. Just a month ago, many thought Brent was on track to hit $100 as a momentum-driven rally took oil the other way. But Wall Street bank Goldman Sachs (NYSE:GS), an influential voice in energy markets, said it expects Brent to return to its target of $80 per barrel by year end.

“The granting of waivers does not imply that Iran exports will stabilize near current levels,” Goldman said, commenting ahead of Friday’s news. “As a result, we still expect that the global oil market will be in deficit in 4Q18, leading to a strengthening in Brent timespreads,” it said. “We expect this steeper backwardation to drive spot prices higher to our year-end $80 per barrel forecast, with low positioning also pointing to price upside in the short-term.”


More News On Crude Oil.

Iranian oil: 40 years of revolution, war, sanctions and bans.
Nearly 40 years after the 1979 Islamic revolution saw the exit of Western oil companies from Iran, the Iranian oil sector faces yet another costly disruption after a series of interruptions from war, sanctions and diplomatic isolation.

Washington will reapply sanctions to Iran’s oil sector on Nov. 4, after ending its participation in an international deal governing Iran’s nuclear sector. Iran’s oil buyers outside the United States will stop or reduce purchases because of secondary sanctions applied on foreign companies that use the U.S. banking system.

Having lifted a self-imposed revolutionary ban on foreign investors in 1995, Iran has struggled to attract external investment for any sustained period. The isolation caused by poor relations with the United States and, in recent years, Tehran‘s efforts to develop a nuclear capability have prevented Iran building output capacity. But huge reserves run by the National Iranian Oil Co have helped it cling to its position as one of the world’s five largest oil producers.

The United States stopped buying Iranian oil or investing in Iran’s oil industry in 1979 and has not resumed since. Iran produces nearly 4 percent of the world’s daily oil supply and over the last 30 years has exported on average two-thirds of that.

The mid-1970s were the heyday of the Iranian oil sector, when its output accounted for 10 percent of global production. It has never returned to the record 6 million barrels per day (bpd) it pumped in 1974.

In that year it pumped 70 percent of the amount produced by OPEC’s biggest producer, its regional political rival Saudi Arabia, and more than three times as much as its neighbor Iraq. In 2012, when a first round of international nuclear sanctions was imposed, Iran’s output was only a third of Saudi Arabia’s, rising to 41 percent last year and just a little higher than Iraq’s.



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Output dropped to a low of 1.5 million bpd in 1980, the year after Shah Mohammed Reza was overthrown, an event that caused the second oil shock across the economies of the West. It took 23 years for Iran to restore 4 million bpd in 2003, with a post-revolutionary peak last year just short of 5 million bpd of crude and condensate combined. Iran’s exports halved during the depths of the 2012-2016 international sanctions on its nuclear program.

It is unclear what proportion of Iranian crude sales will vanish from international markets after Nov. 4. The United States said on Friday it would temporarily spare from sanctions eight jurisdictions that import Iranian oil. The European Union would not be one of the eight, U.S. Secretary of State Mike Pompeo said.

This isn’t Iran’s first round of sanctions. It has devised ways to export oil under the radar, evading detection by switching off the transponders of its fleet of nearly 40 supertankers, using alternatives to the U.S. dollar for payment, or selling crude to private refiners, in small, harder-to-track parcels.

Today’s Stock Market News – Oil prices climbed for the first time in three days on Wednesday


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Oil prices climbed for the first time in three days on Wednesday, but rising supply and fears over the outlook for demand amid the U.S.-China trade war kept pressure on the market. Brent crude futures had gained 49 cents, or 0.7 percent, to $76.40 a barrel by 0619 GMT. They fell 1.8 percent on Tuesday, at one point touching their lowest since Aug. 24 at$75.09 a barrel.

U.S. West Texas Intermediate (WTI) crude futures advanced 28 cents, or 0.4 percent, to $66.46 a barrel on Wednesday. They dropped 1.3 percent the day before, after hitting their lowest since Aug. 17 at $65.33 a barrel. Both crude benchmarks have fallen about $10 a barrel from four-year highs reached in the first week of October, and are on track to post their worst monthly performance since July 2016.

