Crude oil market

[waltky]

Granny says, "2% - dat's another 6 cents a gallon?...

Oil prices jump, shrug off equity slump, glut concerns
Mon Feb 8, 2016 - Crude oil prices jumped as much as 2 percent on Tuesday, shrugging off big drops in Japan's stock market and eroding some of the previous session's losses that were driven by festering concerns about global oversupply.

U.S. crude CLc1 was up 49 cents at $30.18 a barrel at 0259 GMT, after rising as far as $30.30. The contract fell about 4 percent on Monday, finishing at $29.69. Global crude benchmark Brent LCOc1 was up 35 cents at $33.23 a barrel. It settled the previous session down $1.18 at $33.88. Prices on Monday were hit by a drop in U.S. equity markets amid persistent fears about the global economic slowdown. But on Tuesday, oil market traders ignored a 5-percent drop in Japan's Nikkei .N225. Many Asian markets are closed for Lunar New Year holidays. "Once again we have got a weaker U.S. dollar and I suspect that that's where the bulk of the support is coming from," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

The U.S. dollar fell against the Japanese yen =JPY as sentiment towards most risk assets turned bearish amid concerns about banking stability. A declining dollar makes oil prices cheaper because most trade is denominated in the greenback, potentially spurring demand. Still, the glut in world oil markets is unlikely to abate soon, with a Reuters survey showing U.S. crude stocks likely rose by 3.9 million barrels in the week ended Feb. 5. Industry group American Petroleum Institute on Tuesday releases its weekly inventory reports <API/S> followed by official numbers from the U.S. government's Energy Information Administration on Wednesday. "The fundamentals haven't shifted. The market remains in surplus and while that's the case, it is very difficult for prices to sustain any gains," McCarthy said.

There is also little sign of any coordination among big producers outside the United States after weekend talks between OPEC members Saudi Arabia and Venezuela on possible coordination yielded little. That dims prospects of any initiative on curbing supply to boost prices including producers like Russia, analysts say. "Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade," ANZ said in a research note on Tuesday.

Oil prices jump, shrug off equity slump, glut concerns

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Global stocks dumped for safe havens as bank fears flare
Mon Feb 8, 2016 - Asian share markets were scorched on Tuesday as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe haven assets.

As fear overwhelmed greed, yields on longer-term Japanese bonds hit zero for the first time ever, the yen surged to a 15-month peak and gold reached its most precious since June. Japanese Finance Minister Taro Aso felt moved enough to warn the yen's rise was "rough", something of an understatement as the Nikkei nosedived 4.9 percent. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, and would have been lower if not for holidays in many centres. "Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating," said Jo Masters, a senior economist at ANZ.

All of which magnified the stakes for Federal Reserve Chair Janet Yellen's testimony this week. "She needs to come across as optimistic without being too hawkish and cautious without being negative," said Masters. "Hawkishness or dovishness could easily exacerbate the current sell-off, tightening financial conditions further." Wall Street did pare its losses but still ended deep in the red. The Dow lost 1.1 percent, while the S&P 500 fell 1.42 percent and the Nasdaq 1.82 percent. [.N]

The rout began in Europe where the FTSEurofirst 300 index shed 3.4 percent to its lowest since late 2013, led by a near 6 percent dive in the banking sector. Deutsche Bank alone sank 9.5 percent as concerns mounted about its ability to maintain bond payments. Late Monday, the German bank said it has "sufficient" reserves to make due payments this year on AT1 securities. The cost of insuring bank debt against default also climbed to its highest since late 2013. Borrowing costs in Spain, Portugal and Italy jumped as investors demanded a fatter risk premium over safer German paper, where two-year yields hit record lows at minus 52 basis points.

FEAR FACTOR

 

[waltky]

UAE wants production cuts...

Oil prices soar on hopes of Opec production cut
12 Feb.`16 - Oil prices surged as much as 12% on Friday after new suggestions that Opec nations were set to cut oil production.

The United Arab Emirates' energy minister said that Opec members were ready to reduce output, the Wall Street Journal reported. Venezuela's oil minister said oil-producing nations were on a "very good path" to clinch a deal. However, traders said sharp falls on Thursday may have triggered some bargain-hunting. Eulogio Del Pino, the Venezuelan minister, who recently visited Russia and Saudi Arabia as part of a global tour to drum up support among both Opec and non-Opec producers, said "we're on a very, very, very good path" to reducing production.

