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Oil rises to highest in over seven months on supply worries
Saudi Crude Oil Exports Plummet as OPEC Giant Slashes Production
Brent is up about 3% this week while WTI has advanced by 5%.
"We continue to expect (supply) cuts to be extended, with prices above US$90/bbl (on a sustained basis) required to draw OPEC supply back to market," National Australia Bank said in a client note on Friday.
But just how tight the market is also depends on demand.
The appetite for oil in the United States has been robust, with commercial crude inventories declining in five of the most recent six weeks, according to surveys conducted by the U.S. Energy Information Administration.
Oil Posts Third Monthly Gain as OPEC+ Announces Further Cuts
(Bloomberg) -- Oil rose for a sixth session, buoyed by risk-on sentiment and news that Russia had agreed on further OPEC+ cuts.
LONDON (Reuters) -Oil prices extended gains on Wednesday after industry data showed a large draw in crude inventories in the U.S., the world's biggest fuel consumer, and as a hurricane in the Gulf of Mexico kept investors on edge.
Brent crude futures for October rose by 34 cents, or 0.4%, to $85.83 a barrel by 1325 GMT. The October contract expires on Thursday and the more active November contract was at $85.24, up 33 cents.
U.S. West Texas Intermediate crude futures rose 45 cents, or 0.55%, to $81.61.
Both benchmarks rallied by more than a dollar on Tuesday as the U.S. currency weakened after soft U.S. jobs data reduced the likelihood of further increases to interest rates.
Oil Prices Edge Higher Ahead of Weekly U.S. Data
By
Dan Molinski, Dow Jones Newswires
U.S. crude futures are making incremental gains for a fourth consecutive session, up 0.7% at $80.68 a barrel.
"Plenty of fundamental influences with Saudi cuts stepping up and middle distillate cracks particularly in the Atlantic basin both supportive," says Evercore in a research note. "Near-term GDP revisions higher have followed an uptick in short frequency economic data."
Still, it warns of potential issues that could limit price upside in the near term including lackluster U.S. consumer data and China headwinds.
Oil markets now turn their attention to a pair of weekly reports on U.S. oil inventories, and will also be watching for supply and/or demand impacts from Hurricane Idalia.
Brent crude gains 0.7% to $85.04.
Bloomberg) -- Oil edged up for a fifth day ahead of data that could show another substantial draw in US inventories.
Oil prices rose in Asian trade on Wednesday, extending gains from the prior session on signs of a massive draw in U.S. crude stockpiles, while focus also remained on any potential supply disruptions stemming from Hurricane Idalia.
A drop in the dollar helped oil prices rise sharply on Tuesday, as data showed some cooling in U.S. consumer confidence and the labor market, which could necessitate a less hawkish Federal Reserve
Oil prices rise on massive U.S. inventory draw, Idalia hit in focus
Physical markets continue to show signs of tightness. Stockpiles at the key storage hub of Cushing, Oklahoma, have declined to the lowest level since January, and refined products are also trading at giant premiums to crude as the US tropical storm season picks up. WTI’s prompt-spread is trading 44 cents in backwardation, up from 29 cents a week ago.
Oil prices edged higher on Tuesday as Hurricane Idalia intensified as it headed towards Florida's Gulf Coast, threatening to hit crude oil supplies in an already tightening market.
Brent crude oil futures rose 34 cents, or 0.4%, to $84.76 a barrel by 11:44 a.m. EDT [1544 GMT], while the U.S. West Texas Intermediate futures rose 36 cents, or 0.5%, to $80.46 a barrel.
Idalia strengthened on Tuesday as it headed towards Florida after skirting past Cuba. The weather system is expected to slam ashore on Wednesday when it is likely to cause power outages and could hit crude production.
Oil rises as Hurricane Idalia threatens to hit tight supplies
prayers for anyone in the path of the hurricane
Oil futures climbed about 1% to a one-week high on Friday as U.S. diesel prices soared, the number of oil rigs dropped and a fire broke out at a refinery in Louisiana.
