Commodities

Oil prices edger higher after US draw; hefty weekly losses likely

Published

5 months ago

August 22, 2024

Investing.com– Oil prices edged higher Thursday, helped by an unexpected draw in U.S. inventories, but remained on course for hefty weekly losses as weak U.S. labor data added to ongoing global demand concerns.

At 08:15 ET (12:15 GMT), rose 0.4% to $76.33 a barrel, while gained 0.2% to $72.09 a barrel.

So far this week, has fallen over 4%, while WTI crude is down 6%.

US inventories shrink more than expected

Official data, released on Wednesday, showed oil shrank by 4.6 million barrels in the week to August 16, much more than the expected 2 million barrels expected.

Additionally, outsized draws in both and stockpiles suggested that fuel demand remained robust in the largest economy in the world even as the travel-heavy summer season wound down.

Weak US labor data triggers deeper losses in oil

However, gains are mild Thursday, and follow four straight losing sessions, after data released Wednesday by the U.S. labor department showed the U.S. economy added much fewer jobs than initially estimated.

The Bureau of Labor Statistics revised down March 2024’s employment gains by 818,000 positions, as part of an annual review of payrolls data.

The reading sparked renewed concerns over a U.S. recession, especially after weaker-than-expected labor data for July triggered a broad risk-off sentiment across global financial markets.

While the softer labor market reading did cement expectations for an interest rate cut in September, it also added to concerns that the Federal Reserve may be too late in cutting rates, and that the U.S. economy was headed for a hard landing.

Such a scenario bodes poorly for demand in the world’s biggest fuel consumer, especially as recent data showed oil production in the country hit a record high of over 13 million barrels per day.

Traders remain uncertain over the outlook for demand later this year, especially after weak economic readings from China fueled concerns over slowing demand in the face of a slowdown in the world’s biggest oil importer.

(Ambar Warrick contributed to this article.)

Commodities

Russian oil products trapped at sea by US sanctions, LSEG data shows

Published

6 hours ago

January 15, 2025

MOSCOW (Reuters) – Nearly 500,000 metric tons of Russian oil products are trapped on tankers hit by U.S. sanctions, LSEG data showed on Wednesday.

On Jan. 10, new Russia-related sanctions targeted more than 180 vessels and insurance companies, adding to the impact of similar restrictions imposed by United Kingdom (TADAWUL:) and Europe Union.

The vessels under the latest U.S. sanctions include nine tankers that loaded oil products at Russian Baltic and Black Sea ports in December and January.

Four of them – Cup, Aquatica, Turaco and Onyx – are carrying in total around 280,000 tons of fuel oil, destined for India, Turkey and Singapore, LSEG data shows.

Another of the tankers – Ariadne – was loaded in December with about 35,000 tons of naphtha in the Russian Baltic port of Ust-Luga. It is drifting near Egyptian port of Port Said, according to shipping data.

Four other vessels from the sanctions list are carrying in total around 160,000 tons of ultra-low sulphur diesel and gasoil of Russian origin.

One of those cargoes – Pravasi – is discharging at the Brazilian port of Santos. Three other vessels – Symphony, Jupiter and Talisman – are on their way to Turkey, according to LSEG data.

Although there is a transition period, allowing the discharge of cargoes that has already been agreed, traders said concern about penalties has slowed activity.

Since the sanctions were announced, at least 65 oil tankers have dropped anchor at multiple locations, including off the coasts of China and Russia, ship tracking data showed.

Commodities

Oil prices hover near 4-month highs as Russia sanctions stay in focus

Published

1 day ago

January 14, 2025

By Arunima Kumar

(Reuters) -Oil prices paused their rally on Tuesday, but remained near four-month highs, with the market’s attention focused on the impact of new U.S. sanctions on Russian oil exports to key buyers India and China.

futures slipped 54 cents, or 0.67%, to $80.47 a barrel by 1033 GMT, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.67% to $78.29 a barrel.

Prices jumped 2% on Monday after the U.S. Treasury Department on Friday imposed sanctions on Gazprom (MCX:) Neft and Surgutneftegas as well as 183 vessels that transport oil as part of Russia’s so-called “shadow fleet” of tankers.

