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Oil gains over 2% but records seventh weekly decline

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Oil gains over 2% but records seventh weekly decline
© Reuters. An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on November 12, 2021. Mandatory credit Kyodo/via REUTERS ATTENTION EDITORS – THIS IMAGE WAS PROVIDE

By Shariq Khan

BENGALURU (Reuters) -Oil prices rose more than 2% on Friday after U.S. data supported expectations of demand growth, but both benchmarks fell for a seventh straight week, their longest streak of weekly declines in half a decade, on lingering oversupply concerns.

futures settled at $75.84 a barrel, up$1.79, or 2.4%, while U.S. West Texas Intermediate crude futures settled at $71.23, up $1.89, or 2.7%.

For the week, both benchmarks lost 3.8%, after hitting their lowest since late June on Thursday, a sign that many traders believe the market is oversupplied.

Also fuelling the market’s downturn, Chinese customs data showed its imports in November fell 9% from a year earlier as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.

However, Friday’s gains, the first in six sessions, could be a sign that the market has found a floor for now after falling for six straight sessions, said Phil Flynn, analyst at Price Futures Group.

“Look to step in with caution but the lows should be in,” he said.

U.S. Labor Department data released showed stronger-than-expected job growth, signs of underlying labor market strength that should support fuel demand in the biggest oil market.

That followed government data on Wednesday showing U.S. gasoline demand last week lagged the 10-year seasonal average by 2.5% and gasoline stocks rose by 5.4 million barrels, more than quintuple forecasts, leading to gasoline prices to plummet. [EIA/S]

Like crude, U.S. RBOB gasoline futures on Friday rebounded about 3% from two-year lows on Thursday.

“Wednesday’s Energy Information Administration (EIA) report which spurred concern of soft demand on a significant increase in gasoline inventories, may not be as concerning in the wake of the strong jobs report,” said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management.

Offering more support to the demand enthusiasm, data showed U.S. consumer sentiment perked up much more than expected in December.

Meanwhile, Saudi Arabia and Russia, the world’s two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts just days after a fractious meeting of the producers’ club.

The Organization of the Petroleum Exporting Countries and its allies last week agreed to a combined 2.2 million barrels per day (bpd) in output cuts for the first quarter of next year. The market has been concerned, however, that some members may not adhere to their commitments.

Commodities

Gold prices muted as rate fears keep traders to the sidelines

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Gold prices muted as rate fears keep traders to the sidelines
© Reuters.

Investing.com– Gold prices moved in a flat-to-low range on Wednesday, extending their recent run of muted performance as anxiety over higher-for-longer U.S. interest rates persisted ahead of key economic readings.

The yellow metal remained squarely within a $2,000 to $2,050 trading range established over the past month, as any upside in gold was largely limited by a string of Federal Reserve warnings that the bank was in no hurry to begin trimming rates early in 2024. Strength in the , which remained near three-month highs, also pressured gold prices.

Still, gold prices also remained firm above the key $2,000 an ounce support level, indicating that fears of a global economic slowdown and geopolitical tensions in Russia and the Middle East were feeding some safe haven demand for the yellow metal.

steadied at $2,030.69 an ounce, while expiring in April fell 0.2% to $2,039.45 an ounce by 00:20 ET (05:20 GMT). 

PCE inflation, GDP data awaited for more cues

Markets were now awaiting key inflation and economic growth readings for more trading cues.

data- the Fed’s preferred inflation gauge- is due on Thursday, and is expected to show inflation remained sticky in January. Such a scenario gives the Fed more impetus to keep interest rates higher for longer.

Several Fed officials also warned this week that sticky inflation will keep the Fed from lowering interest rates early in 2024. 

Before the inflation data, a second reading on fourth-quarter is due later on Wednesday, and is expected to show some cooling in economic growth.

But the U.S. economy is still expected to remain well ahead of its developed world peers, giving the Fed enough headroom to keep rates higher for longer. 

Higher rates herald more pressure on gold, given that they increase the opportunity cost of buying bullion. Other precious metals also retreated on this notion, with falling 0.5% to $892.05 an ounce, while fell 0.7% to $22.602 an ounce on Wednesday. 

Copper prices dip, China PMIs awaited      

Among industrial metals, expiring in March fell 0.4% to $3.8390 a pound. 

The red metal saw a strong run-up in recent weeks on optimism over more stimulus measures in top importer China.

But this rally will be tested on Friday with the release of closely-watched data from the country, which is expected to provide more cues on the state of business activity through February. 

Readings for January showed little improvement in the economy.

