Commodities
Oil down 3rd day as industry data suggests epic US crude build
© Reuters.
Investing.com – Crude prices fell for a third day in a row as trading began in Asia Thursday, responding to a report by industry group API that the largest weekly crude stockpile build in eight months may have taken place in the United States last week.
After Monday’s 4% price rally on the back of the worst outbreak in decades of fighting between Israeli and Palestine troops that raised concerns about oil exports from the Middle East, crude markets have taken on an unnatural, eerie calm in the past two days as it became clear the market may have overreacted to the crisis.
As such, crude prices gave back more than 3% of those gains in the last 48 hours, particularly after a Reuters report that Saudi Arabia’s state oil firm had informed at least four refiners in North Asia that it would supply them with the full contractual volumes nominated for November.
The pledge by Saudi Aramco (TADAWUL:) ran against the very grain of what Riyadh had been publicly telling global oil markets — that its priority was about keeping the market tight, not assuring that supplies were generously available whenever needed.
On Wednesday, the optics for the oil market worsened further after API, or the American Petroleum Institute, reported that US possibly rose by nearly 13 million barrels last week in what could be the highest build since February.
By Thursday afternoon in Singapore, New York-traded West Texas Intermediate, or , crude for delivery in November was down 31 cents, or 0.4%, at $83.18 per barrel by 12:40 in Singapore (00:40 Eastern US Time). From Monday’s high of $87.24, the benchmark US crude benchmark had fallen to a low of $82.78 in the last session.
“Going into the new trading day, moving below $82.35 would increase the bearish bias with the next support (being) at the low (of) last week, at $81.56,” markets’ analyst Greg Michalowski said in a posting on the ForexLive forum.
A super bullish narrative to a suspect one in 3 days
London-traded crude for the most-active December contract was down 22 cents, or 0.3%, at $85.60 in the latest session. On Monday Brent reached a high of $89.00 but Thursday it struck a low of $85.19.
“The oil market narrative had gone from a super bullish to suspect in just three days,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Aside from last week’s humongous crude build, the API said — the No. 1 US fuel product — rose by 3.645M, adding to the previous week’s gain of 3.946M, the API said.
The only real bullish element in the API report was the drop of 3.535M barrels for distillates — a feedstock for diesel and heating fuel — versus the prior week’s build of 0.349M.
The API also noted a 0.547M barrel drop in storage levels at the Cushing, Oklahoma delivery point for US crude, versus the previous week’s rise of 0.705M. That prior week’s build was the first in months for Cushing. Until that week, there had been fears that Cushng stockpiles may drop to such critically low levels that would complicate any more withdrawals from the storage hub.
The API numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Thursday.
For last week, analysts tracked by Investing.com expect the EIA to report a drop of 0.37 million barrels, versus the 2.224-million barrel reduction reported during the week to Sept. 29.
On the front, the consensus is for a draw of 1.5M barrels over the 6.481M-barrel jump in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.
With , the expectation is for a drop of 1.5M barrels versus the prior week’s drop of 1.269M. Distillates are refined into , diesel for trucks, buses, trains and ships and fuel for jets.
Investing.com– Gold prices fell slightly in Asian trade on Tuesday but remained close to recent peaks as traders awaited key U.S. inflation data for more cues on the Federal Reserve’s plans to begin cutting interest rates.
The yellow metal benefited from safe haven buying following a severe risk-off move across markets last week, which was triggered by concerns over slowing economic growth.
Spot prices came within spitting distance of a record high on Friday, but then pulled back as the advanced ahead of this week’s inflation reading.
fell 0.1% to $2,502.07 an ounce, while expiring in December fell 0.1% to $2,531.0 an ounce by 00:22 ET (04:22 GMT).
Gold steady with Inflation, Fed meeting in sight
Focus this week is squarely on inflation data, due on Wednesday, for more cues on the U.S. economy.
Any signs of cooling inflation are likely to spur increased bets on lower interest rates in the coming months- a scenario that bodes well for gold.
Wednesday’s inflation reading comes just a week before a , where the central bank is widely expected to cut interest rates by 25 basis points.
Expectations of the September cut were also a key driver of gold’s recent gains, given that the cut is likely to kick off an easing cycle by the Fed.
