Commodities
Oil up on Middle East tensions, China economy worries limit gains
© Reuters. FILE PHOTO: A person puts gas in a vehicle at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo
By Ahmad Ghaddar
LONDON (Reuters) – Oil prices edged higher on Tuesday following a more than 1% drop in the previous session as escalating tensions in major producing region the Middle East fuelled supply concerns, though a bleak Chinese economic outlook limited gains.
March futures, which are due to expire on Wednesday, rose 8 cents, or 0.1%, to $82.48 a barrel by 1059 GMT. The more active April contract rose 13 cents, or 0.2% to $81.96. U.S. West Texas Intermediate crude was up 24 cents, or 0.3%, at $77.02 a barrel.
Both contracts fell more than $1 on Monday as a deepening real estate crisis in China fuelled worries about demand the world’s biggest crude consumer, after a Hong Kong court ordered the liquidation of property company China Evergrande (HK:) Group.
Meanwhile, Washington vowed to take “all necessary actions” to defend its troops following a deadly drone attack in Jordan by Iran-backed militants, the first U.S. military deaths since the Israel-Gaza war began, putting markets on edge.
“If U.S.-Iran tensions escalate, particularly through a direct confrontation, the risk rises that Iran’s oil supply is adversely impacted,” said Commonwealth Bank of Australia (OTC:) analyst Vivek Dhar. “Iranian oil exports are likely the most vulnerable via potentially greater enforcement of sanctions.”
Iran exported 1.2-1.6 million barrels per day of through most of 2023, Dhar added, representing 1-1.5% of global oil supply.
Limiting the gains, however, were concerns about the outlook for China’s economy, and any potential fall out from Evergrande’s liquidation order, analysts said.
” () ramifications of a possible collapse in China’s property sector makes moot any authority stimulus and will have very negative global shockwaves,” PVM analyst John Evans said.
On the supply side, while an OPEC+ meeting on Feb. 1 was unlikely to see a decision on the oil policy the group’s oil policy for April, analysts are hoping it could still shed some light on production plans.
Aramco (TADAWUL:), the state oil company of the world’s biggest producer Saudi Arabia, in an indication for the future demand outlook, said it had received a directive from the energy ministry to maintain its maximum sustainable capacity at 12 million barrels a day, and not to continue increasing it to 13 million barrels per day.
“It may be to save money. But most likely it implies that it sees no need for this extra oil in the global market,” said SEB analyst Bjarne Schieldrop.
Investing.com–Oil prices rose on Friday, heading for a second consecutive weekly gain as optimism around China’s economic growth lifted market sentiment.
The were last up 0.8% to $76.6 a barrel, and expiring in February was up 1.1% to $73.3 a barrel.
Oil had gained sharply in the previous session after data showed growth in Chinese factory activity.
Both contracts were on course for second consecutive weekly gains, with WTI 1.3% and 0.9% higher.
Chinese stimulus hopes support oil prices
China’s grew in December, a Caixin/S&P Global survey showed on Thursday, but at a slower pace than expected.
An official survey released on Tuesday also showed that China’s manufacturing activity barely grew in December. However, services and construction fared better, with the data suggesting that policy stimulus is trickling into some sectors.
Beijing has signaled looser monetary policy for 2025 and has doled out a raft of major stimulus measures since late September, in order to boost its sluggish economy.
China’s central bank has indicated that it plans to lower interest rates from the current 1.5% “at an appropriate time” in 2025, the Financial Times reported on Friday.
Traders assess EIA data amid oversupply concerns
{{8849|US crude oil inventories declined, while gasoline and distillate stocks saw significant increases as demand softened during the week ending December 27, the reported on Thursday.
The EIA stated that dropped by 1.2 million barrels last week, falling short of analysts’ expectations for a 2.8 million-barrel decrease.
Latest EIA surveys have shown that U.S. oil production remains near record levels, and the incoming Donald Trump administration is likely to agree to policies that would focus on ramping up domestic fossil fuel production.
This comes amid worries about potential oversupply driven by anticipated production increases from non-OPEC nations, further underscoring an oversupply scenario.
The International Energy Agency recently said that the oil market will remain adequately supplied, despite a rise in demand forecast for 2025.
(Peter Nurse contributed to this article.)
Commodities
Biden to ban new oil drilling over vast areas of US Atlantic, Pacific waters, Bloomberg News reports
(Reuters) – President Joe Biden is set to ban new offshore oil and gas development across 625 million acres (250 million hectares) of U.S. coastal territory, Bloomberg News reported on Friday.
The ban, to be announced on Monday, rules out the sale of drilling rights in stretches of the Atlantic and Pacific oceans and the eastern Gulf of Mexico, said the report, citing unidentified people familiar with the matter.
Biden is leaving the possibility open for new oil and leasing in the central and western areas of the Gulf of Mexico, which account for around 14% of the nation’s production of these fuels, the report said.
The White House did not immediately respond to a Reuters request for comment outside of business hours.
The ban would solidify Biden’s legacy on addressing climate change and his goal to decarbonize the U.S. economy by 2050.
The New York Times (NYSE:) reported that a section of the law Biden’s decision relies on, the Outer Continental Shelf Lands Act, gives a president wide leeway to bar drilling and does not include language that would allow President-elect Donald Trump or other future presidents to revoke the ban.
Biden, Trump and Trump’s predecessor, Barack Obama, all used the law to ban sales of offshore drilling rights in some coastal areas.
Trump tried in 2017 to reverse Arctic and Atlantic Ocean withdrawals Obama had made at the end of his presidency, but a federal judge ruled in 2019 that the law does not give presidents the legal authority to overturn prior bans.
(Reuters) – Russian rescue workers have cleared more than 86,000 metric tons of contaminated sand and earth on either side of the Kerch Strait following an oil spill in the Black Sea last month, the emergencies ministry said on Saturday.
The oil leaked from two ageing tankers that were hit by a storm on Dec. 15. One sank and the other ran aground.
More than 10,000 people have been working to shovel up viscous, foul-smelling fuel oil from sandy beaches in and around Anapa, a popular summer resort. Environmental groups have reported deaths of dolphins, porpoises and sea birds.
The emergencies ministry said on the Telegram messaging app that oil-tainted soil had been collected in the broader Kuban region in Russia and in Crimea, which Moscow annexed from Kyiv in 2014.
The ministry published video footage showing dozens of workers in protective suits loading bags of dirt onto diggers and others skimming dirt off the sand with shovels.
Russia’s transport ministry said this week experts had established that about 2,400 metric tons of oil products had spilled into the sea, a smaller spill than initially feared.
When the disaster struck, state media reported that the stricken tankers, both more than 50-years old, were carrying some 9,200 metric tons (62,000 barrels) of oil products in total.
The spill involved heavy M100-grade fuel oil that solidifies at a temperature of 25 degrees Celsius (77 degrees Fahrenheit) and, unlike other oil products, does not float to the surface but sinks to the bottom or remains suspended in the water column.
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