Brent crude closed up $3.30 at $33.36 a barrel in New York after falling below $30 on Thursday. After sinking to a 12-year low of $26.05 on Thursday, US crude settled up 12%, or $3.23, to $29.44 a barrel - its biggest one-day rise since 2009. Many traders were sceptical about the Journal's report, pointing out that Venezuela and Russia had tried in vain earlier this week to stir Saudi Arabia and other major producers into agreeing to output cuts. However, some believe that prices would rebound sooner or later if production tightened or demand rose.

'High volatility'

Commerzbank analysts said: "We expect declining US oil production, in particular, to drive the oil price back up to $50 per barrel by the end of the year." Some traders still expected wilder price swings in the coming weeks. "It's not a one-way price movement anymore" in oil, said ABN Amro's senior energy economist Hans van Cleef. "We will see a period of high volatility". Friday's price rises were also aided by figures from oil services company Baker Hughes, which said that US energy firms cut the number of oil rigs for the eighth consecutive week to the lowest levels since January 2010.

Drillers removed 28 oil rigs, bringing the total rig count down to 439, Baker Hughes said. The jump in oil prices helped to boost sentiment on stock markets, with the FTSE 100 in London closing 3.1% higher at 5,707 points. Wall Street was also trading higher on Friday, with the S&P 500 rising 1.8% and the Dow Jones Industrial Average up close to 2% in late trading.

Oil prices soar on hopes of Opec production cut - BBC News

 

[waltky]

Will Russia and Saudi Arabia cut a deal?...

Oil rebounds on investor optimism over producers' deal
Wed Feb 17, 2016 - Crude oil futures rebounded on Wednesday on investor hopes that a deal between Saudi Arabia and Russia to freeze oil output at January levels would lead to a wider pact among producers that could eventually see production cuts to support prices.

Brent crude LCOc1 had climbed 34 cents to $32.52 a barrel by 0455 GMT, after settling down $1.21 in the previous session. It had surged to $35.55 a barrel in early trade on Tuesday. U.S. crude CLc1 was up 19 cents at $29.23 a barrel, having ended the last session down 40 cents. Top oil producers Russia and Saudi Arabia on Tuesday agreed to limit oil production at January levels, provided other oil exporters joined in, but stopped short of agreeing cuts in oil output. Iraq, Qatar and Venezuela said they would freeze output at January levels provided a deal could be agreed, while OPEC member Iran could be offered special terms to freeze oil production levels, sources said.

Oil prices initially surged on Tuesday on news of the deal but early gains were wiped out by the realization that there would be no immediate supply cuts to tackle global oversupply. "It was a 'buy the rumor, sell the fact' event," said Ben Le Brun, market analyst at Sydney's OptionsXpress. "The market is coming around to the idea that it is not bad news, but not as good news as it was anticipating," he said, adding that investors were hoping for production cuts.

Pump jacks are seen at the Lukoil company owned Imilorskoye oil field, as the sun sets, outside the West Siberian city of Kogalym, Russia​

Moves to freeze output at January levels will make little difference to the overall supply-demand balance this year and won't be enough to clear the 600,000 barrels per day surplus projected for the year, analysts FGE said in a note on Wednesday. "It could pave the wave for further action to be taken should the likes of Saudi Arabia, other OPEC members and Russia deem it necessary," FGE said. April crude futures will remain range-bound, Singapore's Phillip Futures said in a note on Wednesday. Saudi Arabia's oil production has stagnated at slightly more than 10 million bpd throughout 2015, meaning that "all that was achieved was an agreement to continue what they were doing", Phillip Futures said.

Investors are also eyeing U.S. oil inventory data later on Wednesday for further direction on oil prices. U.S. crude stocks rose by 3.9 million barrels to 505.9 million barrels in the week to Feb. 12, according to a Reuters poll of analysts on Tuesday. Weekly inventory reports from industry group the American Petroleum Institute (API) and the U.S. Department of Energy's Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, a day later than usual because of a public holiday on Monday.

Oil rebounds on investor optimism over producers' deal

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Asian shares consolidate, oil swings higher
Tue Feb 16, 2016 - Asian shares were taking a breather on Wednesday after two sessions of solid gains, while oil prices swung higher as the market reconsidered the chances of a meaningful deal to restrict supply later in the year.

