Oil ticks up on weaker dollar, stalled Russian output cuts-SapForex24

Oil markets rose on Friday as the dollar edged away from a multi-week high, but prices are being held in check by unchanged Russian output for February, a sign of its weak compliance on a global deal to cut supplies.

The dollar slipped on Friday from its highest in seven weeks against a basket of currencies, although still holding close to a level that anchors Brent crude near $55 a barrel and West Texas Intermediate (WTI) just under $53.

Benchmark Brent Crude futures were up 21 cents, or 0.4 percent, at $55.29 a barrel, as of 0755 GMT. It closed down $1.28, or 2.3 percent, in the previous session, and dropped almost 3 percent on the week.


WTI futures gained 16 cents, or 0.3 percent, to $52.77 a barrel after dropping on Thursday to its lowest since Feb. 9. The U.S. benchmark finished in negative territory the past three sessions.

The dollar had climbed on Thursday after hawkish comments by a U.S. Federal Reserve official encouraged investors to expect a near-term interest rate hike.
“Last night’s dollar moves really shook up the markets – we’re seeing it across all markets, not just oil,” said Michael McCarthy, chief market strategist at Sydney’s CMC Markets.

Russia’s February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, with its cuts from October 2016 levels remaining at 100,000 bpd or a third of what was pledged by Moscow under its agreement with the Organization of the Petroleum Exporting Countries (OPEC).

Official U.S. data also showed that crude inventories in the world’s biggest oil consumer rose for an eighth straight week to a record 520.2 million barrels last week.

Crude oil fell to a three-week low as the stronger U.S. dollar combined with concerns about rising U.S. crude oil inventories to reduce investor appetite,” ANZ said in a note.

But even as U.S. oil production rose and Russian output held steady, OPEC boosted already strong compliance with the group’s six-month deal to 94 percent, cutting output for a second month in February, a Reuters survey found.

Russian Energy Minister Alexander Novak said it was too early to say if the deal to reduce oil production would be extended beyond the end of June. OPEC, Russia and others are due to agree on output policy in the next three months.

Short-term technical support could push Brent toward $60 a barrel, which will “establish an adequate price level for OPEC to reduce, but not abolish, its market intervention at the May 25th meeting,” BMI Research said in a note on Friday.


Oil holds steady as traders weigh OPEC cuts, U.S. drilling-SapForex24

Oil prices were little changed during European morning hours on Tuesday, as market players continued to weigh the prospect of production cuts by major crude-producing nations against a rise in U.S. drilling.

The U.S. West Texas Intermediate crude April contract shed 5 cents, or around 0.1%, to $54.00 a barrel by 4:20AM ET (09:20GMT).

Elsewhere, Brent oil for May delivery on the ICE Futures Exchange in London dipped 2 cents to $56.40 a barrel.

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          Comex Market Update-SapForex24

Oil prices have been trading in a narrow $5 range around the mid-$50s over the past two months as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.

Data from oilfield services provider Baker Hughes revealed that the number of active U.S. rigs drilling for oil rose by five last week, the sixth weekly increase in a row.

That brought the total count to 602, the most since October 2015, raising concerns that the ongoing rebound in U.S. shale production could derail efforts by other major producers to rebalance global oil supply and demand.

Hedge funds extended their bullish bets on oil to an all-time high last week as OPEC and non-OPEC countries made a strong start to lowering their oil output by almost 1.8 million barrels per day by the end of June, with compliance currently at around 90%.

OPEC could extend its oil supply-reduction pact with non-members or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level, OPEC sources said earlier this month.

Elsewhere on Nymex, gasoline futures for April shed 0.2 cents, or around 0.2%, to $1.738 a gallon, while March heating oil dipped 0.2 cents to $1.645 a gallon.
Natural gas futures for April delivery slumped 1.9 cents, or almost 0.7%, to $2.674 per million British thermal units.


Dollar slips as ‘Trumpflation trade’ fades-SapForex24

The dollar slipped on Friday and was set for its first week of falls in three, after the new U.S. finance chief poured a little cold water on the “Trumpflation trade” that had taken the greenback to 14-year highs earlier this year.

Treasury Secretary Steven Mnuchin said on Thursday that any steps that U.S. President Donald Trump’s administration takes on policy would probably have only a limited impact this year, though he wants to see tax reform passed before by August.

The comments — made in his first televised interviews since taking office last week — suggested that much work was still needed on key elements of the sweeping tax reform plan, which Mnuchin called his “No. 1 priority”.

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The dollar fell on the comments and was trading down 0.2 percent against a basket of other major currencies on Friday at 100.82 (DXY), leaving it slightly down on the week.

“Mnuchin’s comments were less belligerently reflationary than they could have been, in a dollar strength context, and that probably did much of the damage (to the dollar),” said UBS Wealth Management currency strategist Geoffrey Yu, in London.

“But ultimately outside of the U.S. there is reflation happening and data is looking strong, so perhaps it’s time to just take some dollar longs off the table… We need additional information to sustain (the ‘Trumpflation trade’).”

The dollar was also knocked earlier in the week after minutes from the U.S. Federal Reserve’s latest policy meeting, which were less hawkish than some investors had expected.

The minutes showed many policymakers felt it was appropriate to raise interest rates again “fairly soon”, but many saw only a “modest risk” that inflation would increase significantly and that the Fed would “likely have ample time” to respond if price pressures emerged.