“Everyone thought we were going to go into the $90s, but now we are heading for the $60s,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, referring to Brent prices. Oil has been caught in the global financial market slump this month, with equities under pressure from the trade scrap between the world’s two largest economies.


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U.S. President Donald Trump said on Monday that he thinks there will be “a great deal” with China on trade but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible.

Trump said he would like to make a deal now but that China was not ready. He did not elaborate. The United States has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods.

In a bearish signal, the American Petroleum Institute reported U.S. crude inventories rose 5.7 million barrels last week, more than analyst’s forecasts for a 4.1 million barrel build. Investors will look to official government data on U.S. inventories due on Wednesday.

Oil production from Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed. That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand.

The United States is set to impose new sanctions on Iranian crude from next week, and exports from the Islamic Republic have already begun to fall. Saudi Arabia and Russia have said they will pump enough crude to meet demand once the sanctions kick in.

“(After the recent drop in oil prices), this is not the time to back off, if Trump wants to put the screws on Iran,” Nunan said. Imports of Iranian crude oil by major buyers in Asia hit a 32-month low in September, as China, South Korea and Japan sharply cut their purchases ahead of the sanctions on Tehran, government and ship-tracking data showed.



More News on Crude Oil:

Oil started out the week seeing some volatility and choppy trading, awaiting more signs of a clear direction.

• YPF plans to spend $4 billion to $5 billion per year through 2022 in an effort to increase oil and gas production, with a target of 5 to 7 percent production growth per year.

• Petrobras and a consortium including BP (NYSE: BP) and CNPC began drilling on its first well in the Peroba subsalt area in offshore Brazil. The block could hold as much as 5.3 billion barrels of oil.

• Cabot Oil & Gas (NYSE: COG) saw its share price jump when it reported higher realized natural gas prices and gains from asset sales. Cabot’s stock rose nearly 6 percent despite missing earnings expectations.

India, China and Turkey still buying Iranian oil. With just days to go before U.S. sanctions on Iran go into effect, it appears that India, China and Turkey are still resisting demands from Washington to eliminate purchases.

Reuters reports that there is tension within the Trump administration over how hard to press these countries, with one camp, led by national security adviser John Bolton, pushing for zero tolerance, and others more in favor of offering some waivers. Several top importers are still set to buy some Iranian oil in November. “We have told this to the United States, as well as during Brian Hook’s visit,” a source from the Indian government told Reuters, referring to the U.S.’ special envoy. “We cannot end oil imports from Iran at a time when alternatives are costly.”

Concerns over global economy weigh on crude. Crude oil posted steep losses over the past two weeks, the result of growing concerns about the health of the global economy. Other commodities, including copper, have also seen volatility. “It is often said that when stock markets sneeze, commodities catch a cold.  This adage was on full display last week as a global rout on equity gauges dragged the energy complex lower,” PVM Oil Associates strategist Stephen Brennock said to Reuters.

Market in wait-and-see mode. With Iran sanctions set to take effect in a few days, the market is awaiting further clarity. Saudi Arabia and Russia have vowed to cover any supply shortfall, but Iran’s oil exports likely won’t go to zero.


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“I expect investors will take a wait-and-see stance this week before the return of sanctions on Iran and U.S. midterm elections,” Makiko Tsugata, a senior analyst at Mizuho Securities Co., told Bloomberg. Even though Iran is set to lose a significant portion of its exports, “if both Saudi Arabia and Russia boost output and U.S. production continues to rise, we could have a supply glut.”

Russia ill-prepared for IMO rules. Rules from the International Maritime Organization (IMO) set to take effect in 2020, which will lower the allowed concentration of sulfur in marine fuels, pose an enormous threat to Russia. Russia is the world’s largest exporter of sulfurous residual fuel oil and it is ill-prepared to comply with the regulations. “Russia’s oil segment appears to end up among the biggest losers financially,” IHS Markit Ltd.’s senior research analyst Alexander Scherbakov said, according to Bloomberg. There’s “no chance for them to be 100 percent prepared.”