The mood was still skittish - when China set a slightly lower guidance rate for its yuan, the yen and safe-haven bonds got an instant boost. As investors realized this was not some message from Beijing on devaluation, the moves quickly reversed. Yet nerves had settled enough for stocks to make some modest gains. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent, having climbed 3 percent over the previous two sessions.

The Shanghai Composite Index .SSEC gained 0.6 percent and South Korea .KS11 0.2 percent. Japan's Nikkei .N225 eased 0.2 percent, but is still up more than 7 percent on the week. E-Mini futures for the S&P 500 ESc1 firmed 0.2 percent after Wall Street broke its negative feedback loop with oil. The Dow .DJI ended Tuesday with gains of 1.39 percent, while the S&P 500 .SPX added 1.65 percent and the Nasdaq .IXIC 2.27 percent. [.N] A survey of global fund managers found they had become so cautious they were holding more cash than at any time since late 2001, an "unambiguous buy" signal according to Bank of America Merrill Lynch.

MOOD SWINGS

In commodity markets, oil was whipsawed after top exporters, Russia and Saudi Arabia, agreed to freeze output levels but said the deal was contingent on other producers joining in. After falling sharply at first, prices recouped some ground early on Wednesday. Brent LCOc1 added 40 cents to $32.58, while U.S. crude CLc1 was up 19 cents at $29.23 a barrel. "Albeit mostly symbolic, it is one of the first clear acknowledgments by the oil heavyweights that all is not entirely well in the current price environment," wrote Helima Croft, global head of commodity strategy at RBC Capital Markets. "Additionally it signals a potential willingness to be more proactive later in the year. It puts the ball back in the court of those who would not or could not comply." Markets now await minutes of the Federal Reserve's last meeting to judge the balance of opinion among policymakers on the prospect of further rate hikes.

Boston Fed President Eric Rosengren certainly sounded in no hurry to tighten. Speaking late on Tuesday, Rosengren said the Fed would need to ratchet down economic forecasts it made in December because of the uncertain global outlook. Doubts about the pace of any further hikes kept the U.S. dollar restrained at 96.871 .DXY against a basket of currencies. It was steady on the yen at 114.05 JPY=, after finding support around 113.60. The big loser was sterling, which has struggled so far in 2016 because of worries the UK might leave the euro zone. Traders said UK markets face a pivotal week ahead of a two-day summit starting on Thursday at which Prime Minister David Cameron will try to persuade other leaders to support a deal to keep Britain in the European Union. Sterling GBP= was stuck at $1.4300, having shed 1 percent against the dollar on Tuesday.

Asian shares consolidate, oil swings higher

 

[waltky]

Energy leads Wall St. rally, as oil prices jump...

Wall St. rallies for third session, led by energy shares
17 Feb.`16 - U.S. stocks tallied their third straight session of gains on Wednesday, led by energy shares as oil prices jumped, while better-than-expected economic data helped allay growth fears. Nine of the 10 major S&P sectors closed higher, with energy rising 2.9 percent.

The S&P 500 posted its first three-day rally of 2016, and ended with its biggest three-day percentage rise since August. With Wednesday's performance, the Dow industrials had erased nearly all its losses for February. Still, the benchmark S&P remains down 5.7 percent this year. The steep slide in oil, whose performance has been tightly tied to equities, along with fears of a China-led slowdown in global growth have rattled markets.

Oil prices rose 7 percent on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production. Data also showed U.S. industrial production in January rose by the most in 14 months. "Oil continues to directionally trade with equities and oil prices are higher, and more important, economic data recently has been better than feared," said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City. "Meanwhile, the backdrop for equities is oversold...This has certainly compelled some folks who are under-invested to get back into the stock market,” Ware said.

The Dow Jones industrial average <.DJI> rose 257.42 points, or 1.59 percent, to 16,453.83, the S&P 500 <.SPX> gained 31.24 points, or 1.65 percent, to 1,926.82 and the Nasdaq Composite <.IXIC> added 98.11 points, or 2.21 percent, to 4,534.07. The U.S. indexes built on their gains after minutes from the U.S. Federal Reserve's January policy meeting were released in the afternoon.

The minutes showed Fed policymakers worried last month that tighter global financial conditions could hit the U.S. economy and considered changing their planned path of interest rate hikes in 2016. "The sense of what has come out of that, is that you’re not going to see a rate hike in March and you may not even see one in June," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "What it has done basically is taken that potentially negative issue off the table for the time being."

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[waltky]

Oil prices slide again...