“There seem to be two different camps in the reading of those minutes – whether they introduced a more hawkish tone, or a more dovish tone – and it appears the doves are winning that battle,” said Bill Northey, chief investment officer for the private client group at U.S. Bank in Helena, Montana.

The euro was off this week’s six-week lows at just above $1.06, lifted by a new alliance between French presidential candidate Emmanuel Macron and fellow centrist Francois Bayrou, which helped French 10-year government bond yields to their biggest weekly falls in two months .

Digital currency bitcoin hit a record high of $1,220 in Asian trade on speculation that a bitcoin ETF is set to get approval from the U.S. regulator, before edging back to trade at around $1,170 by 0835 GMT (3:35 a.m. ET) .


Oil rises toward 7-week highs as investors await U.S. supply data-SapForex24

Oil prices were higher during European morning hours on Thursday, rising back toward a seven-week high after data overnight showed a surprise drop in U.S. crude supplies.

The U.S. West Texas Intermediate Crude April contract rose 81 cents, or 1.5%, to $54.39 a barrel by 4:15AM ET (09:15GMT), after losing 74 cents, or 1.4%, on Wednesday. The U.S. benchmark reached $55.03 on Tuesday, a level not seen since January 3.

After markets closed Wednesday, the American Petroleum Institute said that U.S. oil inventories surprisingly fell by 884,000 barrels in the week ended February 17, breaking a trend of six-straight builds.


The oil storage hub of Cushing, Oklahoma, saw a draw of 1.73 million barrels, the sixth decline in seven weeks.

The API report also showed a decline of 893,000 barrels in gasoline stocks, while distillate stocks dropped a sharp 4.23 million barrels.

The U.S. Energy Information Administration will release its official weekly oil supplies report at 11:00AM ET (16:00GMT) Thursday.

The report comes out one day later than usual due to Monday’s President’s Day holiday.

Elsewhere, Brent oil for April delivery on the ICE Futures Exchange in London added 85 cents, or nearly 1.6%, to $56.70 a barrel. The global benchmark dropped 82 cents in the prior session.

Oil prices have been trading in a narrow $5 range around the mid-$50s over the past two months as sentiment in oil markets has been torn between hopes that oversupply may be curbed by output cuts announced by major global producers and expectations of a rebound in U.S. shale production.

Elsewhere on Nymex, gasoline futures for March rose 1.8 cents, or 1.2%, to $1.537 a gallon, while March heating oil jumped 2.3 cents ,or 1.5%, to $1.653 a gallon.

Natural gas futures for April delivery added 3.2 cents, or 1.2%, to $2.734 per million British thermal units, as market participants looked ahead to weekly storage data due later on Thursday, which is expected to show a draw of 85 billion cubic feet in the week ended February 17.

That compares with a withdrawal of 114 billion cubic feet in the preceding week, 117 billion a year earlier and a five-year average drop of 158 billion cubic feet.


Oil prices fall on bloated U.S. fuel inventories, stalling China demand – SapForex24

Oil prices dropped on Wednesday to extend falls from the previous day, as a massive increase in U.S. fuel inventories and a slump in Chinese demand implied that global crude markets remain oversupplied despite OPEC-led efforts to cut output.

International Brent crude futures (LCOc1) were trading at 54.70 per barrel at 0758 GMT, down 35 cents, or 0.64 percent, from their previous close.

U.S. West Texas Intermediate (WTI) crude (CLc1) was at $51.68 a barrel, down 49 cents, or 0.94 percent.

These slumps came after over 1-percent falls the previous day.
The declines came on the back of unexpectedly big increases in U.S. fuel inventories, as reported by the American Petroleum Institute (API) on Tuesday. [API/S].


“The API delivered a Goliath crude inventory number… The second highest on record. The reaction was predictable as the herd, already nervous from the previous day’s price action, turned en masse and ran off the cliff,” said Jeffrey Halley of futures brokerage OANDA in Singapore.

Crude inventories rose by 14.2 million barrels in the week to February 3 to 503.6 million barrels, compared with analysts’ expectations for a 2.5 million barrels increase.

Gasoline stocks rose by 2.9 million barrels, compared with expectations for a 1.1-million barrel gain.

Goldman Sachs (NYSE:GS) said that the data pointed to “U.S. gasoline demand falling sharply by 460,000 barrels per day (bpd) year-on-year in January, with such declines only previously (seen) during recessions.”

Despite this, the U.S. bank said “this data vastly overstates a likely modest year-on-year decline in gasoline demand,” and that its “outlook for global strong demand growth (remains) unchanged”.

Apart from rising stocks, U.S. oil production is also increasing.
The Energy Information Administration (EIA) expects U.S. crude output to rise 100,000 bpd to 8.98 million barrels in 2017, and then to jump by 550,000 bpd in 2018.

Outside the United States, there were other signs of market weakness.
China’s 2016 oil demand grew at the slowest pace in at least three years, Reuters calculations based on official data showed.

China’s implied oil demand growth eased to 2.5 percent in 2016, down from 3.1 percent in 2015 and 3.8 percent in 2014, led by a sharp drop in diesel consumption and as gasoline usage eased from double-digit growth.

The slowing occurred as the economy expanded by only 6.7 percent in 2016, the slowest pace in 26 years.

Slowing demand and ongoing high inventories undermine efforts by the Organization of the Petroleum Exporting Countries and other producers including Russia to cut output by almost 1.8 million bpd during the first half of this year in order to prop up prices and rebalance the market.

Despite this, both Brent and WTI are down over 6 percent since early January, when the cuts started to be implemented.