Hedge funds continue to cut bullish bets. Hedge funds and other money managers continued to liquidate their bullish positions on crude oil futures, a sign that investors are increasingly pessimistic about the trajectory for oil prices. The ratio of long to short positions fell to 6:1, down from 12:1 at the end of September, according to Reuters.

Oil fell near the lowest level in two months as a rout in U.S. stocks prompted investors to flee risk assets and as American crude inventories continued to rise.

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Futures in New York dropped as much as 1.2 percent after a 0.6 percent gain on Wednesday. Asia’s main equity gauge entered a bear market after U.S. stocks erased all of this year’s gains on Wednesday. While the stock-market rout spread to risk assets including oil and copper, safe-havens like gold gained. Meanwhile, a government report showed U.S. crude stockpiles climbed more than expected, rising for a fifth week.

Oil Resumes Slide on Sinking Stocks And Growing U.S. Inventories.

Oil is poised for the worst monthly decline since July 2016 as ongoing trade tensions stoke concerns over global growth that drives energy demand at a time when American crude stockpiles are increasing. Traders are also closely watching how much Iranian oil will be removed from the market by U.S. sanctions and whether the Organization of Petroleum Exporting Countries and its allies can fill the gap.

“Sell-off in equity markets raised concerns over oil demand, contributing to a decline in prices,” said Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo. In addition, the gain in U.S. crude inventories is adding to bearish sentiment, he added. West Texas Intermediate for December delivery declined as much as 83 cents to $65.99 a barrel on the New York Mercantile Exchange, and traded at $66.43 at 7:57 a.m. in London. The contract rose 39 cents to $66.82 on Wednesday. Total volume traded was about 5 percent below the 100-day average.

Brent for December settlement fell 41 cents to $75.76 a barrel on the London-based ICE Futures Europe exchange. The contract dropped 27 cents to $76.17 on Wednesday. The global benchmark traded at a $9.32 premium to WTI. In equity markets, the MSCI Asia Pacific Index dropped as much as 2.4 percent on Thursday, taking its slide from a January peak to more than 20 percent. Both the S&P 500 Index and the Dow Jones Industrial Average plummeted on Wednesday on mixed corporate earnings and concerns over global economic growth. Elsewhere, gold has climbed to a three-month high.

In the U.S., nationwide inventories climbed by 6.35 million barrels last week for the longest streak of gains since March 2017, the Energy Information Administration reported on Wednesday. That compares with the median 3.7 million-barrel increase forecast in a Bloomberg survey. Meanwhile, American gasoline stockpiles declined by 4.83 million barrels and distillate inventories dropped for a fifth straight week, according to EIA data. Refinery runs in the country remained low due to seasonal maintenance.

More News: Oil steadied near the lowest level in two months as a rout in global equity markets abated.

Futures in New York fell 0.2 percent, paring earlier decline of as much as 1.2 percent. The Stoxx Europe 600 index increased, while futures on the S&P 500 Index advanced after an earlier rout wiped out all of the U.S. index’s gains for this year. Meanwhile, a government report on Wednesday showed American crude stockpiles climbed more than expected, rising for a fifth week.

Oil is poised for the worst monthly decline since July 2016 as ongoing trade tensions stoke concerns over global energy demand at a time American crude stockpiles are increasing. Traders are also closely watching how much Iranian oil will be removed from the market when U.S. sanctions hit next month and whether the Organization of Petroleum Exporting Countries and its allies are willing — and able — to fill the gap.

“The sentiment in other asset classes is very much looked at, and it seems that the market is trying to find a bottom around current levels,” said Hans van Cleef, senior energy economist at ABN Amro Bank NV. “There needs to be a driver which can push prices up again and Iran sanctions kicking in might be one of them.”