Brent futures rose $1.12, or 1.3%, to settle at $84.48 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 78 cents, or 1.0%, to settle at $79.83.
Diesel futures soared about 5% to a near seven-month high, boosting the diesel crack spread, a measure of refining profit margins, to its highest since January 2023.
"The main thing was concern about diesel prices, the diesel crack spread and worries about diesel shortages when refineries go into maintenance," said Phil Flynn, an analyst at Price Futures Group. He added prices also drew support from a fire at a Louisiana refinery and a drop in U.S. oil rigs.
I think that Saudi Arabia is doing whatever it can to increase the price of Brent crude oil to $90 per barrel, and that will lead to them continuing with their voluntary production cut in October and perhaps beyond," added Lipow.
Lipow also noted that Hurricane Idalia could impact tanker movements, pressuring near-term retail gas prices in the US.
Diesel prices have risen to their highest levels since March and are showing no immediate signs of easing their upward trend.
The national price of diesel was at $4.38 per gallon as of Monday, $0.41 higher from a month ago, according to data from AAA.
Hydrogen-to-power strategies are key to decarbonisation pathways in Europe and Asia, making these key potential export markets for hydrogen produced in Colombia. We estimate the levelised cost of hydrogen (LCOH) in Colombia could be similar to Chile’s. Potential export volumes from Colombia would be globally competitive, especially into Europe.
Colombia's majority state-owned oil company Ecopetrol (ECO.CN) is looking at the possibility of restarting exploration at eight suspended oil and gas contracts, chief executive Ricardo Roa said on Wednesday.
The government of leftist President Gustavo Petro has prioritized weaning Colombia off of its dependence on oil and coal, major sources of income for the country, while also pushing a transition to renewable energy.
Global oil major BP said the world must invest in the production of oil and gas to avoid sharp price spikes while accelerating the energy transition to combat greenhouse gas emissions.
Global gas prices surged seven-fold last year as 3% of global gas supplies were hit following Russia's invasion of Ukraine, forcing countries to boost energy spending and shift to coal, BP CEO Bernard Looney said in New Delhi.
"We need to do both. We need to invest in today's energy system responsibly and, at the same time, we must invest in accelerating the energy transition," Looney told the B20 conference.
Colombia Reportedly Reconsidering Its Idea To Halt On New Oil And Gas Projects
Oil prices edge higher after two weeks of losses, WTI tests $80
Oil prices edged higher as Chinese stimulus efforts offset concerns about demand and higher supply.
Brent crude oil rose 0.3% to $84.20 a barrel, while WTI gained 0.5% to $80.23 a barrel.
The moves came after Beijing said it would cut a tax on trading and indicated it planned more measures to support markets. Concerns about China's economy have been a key drag on demand expectations.
Hydrogen-to-power strategies are key to decarbonisation pathways in Europe and Asia, making these key potential export markets for hydrogen produced in Colombia. We estimate the levelised cost of hydrogen (LCOH) in Colombia could be similar to Chile’s. Potential export volumes from Colombia would be globally competitive, especially into Europe.
Oil and gas exploration has been at the heart of Colombia’s national energy strategy and that of its National Oil Company, Ecopetrol. But as the world decarbonises and Colombia focuses on its own net zero target, the winds of change are blowing. How can the country now become a regional leader in a sustainable approach to energy?
FORBESBUSINESSENERGY
Colombia Could Lead Latin America Through The Energy Transition
While the supply cuts by OPEC+ are resulting in demand outstripping supply and establishing a price floor of around $80.00 for Brent crude, the supply cuts have also resulted in spare capacity of nearing 6.0 million b/d," says Stratas Advisors in a research note. "As such, if crude prices start to ramp-up,
Oil prices were up in early trade on Tuesday ahead of data later expected to show a draw in U.S. crude oil and gasoline inventories, though persistent concerns over a slowdown in China's economy limited the upside.
