Record US crude production weighs on oil prices

Oil prices dipped on Thursday as US crude production quickly approached an unprecedented 12 million barrels per day (bpd) just as worries about weakening demand emerge.

US West Texas Intermediate (WTI) crude futures were at $52 per barrel at 0140 GMT, down 31 cents, or 0.6 percent, from their last settlement.

International Brent crude oil futures were down 34 cents, or 0.6 percent, at $60.98 per barrel.

American crude oil production reached a record 11.9 million bpd in the week ending Jan. 11, the Energy Information Administration (EIA) said on Wednesday, up from 11.7 million bpd last week, which was already the highest national output in the world.

US output has soared by 2.4 million bpd since January 2018, stoking fears of a supply glut.

The EIA also said gasoline stockpiles climbed 7.5 million barrels last week, far exceeding analyst expectations in a Reuters poll for a 2.8 million-barrel gain. At 255.6 million barrels, gasoline stocks were at their highest weekly level since February, 2017.

"While (US crude) inventories fell slightly more than expected, there was a large build in gasoline inventories. This stoked fears of weak demand in the US," ANZ Bank said in a note.

Distillate stockpiles, which include diesel and heating oil, rose by 3.0 million barrels, versus expectations for a 1.6 million-barrel increase, the EIA data showed.

US EXPORTS SURGE, OPEC CUTS

Along with the surge in US crude output, exports from the United States are also rising, hitting a record 3.2 million bpd by the end of last year.

"Crude oil exports from the US have strongly increased during the last few years and the trend is expected to remain positive," shipping brokerage Banchero Costa said in a note.

Norbert Ruecker, head of commodity research at Swiss Julius Baer, said "the United States is moving forward towards energy independence and is set to become a petroleum net exporter next year thanks to rising shale output".

Soaring US supply comes amid concerns over stuttering demand-growth due to a global economic slowdown, which some analysts believe will turn into a recession.

To stem a lurking petroleum glut, the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer Russia are leading efforts to cut supply.

This has prevented crude prices from falling much lower despite softening demand and the surge in US output.

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Source: Moneycontrol

Oil prices surge on hopes of successful US-China trade talks

Oil prices rose on Wednesday, extending gains from the previous session on hopes that Washington and Beijing can resolve a trade dispute that has triggered a global economic slowdown.

U.S. West Texas Intermediate (WTI) crude oil futures were at $50.29 per barrel as at 0131, up 51 cents, or 1 percent from their last settlement. It was the first time this year that WTI has topped $50 a barrel.

International Brent crude futures were up 42 cents, or 0.7 percent, at $59.14 per barrel.

Both crude price benchmarks had already gained more than 2 percent in the previous session.

"Crude continues to extend gains as early reports from Beijing regarding trade negotiations are fueling optimism around successful trade talks between the U.S. and China," said Stephen Innes, head of trading for Asia/Pacific at futures brokerage Oanda in Singapore.

"After a dreadful December for risk markets, Crude oil continues to catch a positive vibe," he added.

The world's two biggest economies will continue trade talks in Beijing for an unscheduled third day on Wednesday, U.S. officials said, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China's markets.

State newspaper China Daily said on Wednesday that Beijing is keen to put an end to its trade dispute with the United States, but that it will not make any "unreasonable concessions" and that any agreement must involve compromise on both sides.

If no deal is reached by March 2, Trump has said he will proceed with raising tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports at a time when China's economy is slowing significantly.

Oil prices have also been receiving support from supply cuts started at the end of 2018 by a group of producers around the Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

"Crude oil prices continued to march higher, with investors becoming increasingly confident that the OPEC cuts would tighten the market," ANZ bank said.

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Source: Moneycontrol

Today Crude Updates Trading Rules

Buy Signal: When all the mcx crude oil short-term Exponential Moving Averages (EMA) crosses the long-term Exponential Moving Averages (EMA) from below, signals for a uptrend.

SELL Signal: When all the mcx crude oil short-term Exponential Moving Averages (EMA) cross the long-term Exponential Moving Averages (EMA) from above, signals for a downtrend.

Trend Strength: Another application of Guppy multiple moving average system is to analyze the strength of the current trend in crude oil. If the EMA lines of short term and long term moving averages are wide separated by a uniform distance then the trend in crude oil is seen as stable. If there's no wide separation, then the prevailing trend is weak and vulnerable.

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OPEC sends fewest oil cargoes to United States in at least five years

OPEC crude cargoes leaving for the United States in December dropped to the lowest level in at least five years, data from Refinitiv Eikon and market intelligence firm Kpler show.

Oil cargoes departing from OPEC nations to the United States fell to 1.63 million barrels per day (bpd) last month, down from 1.80 million bpd in November and 1.78 million bpd in October, the data show.

Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries, and several others curbed supplies in the face of rising US production and inventories, analysts said.

"Some of it was a decline in OPEC production," said Andy Lipow, president of Lipow Oil Associates in Houston. "But they're facing competition from US shale and Canadian production."

OPEC and allies including Russia agreed last month to cut crude production beginning this month by 1.2 million bpd, following a strategy to support prices when supplies overwhelm demand.

OPEC pumped 32.68 million bpd last month, according to a Reuters survey, down 460,000 bpd from November, suggesting some members moved to reduce supplies ahead of the recent accord.

"Historically, Saudi Arabia has utilized crude export flows to the United States as a method of signalling the Kingdom's intentions, given the transparency of the US market," said Reid I'Anson, an energy economist at Kpler.

