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.
Oil prices steady on OPEC+ cut uncertainty and Middle East tension
© Reuters. FILE PHOTO: An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS/File Photo
By Natalie Grover
London (Reuters) -Oil prices were little changed on Tuesday against a backdrop of uncertainty over voluntary output cuts by the OPEC+ group of producers, tensions in the Middle East and some encouraging economic signals in Europe.
futures edged down by 25 cents, or 0.3%, to $77.78 a barrel by 1301 GMT. U.S. West Texas Intermediate crude futures lost 21 cents, or 0.3%, to $72.83.
Comments by Saudi Arabia’s energy minister that OPEC+ production cuts could continue past the first quarter of 2024 lent some price support, said OANDA analyst Kelvin Wong.
Oil prices had declined on Monday on doubts that OPEC+ supply cuts would have a significant impact, said CMC Markets (LON:) analyst Tina Teng.
On Tuesday, however, the Kremlin said that the cuts agreed by the OPEC+ group will take time to kick in.
The Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, agreed on Thursday to voluntary output cuts of about 2.2 million barrels per day (bpd) for the first quarter of 2024.
At least 1.3 million bpd of those cuts, however, were an extension of voluntary curbs that Saudi Arabia and Russia already had in place.
The additional cuts were below the 1 million bpd reduction that was already baked into market expectations in the run-up to the OPEC+ meeting, FGE analysts wrote in a note, adding that in practice they expect the overall OPEC+ cut to be closer to 500,000 bpd more than the reductions to fourth-quarter output.
Meanwhile, the resumption of fighting in the Israel-Hamas war has stoked supply concerns, as did attacks on three commercial vessels in international waters in the southern Red Sea.
There was a bright spot on the demand side, with European Central Bank board member Isabel Schnabel telling Reuters the bank can take further interest rate hikes off the table after a “remarkable” fall in inflation.
In the United States, however, data on Tuesday showed factory orders fell by more than analysts had expected in October and the most in more than three years, raising concerns about the health of U.S. demand.
That bolstered the view that increases to interest rates are beginning to limit spending, analysts said.
Oil falls on demand fears and doubts over OPEC+ cuts
© Reuters. FILE PHOTO: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS
By Alex Lawler
LONDON (Reuters) – Oil prices extended declines on Monday, pressured by investor scepticism over the latest OPEC+ decision on supply cuts and uncertainty surrounding global fuel demand, though the risk of supply disruptions from the Middle East conflict limited losses.
Monday’s fall adds to a 2% decline last week after the supply cuts announced on Thursday by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+.
futures were down 45 cents, or 0.6%, at $78.43 a barrel by 1243 GMT. U.S. West Texas Intermediate crude futures fell 43 cents, or 0.6%, to $73.64.
“Crude seems to be under continued pressure from the OPEC+ decision,” said Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:) Insights.
The OPEC+ cuts were voluntary in nature, raising doubts about whether or not producers would fully implement them. Investors were also unsure about how the cuts would be measured.
“The OPEC+ ‘deal’ last week was unconvincing to say the least,” said Craig Erlam, analyst at brokerage OANDA. “And with markets seemingly anticipating more of an economic slowdown next year, the announcement simply doesn’t go far enough.”
Surveys on Friday showed global manufacturing activity remained weak in November on soft demand, with euro zone factory activity contracting, while there were mixed signs on the strength of China’s economy.
Geopolitical considerations were back in focus as fighting resumed in Gaza, lending some support to prices. Three commercial vessels came under attack in international waters in the southern Red Sea, the U.S. military said on Sunday.
Elsewhere, Western countries have stepped up efforts to enforce the $60 a barrel price cap on seaborne shipments of Russian oil imposed to punish Moscow for its war in Ukraine.
Washington on Friday imposed additional sanctions on three entities and three oil tankers.
Gold prices hit record high on bets of early Fed rate cuts
Investing.com — Gold prices touched an all-time high on Monday, but later pared back some of these gains, as traders bet on the potential for a Federal Reserve interest rate cut next year.
By 07:26 ET (12:26 GMT), was mostly unchanged at $2,071.29 a troy ounce, retreating slightly from an earlier rally that had lifted the typical safe haven asset to a record $2,135 per troy ounce. Gold posted strong gains last week, and also rose for a second consecutive month in November.
The yellow metal has appreciated sharply in recent sessions as easing inflation, soft labor market data, and less-hawkish signals from the Fed bolstered speculation that the bank will bring down borrowing costs from a more than two-decade peak in 2024.
Near-term demand for gold was also fueled by an attack on an American warship and commercial vessels in the Red Sea, which ramped up concerns over an escalation in the violence in the Middle East.
Speaking on Friday, Fed Chair Jerome Powell reiterated his stance that U.S. rates will remain higher for longer. But some changes in his language — particularly an acknowledgement of progress made towards curbing inflation and the potential for a “soft landing” for the U.S. economy — reinforced expectations that the Fed will no longer hike rates in December and possibly begin cutting them by March 2024.
More economic cues on tap this week
shows an almost 97% chance that the Fed will keep rates on hold at a range of 5.25% to 5.50% when policymakers meet later this month. Meanwhile, there is a more than 50% probability that the central bank will trim rates by 25 basis points as soon as March of next year, up from around 21% one week ago.
The prospect of falling borrowing costs bodes well for gold, given that elevated rates push up the opportunity cost of investing in non-interest bearing assets like the metal. This notion had battered bullion prices over the past year.
But markets still have a slew of economic figures to assess. data for November — a key gauge of the labor market — is due later this week, while inflation readings for the remainder of the year are also slated for release in the coming weeks.
Some facets of the labor market remain strong, while inflation is still comfortably above the Fed’s 2% target — a trend that, if persistent, may diminish the chances of an early rate cut.
Ambar Warrick contributed to this report.
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