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Commodities

Oil rises more than $1/bbl as OPEC+ mulls extending output cuts

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Oil rises more than $1/bbl as OPEC+ mulls extending output cuts
© Reuters. FILE PHOTO: Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013. REUTERS/David McNew//File Photo

By Arathy Somasekhar

HOUSTON (Reuters) – Oil prices rose more than $1 a barrel on Tuesday as sources said OPEC+ is considering extending voluntary oil output cuts into the second quarter to provide additional support.

futures rose $1.12, or 1.4%, to $83.65 a barrel, while U.S. West Texas Intermediate crude futures (WTI) were up $1.29, or 1.7%, at $78.87.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed in November to voluntary cuts totalling about 2.2 million barrels per day (bpd) for the first quarter this year, led by Saudi Arabia rolling over its own voluntary cut.

The producer group could keep the additional cuts in place until the end of the year, two of the sources told Reuters.

“We are going to see some tight supplies down the road,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“OPEC is looking for mid-$80s, may be around $85 a barrel on Brent. If we stay below that, they will curtail production all the way to the year end,” Kissler added.

Also supporting prices on the supply side, Israel and Hamas, as well as Qatari mediators, all sounded notes of caution about progress towards a truce in Gaza, after U.S. President Joe Biden said he believed a ceasefire could be reached in under a week to halt the war for Ramadan.

Yemen’s Houthi spokesperson said the group’s operations in the Red Sea would stop only when Israeli “aggression” against Gaza ends. Houthi missile and drone attacks on international shipping have driven up the cost of transporting energy products and contributed to a tighter market.

In the U.S., crude inventories were expected to have risen about 2.7 million barrels last week, while distillates and gasoline stockpiles were seen falling, a Reuters poll showed.

The American Petroleum Institute will release the industry group’s weekly inventories data at 4:30 p.m. EST (2130 GMT), followed by the government’s report on Wednesday morning.

Meanwhile, the 3-2-1 U.S. refinery crack spread , a proxy for refining margins, rose to their highest in more than five months. The surge suggests increased profitability for refineries amidst robust consumer demand for petroleum products.

Markets expect to see some improvement in Chinese oil demand as improving travel demand over the Lunar New Year holiday outweighed worries of slowing macro-economic indicators.

Russian authorities announced a six-month ban on gasoline exports from March 1 to compensate for rising demand and to allow for refinery maintenance.

Global crude oil markets were expected to be fairly stable this year at around $80 a barrel, Russel Hardy, CEO of oil and gas trader Vitol, said.

Speaking at the Energy Institute conference, Hardy also said global oil demand was expected to peak in the early 2030s.

Both oil benchmarks had settled more than 1% higher on Monday after declines of 2-3% over the previous week as markets factored in a greater likelihood that cuts to interest rates might take longer to come than previously expected.

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Commodities

Oil falls 1% on Fed rate cut caution and stocks build

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Oil falls 1% on Fed rate cut caution and stocks build
© Reuters. Oil, miniatures of oil barrels and U.S. dollar banknote are seen in this illustration taken, June 6, 2023. REUTERS/Dado Ruvic/Illustration/Files

By Paul Carsten

LONDON (Reuters) -Oil prices pulled back on Wednesday as the prospect of delays to U.S. interest rate cuts and a jump in stocks that trounced expectations offset a boost from a potential extension to OPEC+ supply curbs.

futures fell 76 cents, or 0.91%, to $82.89 a barrel by 1227 GMT. U.S. West Texas Intermediate futures (WTI) were down 83 cents, or 1.05%, at $78.04. Both benchmarks had fallen $1 in earlier trading.

Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:) Insights, attributed the price falls to profit-taking plus a combined response to a surge in U.S. crude stocks and continuing hopes of a Gaza ceasefire deal in coming days.

U.S. crude stocks showed an 8.43 million barrel build in the week ended Feb. 23, according to market sources citing American Petroleum Institute (API) figures on Tuesday. 

That shattered expectations of a 1.8 million barrel build, according to analysts polled by Reuters on Monday.

Federal Reserve Governor Michelle Bowman had signalled on Tuesday that she was in no rush to cut U.S. interest rates, particularly given continuing inflation risks. Higher-for-longer rates could dampen economic growth and suppress demand for oil.

Due Thursday is the January U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation and a key factor in rate decisions.

“The power of inflationary expectations must not be underestimated,” said Tamas Varga of oil broker PVM in a note on Wednesday. “In case tomorrow’s U.S. PCE reading comes in above expectations, a temporary top might have been found” for oil.

Brent and WTI futures rose more than $1 a barrel on Tuesday after Reuters reported that the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) will consider extending voluntary oil output cuts into the second quarter. 

Analysts at ANZ Research said that such a move by OPEC+ would be likely to tighten the market.

Russian authorities on Tuesday announced a six-month ban on gasoline exports from March 1 to compensate for rising demand from consumers and farmers and to allow for planned refinery maintenance.

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