Lower rates bode well for gold, given that they reduce the opportunity cost of investing in the yellow metal.
Other precious metals fell on Tuesday, having largely lagged gold in recent weeks. fell 0.1% to $945.0 an ounce, while fell 0.2% to $28.590 an ounce.
Copper edges lower, Chinese trade data brings little cheer
Among industrial metals, prices retreated on Tuesday, taking little support from data that showed some economic resilience in top importer China.
China’s unexpectedly grew in August on strength in the country’s . But laggard offset cheer over this trend, given that they signaled sluggish demand in the country.
China’s overall copper imports shrank 12.3% year-on-year in August, although they were still in positive territory for the first eight months of the year.
The soft import data came following a string of weak readings on China’s economy over the past week, which raised concerns over slowing growth in the world’s biggest copper importer.
The data, coupled with a broader risk-off move in global markets, saw copper nursing steep losses over the past week.
Investing.com– Oil prices steadied in Asian trade on Tuesday as traders sought to gauge the impact of Tropical Storm Francine on U.S. oil production, while concerns over sluggish demand remained in play.
Prices were nursing steep losses from the prior week amid renewed concerns that global oil demand will slow, especially following middling economic readings from top importer China. The prospect of oversupply and increased production also weighed.
But oil prices rebounded on Monday as sentiment improved.
expiring in November were flat at $71.86 a barrel, while steadied at $67.90 a barrel by 22:37ET (02:37 GMT).
Tropical storm Francine set to batter Gulf of Mexico
A slew of oil companies were seen stopping production and refining activities in the Gulf of Mexico as Tropical Storm Francine made its way towards the U.S. mid-South.
The storm is expected to potentially strengthen into a hurricane before making landfall, and is expected to lash the upper Texas and Louisiana coasts with heavy rain and gale winds this week.
The storm could potentially cause extended disruptions in the energy-rich Gulf of Mexico, reducing crude supplies in North America and presenting a tighter near-term outlook for oil markets.
This notion offered oil markets some support, helping them recover a measure of bruising losses logged last week.
Oil battered by demand concerns, China woes
Oil prices were nursing steep losses in recent sessions as markets fretted over slowing demand, especially in top crude importer China.
A string of weak economic readings from the country for August drummed up concerns over slowing growth, as did signs that increasing electric vehicle adoption was also denting fuel demand.
Beyond China, caution over U.S. interest rates also weighed on oil markets, especially ahead of key inflation data due later this week.
The inflation reading comes just a week before a Federal Reserve meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
By Ahmad Ghaddar
LONDON (Reuters) -Oil prices gave up the previous day’s gains on Tuesday as a weaker demand outlook offset U.S. supply disruptions from Tropical Storm Francine and global oil oversupply risks that continue to weigh on the market.
futures were down 95 cents, or 1.3%, at $70.89 a barrel by 1214 GMT. U.S. West Texas Intermediate crude lost 96 cents, or 1.4%, to $67.75.
Both benchmarks had risen about 1% on Monday.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from previously projected growth of 2.11 million bpd.
OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.
The weakening global demand prospects and expectations of oil oversupply kept the market suppressed.
Chinese data on Monday showed consumer inflation accelerated in August to its fastest in half a year, though domestic demand remained fragile, and producer price deflation worsened.
And while data released on Tuesday showed China’s exports grew at their fastest in nearly 1-1/2 years in August, imports disappointed against a backdrop of depressed domestic demand.
“The message from China is simple but loud and reverberates throughout the globe,” said PVM Oil analyst Tamas Varga, adding that the country is struggling to encourage spending and boost sluggish demand.
Meanwhile, the U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening as Tropical Storm Francine barrelled across the Gulf of Mexico. Corpus Christi port remained open with restrictions.
The tropical storm is forecast to strengthen significantly and become a hurricane on Tuesday, according to the National Hurricane Center (NHC).
Exxon Mobil (NYSE:) said it shut in output at its Hoover offshore production platform while Shell (LON:) paused drilling operations at two platforms. Chevron (NYSE:) also began shutting in oil and gas output at two of its offshore platforms.
The U.S. Energy Information Administration is due to publish its short-term energy outlook, with forecasts for the global market and oil output.
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