“With several nations seeking alternative fuel supplies in order to adapt to the sanctions, there may be more advances in store, even if prices correct a bit lower should tomorrow’s U.S. CPI data come in somewhat hotter-than-expected”, said Charalampos Pissouros, senior investment analyst at brokerage XM.

The U.S. producer price index (PPI) will be released today, followed by the consumer price index (CPI) on Wednesday.

A core inflation rise above the 0.2% forecast could lower the likelihood of further Federal Reserve rate cuts, which typically support economic growth and could boost oil demand. [MKTS/GLOB]

While analysts were still expecting a significant price impact on Russian oil supplies from the fresh sanctions, their effect on the physical market could be less pronounced than what the affected volumes might suggest.

ING analysts estimated the new sanctions had the potential to erase the entire 700,000 barrel-per-day surplus they had forecast for this year, but said the real impact could be lower.

“The actual reduction in flows will likely be less, as Russia and buyers find ways around these sanctions,” they said in a note.

Nevertheless, analysts expect less of an supply overhang in the market as a result.

“We anticipate that the latest round of sanctions are more likely to move the market closer to balance this year, with less pressure on demand growth to achieve this,” said Panmure Liberum analyst Ashley Kelty.

Uncertainty about demand from major buyer China could blunt the impact of the tighter supply. China’s imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic, official data showed on Monday.

Commodities

Peru’s niche Bretaña crude oil gains popularity in US

Published

1 day ago

January 14, 2025

By Arathy Somasekhar

HOUSTON (Reuters) – Peru’s niche Bretaña is gaining popularity in the United States, with the first cargo discharging in the U.S. Gulf Coast this month as U.S. refiners seek alternatives for declining Mexican heavy crude.

Bretaña, a rare heavy sweet crude with minimal metals, is produced in the Peruvian side of the Amazon (NASDAQ:) rainforest. It is then barged along the Amazon river and loaded onto larger ships that depart from Brazil.

The vessel Radiant Pride transported about 300,000 barrels of Bretaña from Manaus, on the banks of the Negro river in Brazil, and discharged on Jan. 2 in Houston, ship tracking data from Kpler and LSEG showed.

The cargo was bought by oil major Shell (LON:), a source said. Shell declined to comment.

“Given the drop in heavy sour crude from Mexico to the U.S. Gulf Coast over the last year, we are starting to see new heavy grades being pulled in to backfill this loss – this is a trend we only expect to continue,” said Matt Smith, an analyst at Kpler.

U.S. imports from Mexico fell to their lowest on record in 2024 as the Latin American country’s oil production fell and a larger portion of output remained at home to be refined.

Two cargoes of Peru’s Bretaña, a relatively new entrant into the market since production began in 2018, discharged at the U.S. West Coast last year – one at Marathon Petroleum (NYSE:) and another at PBF Energy (NYSE:) terminals, the Kpler data showed.

Marathon Petroleum declined to comment. PBF Energy did not immediately reply to a request for comment.

PetroTal Corp, the producer of Block 95 where the Bretaña oilfield is located, bought the assets from Canadian producer Gran Tierra Energy (NYSE:) in 2017, and currently produces about 20,000 barrels of oil per day, according to Chief Executive Officer Manuel Zúñiga.

Challenges with transporting the crude via a pipeline operated by Peru’s state oil firm Petroperu led to a brief halt in exports between 2022 and 2024, Zúñiga said.

Petroperu has struggled in recent years to keep the line operational amid spills and social conflict interrupting its flow.

Three cargoes of Bretaña headed to the U.S. West Coast and one to the U.S. East Coast between 2020 and 2022, Kpler data showed.

About 90% of the Bretaña crude produced by PetroTal is exported, and the remaining is transported by barges to Petroperu’s refinery in Iquitos, Zúñiga said.

PetroTal has a contract with Houston-based Novum Energy under which Novum buys the crude for export and arranges its transportation, Zúñiga added.

Novum did not immediately respond to a request for comment.

While PetroTal hopes to increase production, permitting delays as well as reliance on barges are a current limitation, Zúñiga said.

“You need access to the pipeline,” Zúñiga said, adding that the company is working to secure use of the infrastructure.

Petroperu said last year that it would hold negotiations with producers in the Peruvian jungle so that they can use the pipeline with a fair rate to help cover operational costs.