West Texas Intermediate for December delivery declined as much as 83 cents to $65.99 a barrel on the New York Mercantile Exchange, and was at $66.68 at 11:37 a.m. in London. The contract rose 39 cents on Wednesday. Total volume traded was in line with the 100-day average. Brent for December settlement fell 6 cents to $76.11 a barrel on the London-based ICE Futures Europe exchange, after declining 27 cents on Wednesday. The global benchmark traded at a $9.44 premium to WTI.


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Equities in Europe rose after Asian gauges fell for a third day. Futures on the S&P 500 Index advanced, with positive results from Tesla Inc. brightening the mood. The Stoxx Europe 600 Oil & Gas index gained after three days of declines.

In the U.S., nationwide crude inventories climbed by 6.35 million barrels last week for the longest streak of gains since March 2017, the Energy Information Administration reported on Wednesday

Oil Price News: Regional crude prices have diverged from global benchmarks even as fears over Iran sanctions intensify.


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Crude prices had their biggest two-day retreat since April in percentage terms through Thursday’s close. This came despite a fairly significant 700,000 barrel a day impact during the peak of the recent storm to U.S. Gulf of Mexico production. The interest-rate worries that dinged the Dow Jones Industrials for 1,377 points didn’t spare the world’s most important industrial commodity.

Yet Fed Chairman Jerome Powell’s long-term zeal for normalizing interest rates is no match at the moment for President Trump’s determination to punish major crude producer Iran. The shortfall of Iranian barrels has led some to predict that Brent crude, now just above $80 a barrel, could top $100 before the end of 2018.

The market isn’t tight everywhere, though. As evidenced by prices, there are localized gluts and producers who would gladly put more supply on the market if logistics would oblige. U.S. benchmark crude futures, priced at Cushing, Okla., are $9.00 a barrel below Brent and cash prices in the prolific Permian Basin are even cheaper. A lack of pipeline capacity is to blame.

إيران ترجئ مؤتمرا للنفط في لندن إلى فبراير المقبل

None of that holds a candle to western Canada at the moment. Western Canada Select crude cash prices are now $46 a barrel below Brent. Pipeline and rail capacity already was stretched and, according to JBC Energy, a gas pipeline incident in the Pacific Northwest has worsened the situation significantly. Refineries in the region have had to scale back operations and thus crude purchases.

Economics of Offshore Drilling.

The economics of offshore drilling have deteriorated not just because oil prices remain lower than their previous peak, but because onshore shale production has become much more efficient, attracting more capital. At the same time, the offshore drilling-rig market remains oversupplied, particularly when it comes to less modern rigs. Utilization globally went from nearly 90% in 2014 to barely half last year and is a little over 60% now.

U.S. oil prices hit their highest level since November 2014 on Tuesday and Brent crude was also near a four-year peak reached the previous day.


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International benchmark Brent crude oil futures (LCOc1) were at $85.28 per barrel, up 30 cents, or 0.4 percent, from their last close. That was not far off the $85.45 peak reached in the previous session, the highest since November 2014.

Brent has risen by more than 20 percent from its most recent lows in August. Sentiment was lifted by a last-gasp deal to salvage NAFTA as a trilateral pact between the United States, Mexico and Canada, rescuing a $1.2 trillion a year open-trade zone that had been about to collapse. More fundamentally, oil markets have been pushed up by looming U.S. sanctions against Iran’s oil industry, which at its most recent peak this year supplied almost 3 percent of the world’s almost 100 million barrels of daily consumption.

“Oil prices continue to climb, supported by the nearing Iran embargo and related supply concerns,” said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.

“The supply situation looks fragile indeed, as any additional shortfall such as a deterioration of the situation in Venezuela would tighten oil supplies.”

HSBC said in its fourth quarter Global Economics outlook that “our oil analysts believe there is now a growing risk it (crude) could touch $100 per barrel“. Washington’s sanctions are set to start on Nov. 4, and analysts say there may not be enough spare production capacity in the short-term to meet demand, potentially requiring large storage drawdowns.