Supply cuts by Saudi Arabia and Russia, part of the alliance between the Organization of the Petroleum Exporting Countries and their allies, or OPEC+, are expected to erode oil inventories in the rest of this year, potentially driving prices even higher, the International Energy Agency said in its monthly report on Friday.
Reflecting tightening supply, the price spread between first and second month Brent held steady on Monday after settling at 67 cents on Friday, the widest since March.
A Russian warship fired warning shots at a cargo ship in the Black Sea on Sunday, ratcheting up tensions in a key area for commodities exports from Ukraine and Russia.
"Escalating tensions between Russia and Ukraine has raised the prospect of disruption to trade in the Black Sea," ANZ analysts said in a note, adding that the Black Sea handles around 15%-20% of oil that Russia sells.
The rapid escalation in diesel prices and hedge fund position building is a warning that capacity constraints and upward pressure on goods prices are likely to re-emerge relatively quickly later in 2023 and in 2024.
Depleted diesel inventories are a sign that if the economy achieves a mid-cycle soft-landing the second phase of the current expansion could prove short and inflationary.
Prices for diesel and other distillate fuel oils have surged as expectations for a soft landing and an improving economic outlook in the United States threaten to deplete already low inventories even further.
Supply cuts and an improving economic outlook have created more optimism among oil investors, OANDA analyst Craig Erlam said. However, he noted signs momentum was wearing thin after a sustained rally. On Thursday, Brent hit its highest since January, a day after WTI hit its highest this year.
The last time that Brent rose for seven straight weeks was in January-February 2022, prior to Russia's invasion of Ukraine.
Meanwhile, output cuts from Saudi Arabia and Russia set the stage for a sharp decline in inventories over the rest of 2023, which IEA said could drive oil prices even higher.
On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) said it expects global oil demand to rise by 2.44 million bpd this year, unchanged from its previous forecast. Prospects for the oil market look healthy for the second half of the year, OPEC said.
U.S. economic data this week also lifted market sentiment, fueling speculation that the Federal Reserve is nearing the end of aggressive rate hikes.
At the same time, IEA's latest forecast comes after global oil supply fell 910,000 barrels to 100.9 million barrels per day in July, fed by a sharp reduction in output from Saudi Arabia.
Global inventories fell 17.3 billion in June, with industry stocks 115.4 million barrels per day below the five-year average. Preliminary data indicate inventories have continued falling, with August marking the fourth straight monthly decline.
Overall, global oil output likely will rise by 1.5 million barrels per day this year, with U.S. production composing 80% of that amount, IEA said. But the increase still trails this year's anticipated world demand growth by 700,000 barrels.
World oil demand reached an all-time high of 103 million barrels per day in both June and August and may increase further in coming months, IEA said. That should push average daily demand for 2023 to 102.2 million barrels per day, up 2.2 million from a year ago and the highest annual level ever.
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Stronger-than-expected usage from China has contributed to this year's demand growth, which has occurred as concerns about the global economy have faded
Shrinking supplies and record-high demand have pushed global crude oil prices up 15% since the beginning of July—and the IEA says they could keep rising.
Production cuts in Saudi Arabia have contributed to declining global inventories, which will likely decrease for the fourth straight month in August.
Global Oil Prices Could Keep Heading Higher, IEA Says
Global oil markets are on track for a sharp supply deficit of more than 2 million barrels a day this quarter as Saudi Arabia slashes production, OPEC data indicate.
Oil prices hit new peaks on Wednesday with the global Brent benchmark touching its highest since January after a steep drawdown in U.S. fuel stockpiles and Saudi and Russian output cuts offset concerns about slow demand from China.
Brent crude settled $1.38, or 1.6%, higher at $87.55 a barrel, its highest since Jan. 27.
Oil hits new highs on US fuel demand, tighter supply