Vessels last month carried about 534,000 bpd from Saudi Arabia to the United States, down from 632,000 bpd in November. Algeria sent 10,000 bpd, down 94,000 bpd, and Nigeria shipped 103,000 bpd, down by 48,000 bpd, according to Kpler.

One major exception to the decline was Iraq, which sent 295,000 bpd to the United States, up by 140,000 bpd from November. Shipments from Venezuela increased 22,738 bpd.

Booming US shale production and growing stockpiles also crimped the nation's appetite for imported crude. US commercial crude stocks rose to 441 million barrels in the week ended Dec. 21, up from 394 million barrels in mid-September, according to the US Energy Information Administration.

"When inventories began rising, that started to help decrease the demand for imports," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. "We could see even lower imports from OPEC."

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Source: Moneycontrol

Oil prices rise, but set for first annual decline since 2015

Oil prices edged higher on the last trading day of the year on Monday, taking a cue from firmer stock markets, but remain on track for the first yearly decline in three years amid concerns of a supply glut.

Hints of progress on a possible US-China trade deal helped bolster sentiment, which has been battered by concerns over a weaker global economic outlook.

Brent crude futures - the international benchmark for oil prices - rose 17 cents, or 0.3 percent, to $53.38 a barrel by 0115 GMT. Brent has shed about 20 percent in 2018 following two years of successive growth.

US West Texas Intermediate (WTI) crude futures were at $45.52 a barrel, up 19 cents, or 0.4 percent, from their last close. WTI is down nearly 25 percent this year.

Crude prices have been closely tracking equity markets during volatile trading for both asset classes last week.

"Investors are looking for bargains in an illiquid market (today)... If Trump gets over trade issues with China expect economic demand to surge," said Jonathan Barratt, chief investment officer at Probis Securities in Sydney.

"Also, drivers on Iran with waivers ending in May are still not been put to bed. Hence, it could get ugly at any time and I expect this is a diversion for Trump when needed," Barratt added.

US President Donald Trump said he had a "long and very good call" with Chinese President Xi Jinping and that a possible trade deal between the United States and China was progressing well.

Meanwhile, imports of Iranian crude oil by major buyers in Asia hit their lowest in more than five years in November as US sanctions on Iran's oil exports took effect last month.

Asia's imports from Iran are set to rise again in December after the US granted temporary waivers to some countries, but is not known how much Iran will be able to export once the waivers expire around the start of May.

"Investors will require substantive indications from global economic fundamentals and oil inventories to move in positively on oil prices in 2018," said Benjamin Lu Jiaxuan, commodities analyst at Singapore-based brokerage firm Phillip Futures.

"We postulate for a gentle recovery for oil prices into the first quarter of 2019 though marked volatility can snap oil prices south in lieu of market uncertainties and key events such as Brexit, US-China trade truce deal, US monetary policy, US-Iran sanctions."

The current downward pressure on oil prices should likely taper off from January, when OPEC-led supply cuts commence, analysts said.

Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed to curb output by 1.2 million bpd starting in January in a bid to clear a supply overhang and prop up prices.

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Source: Moneycontrol

Today Crude Updates Trading Rules

Buy Signal: When all the mcx crude oil short-term Exponential Moving Averages (EMA) crosses the long-term Exponential Moving Averages (EMA) from below, signals for a uptrend.

SELL Signal: When all the mcx crude oil short-term Exponential Moving Averages (EMA) cross the long-term Exponential Moving Averages (EMA) from above, signals for a downtrend.

Trend Strength: Another application of Guppy multiple moving average system is to analyze the strength of the current trend in crude oil. If the EMA lines of short term and long term moving averages are wide separated by a uniform distance then the trend in crude oil is seen as stable. If there's no wide separation, then the prevailing trend is weak and vulnerable.

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Source: Moneycontrol

US oil prices extend gains as equities rise, but economic worries weigh

US oil prices on Thursday extended their sharp climb from the session before amid rising stock markets, but worries over a glut in crude supply and concerns over a faltering global economy kept a lid on gains.

US West Texas Intermediate (WTI) crude futures , were up 26 cents, or 0.56 percent, at $46.48 per barrel at 0032 GMT. They jumped 8.7 percent to $46.22 per barrel in the previous session.

Brent crude oil futures had yet to trade. They rose 8 percent to $54.47 a barrel the day before.

Global stocks rebounded on Wednesday on the back of the Trump administration's attempt to shore up investor confidence and a report on strong U.S. holiday spending.

However, both crude benchmarks are still down roughly 40 percent from highs in October, pressured by concerns about oversupply and over the outlook for the global economy.

"Oil prices have rebounded following the stock market's move, but they are still low," said Shim Hye-jin, a commodity analyst at Samsung Securities in Seoul.

"But if OPEC's cuts are fulfilled, WTI prices are expected to rise to $50-60 a barrel, while Brent is expected to go up to between $58-70 a barrel next year."

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed at a meeting earlier this month to limit output by 1.2 million barrels per day starting in January.

Offering further support to oil prices, U.S. crude inventories were forecast to drop 2.7 million barrels in the week to Dec. 21, marking their fourth straight week fall, according to a preliminary Reuters poll on Wednesday.

The American Petroleum Institute's (API) inventory data is due on Thursday, while the U.S. Department's Energy Information Administration (EIA) is set to release its report on Friday.

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Source: Moneycontrol