Many analysts say the Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, will struggle to replace export falls from Iran.

Britain’s Barclays (LON:BARC) bank, however, said on Tuesday that “OPEC has ample spare capacity”. For now, soaring crude prices and weak emerging market currencies, including India’s rupee and Indonesia’s rupiah, may erode economic growth.

“Admittedly, supply-side concerns are pushing the oil price higher, but there are now clear warning signs on the demand-side, which could yet send prices lower,” said Capital Economics in a note to clients. “Softening demand growth and new supply should cool the bullish sentiment and push prices lower by the end of the year,” Barclays said.

Energy stocks drove gains in Europe as oil prices held near four-year highs.


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Energy stocks drove gains in Europe as oil prices held near four-year highs. U.S. futures and the Canadian dollar pushed higher at the start of the final quarter after the U.S. and Canada reached a last-minute deal late Sunday night to revise the North American Free Trade Agreement. The Canadian dollar rose 0.5% against the U.S. dollar to its highest level since May, while the Mexican peso climbed 0.9%. The WSJ Dollar Index, which measures the buck against a basket of 16 others, rose 0.1%.

Futures markets pointed to a 0.5% opening gain for the S&P 500 after the blue-chip index climbed over 7% in the third quarter, notching its best performance in almost five years, to rest just below record highs. The pending agreement will allow Canada to join an accord reached in late August between the U.S. and Mexico.

The Stoxx Europe 600 was up 0.2% in early trade, led by gains in energy stocks as oil prices held near the highest level in around four years. Markets in the Asia-Pacific region were mixed. Japan’s Nikkei Stock Average increased, while Australian and Korean indexes declined. Chinese markets were closed for a public holiday.

Investors have remained focused on trade tensions in recent weeks as the U.S. and China have ramped up tariffs against each others’ economies. Still, many have drawn comfort from the U.S. reaching agreements with other large trading partners in recent months including the European Union, Mexico and now Canada.

“The market is now done with the issue of Nafta,” Commerzbank strategists wrote in a note to clients Monday. A robust domestic economy and strong company earnings have also boosted U.S. stocks this year. Even so, investors are likely to remain focused on the continuing trade war between the U.S. and China, which has showed little sign of ending soon.

Mike Bell, global markets strategist at J.P. Morgan Asset Management, said he has been scaling down his equities positioning to neutral having been overweight for some time, and is plowing more money into U.S. Treasurys. “The primary reason in the near term [is] the continuing uncertainty around the ongoing trade negotiations,” he said. “In the more medium term, the risk is that we’re pretty late cycle in the U.S. now.”

In commodity markets, Brent crude oil prices continued to push higher to $83.09 a barrel, up 0.4% on the day. That helped push the Stoxx Europe 600 oil & gas subindex up 0.6%, taking gains for this sector to 20% over the past six months. Elsewhere in Europe, Italy’s FTSE MIB index rose 0.5%, regaining some of its footing after slumping 3.7% Friday on news that the country’s anti-establishment government had widened its budget-deficit target. Italian bonds remained under pressure, though, with 10-year yields rising nearly 0.1 percentage point relative to haven German bonds Monday, according to Tradeweb. Yields rise as prices fall.

In the Asia-Pacific region, the Nikkei Stock Average rose 0.5%, Australia’s S&P/ASX 200 fell 0.6% and Korea’s Kospi Index slipped 0.2%. In bond markets, the yield on the 10-year Treasury inched up to 3.071%, according to Tradeweb, from 3.055% on Friday.

Oil prices advanced on Friday and were near four-year highs. Oil Prices Advance as U.S. Denies Reports of Using Emergency Supply.



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Oil prices advanced on Friday and were near four-year highs on Friday after Energy Secretary Rick Perry denied reports that the U.S. government plans to use emergency oil reserves to make up for barrels that would be lost from sanctions applied by Washington on Iranian oil exports. On the New York Mercantile Exchange, Crude Oil WTI Futures for November delivery traded 0.2% higher to $72.25 a barrel by 12:45AM ET (04:45 GMT), while on London’s Intercontinental Exchange, Brent Oil Futures for December delivery gained 0.05% to trade at $81.42 a barrel.

Perry told a news conference at the Department of Energy late on Wednesday that the Trump Administration was not considering a release of oil from the U.S. Strategic Petroleum Reserve to offset the impact of the sanctions on Iran that would come into force from Nov. 4. Headlines over the past three months have repeatedly raised the possibility of President Donald Trump tapping the SPR to lower current market and pump prices for gasoline and the president has not publicly refuted the reports. High oil prices are a political risk for Triump and his fellow Republicans.

“Perry is right. A release from the SPR will give the market a false sense of security and the demand side of the equation would be slow to adjust to less barrels,” said Phil Flynn, analyst at the Price Futures Group in Chicago.

Meanwhile, the upcoming U.S. sanctions on Iran has been supporting the crude market in recent months. The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members, including Russia, said they have little spare capacity to increase output in order to offset low supplies that will be brought on by the Iranian sanctions. Iran is OPEC’s third-largest producer. “The market has been focusing on trading headlines on the Iran sanctions for a whole week. But views on how much OPEC and Russia can make up for the losses vary,” said Chen Kai, head of commodity research at Shenda Futures.

The U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices.


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Brent oil edged further away from a four-year high on Wednesday and U.S. crude fell, after the U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices. Brent crude futures were down 43 cents, or 0.5 percent, at $81.44 a barrel by 0041 GMT, after gaining nearly 1 percent the previous session. Earlier on Tuesday, Brent hit its highest since November 2014 at $82.55 per barrel.

U.S. crude oil futures were down 40 cents, or 0.6 percent at $71.88 a barrel. They rose 0.3 percent on Tuesday to close at their highest level since mid-July. However, Brent is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007, when a six-quarter run led to a record-high of $147.50 a barrel.

“We will ensure prior to the reimposition of our sanctions that we have a well supplied oil market,” Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly. In a speech at the UN, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices.

He also accused Iran of sowing chaos and promised further sanctions on the OPEC member after restrictions on its oil exports are imposed from early November.

The so-called ‘OPEC+’ group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so. Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday that OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another”.

Also weighing on sentiment was an industry report showing U.S. crude stocks unexpectedly climbed last week. Crude inventories rose by 2.9 million barrels in the week to Sept. 21 to 400 million, compared with analyst expectations for a decrease of 1.3 million barrels, the American Petroleum Institute said. [API/S]

OPEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out on Sunday any immediate, additional increase in crude output, effectively rebuffing U.S. President Donald Trump’s calls for action to cool the market.



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OPEC, Russia rebuff Trump’s call for immediate boost to oil output. OPEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out on Sunday any immediate, additional increase in crude output, effectively rebuffing U.S. President Donald Trump’s calls for action to cool the market. “I do not influence prices,” Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost.

Benchmark Brent oil (LCOc1) reached $80 a barrel this month, prompting Trump to reiterate on Thursday his demand that the Organization of the Petroleum Exporting Countries lower prices. The price rally mainly stemmed from a decline in oil exports from OPEC member Iran due to fresh U.S. sanctions.

“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter.

Falih said Saudi Arabia had spare capacity to increase oil output but no such move was needed at the moment. “My information is that the markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih said.

However, he signaled Saudi Arabia stood ready to increase supply if Iran’s output fell: “Whatever takes place between now and the end of the year in terms of supply changes will be addressed.”

Russian Energy Minister Alexander Novak said no immediate output increase was necessary, although he believed a trade war between China and the United States as well as U.S. sanctions on Iran were creating new challenges for oil markets. Oman’s Oil Minister Mohammed bin Hamad Al-Rumhy and Kuwaiti counterpart Bakhit al-Rashidi told reporters after Sunday’s talks that producers had agreed they needed to focus on reaching 100 percent compliance with production cuts agreed in June.

That effectively means compensating for falling Iranian production. Al-Rumhy said the exact mechanism for doing so had not been discussed. The statement from Trump, meanwhile, was not his first criticism of OPEC. Higher gasoline prices for U.S. consumers could create a political headache for Republican Trump before mid-term congressional elections in November.

Iran, OPEC’s third-largest producer, has accused Trump of orchestrating the oil price rally by imposing sanctions on Tehran and accused its regional arch-rival Saudi Arabia of bowing to U.S. pressure. On Sunday, Iranian Oil Minister Bijan Zanganeh said Trump’s tweet “was the biggest insult to Washington’s allies in the Middle East”.

Seeking to reverse a downturn in oil prices that began in 2014, OPEC, Russia and other allies decided in late 2016 to reduce supply by some 1.8 million barrels per day (bpd). In June this year, however, after months of cutting by more than their pact had called for, largely due to involuntary reductions from Venezuela and other producers, they agreed to boost output by returning to 100 percent compliance.

That equates to an increase of about 1 million bpd, but latest data show they are some way from achieving that target. In August, OPEC and its allies cut production by 600,000 bpd more than their pact required, mainly as a result of falling output in Iran as customers in Europe and Asia reduced purchases ahead of the U.S. sanctions deadline.

Iran told OPEC its production had been steady in August at 3.8 million bpd. OPEC’s own estimates, according to its secondary sources such as researchers and ship-trackers, put Iranian output at 3.58 million bpd. Falih said returning to 100 percent compliance was the main objective and should be achieved in the next two-three months. Although he refrained from specifying how that could be done, Saudi Arabia is the only oil producer with significant spare capacity.

“We have the consensus that we need to offset reductions and achieve 100 percent compliance, which means we can produce significantly more than we are producing today if there is demand,” Falih said. “The biggest issue is not with the producing countries, it’s with the refiners, it’s with the demand. We in Saudi Arabia have not seen demand for any additional barrel that we did not produce.”

OPEC also decided on Sunday to adjust the dates of its next meeting to Dec. 6-7 from the earlier-agreed Dec. 3. The joint OPEC/non-OPEC ministerial monitoring committee will next meet on Nov. 11 in Abu Dhabi.

Japanese oil refiners have temporarily halted Iranian oil loadings ahead of U.S. sanctions and are buying alternatives as it remains unclear whether Japan will receive an exemption, the head of the country’s refinery association said on Thursday.

Stock Market News Today
2018/09/20

 


Commodities

Japan’s oil refiners temporarily halt Iranian loadings on sanctions threat. Japanese oil refiners have temporarily halted Iranian oil loadings ahead of U.S. sanctions and are buying alternatives as it remains unclear whether Japan will receive an exemption, the head of the country’s refinery association said on Thursday.

The United States has demanded that nations cut all their Iranian oil imports when sanctions on the country’s petroleum sector over Tehran’s nuclear program are re-imposed on Nov. 4.

“It is my view that each firm is taking the same stance and temporarily suspending (the loading) and watching the situation carefully,” Takashi Tsukioka, the President of the Petroleum Association of Japan (PAJ), said when asked if Japanese refiners plan to halt Iranian loadings from October. Tsukioka, who also serves as chairman of refiner Idemitsu Kosan, however, did not comment on the details of each refiner’s reaction.

Many refiners in Japan, the world’s fourth-biggest oil consumer, say they are resigned to completely halting imports from one of their historically important suppliers, unlike during a previous round of sanctions when they only reduced imports from Iran. Iran is an important supplier of oil to Japan, accounting for about 5 percent of its crude imports, and Japanese refiners, together with the government, will try to maintain its good relationship with the Middle Eastern country, said Tsukioka, adding that the U.S. sanctions will not cause a major impact.

Tsukioka said in July that Japanese oil refiners would likely stop loading Iranian crude oil from mid-September, with final shipments to arrive in the first half of October.