Oil prices fall on oversupply concerns after US crude stocks hit record
Thu Feb 18, 2016 - Oil futures fell in Asian trade on Friday as a record build in U.S. crude stocks stoked concerns about global oversupply, outweighing moves by oil producers including Saudi Arabia and Russia to cap oil output.

U.S. crude inventories rose by 2.1 million barrels last week, to a peak of 504.1 million barrels, the third week of record highs in the past month, data from the U.S. government's Energy Information Administration (EIA) showed on Thursday. That came as Iraq's oil minister Adel Abdul Mahdi said on Thursday that talks would continue between OPEC and non-OPEC members to find ways to restore "normal" oil prices following a meeting on Wednesday. "The market is expecting continuing inventory builds," said Tony Nunan, oil risk manager at Japan's Mitsubishi Corp in Tokyo. "Key to any deal (to cap production) is Iran. But Iran has been clear, saying it wants to get back to its pre-sanctions (production) level," Nunan added. "Everything is pointing to the end of this year (before there is an agreement) when Iran gets to 4 million barrels per day. By that time the pain will be so great everybody will come to the table (to agree output caps)," Nunan said.

A combination of increased global oil demand of between 1-2 million barrels per day, production cutbacks by non-OPEC members and the deal by producers to cap output could lead oil prices to climb to around $40 a barrel by year-end, Nunan said. Brent futures had fallen 38 cents to $33.90 a barrel as of 0359 GMT, after ending the previous session down 22 cents. U.S. crude had slipped 32 cents to $30.45 a barrel, after settling up 11 cents the session before. The fall in oil prices hit Asian shares which slipped from near three-week highs on Friday. MSCI's broadest index of Asia-Pacific shares outside Japan fell more than 0.8 percent, but gains in previous sessions left it up 4 percent for the week.

Oil prices rose more than 14 percent in the three days to Thursday after Saudi Arabia and Russia, supported by other producers including Venezuela and Iraq, moved to freeze oil output at January's levels. Iran endorsed the plan without commitment on Wednesday, If approved, it would be the first such deal in 15 years between the Organization of the Petroleum Exporting Countries and non-OPEC members.

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Asian shares slip from three-week high as oil rally reverses
Thu Feb 18, 2016 - Asian shares slipped from near three-week highs on Friday as a rally in oil prices reversed and investors remained cautious about the outlook for the global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, but gains in previous sessions left it up 4 percent for the week. Japan's Nikkei .N225 dropped 2.2 percent as the yen firmed, but remained on track for a weekly gain of 5.9 percent. "This week is the first sign of change I have seen in 2016," Evan Lucas, market strategist at trading services provider IG, wrote in a note. But "most fund managers are nearing their maximum levels of cash under their respective mandates. This capital needs to be deployed to confirm the change is on."

MSCI's emerging market index .MSCIEF hit a six-week high overnight on hopes that oil prices were stabilizing, but the positive sentiment didn't flow through to U.S. shares. The S&P 500 .SPX shed 0.5 percent, dragged down by lackluster earnings from Wal-Mart Stores (WMT.N). Oil prices reversed earlier gains on Thursday following a rise in U.S. stockpiles but look set to post their first rise in three weeks after the battered market took heart from a tentative deal by major producers to freeze output at January's highs.

Still, doubts about how much other countries will cooperate have weighed on investors, with a focus on Iran, which has pledged to increase output sharply to regain market share lost during sanctions. Brent crude extended losses on Friday, last trading down 0.8 percent at $34.02 per barrel, but is up 2 percent for the week. U.S. crude last traded at $30.56, off a two-week high of $31.98 hit on Thursday but up 3.8 percent so far this week. "I would assume oil prices will face downward pressure and there will be selling into a rally," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.

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As 2017 oil rebounds to $45, U.S. drillers begin to hedge anew
Thu Feb 18, 2016 - U.S. oil producers reeling from an 18-month price rout have cautiously begun hedging future production this week, fearing this may be their best chance yet to lock in a $45 a barrel lifeline for 2017 and beyond.

As oil markets rebounded from 12-year lows this week, U.S. shale companies - for the first time in months - started inquiring and placing new hedges for the next few years, according to three market sources familiar with money flows. Oil prices have crashed more than 70 percent in the past 20 months, driven by near-record production by the Organization of the Petroleum Exporting Countries and other producers, adding to one of the worst supply gluts in history. On Thursday, even as immediate-delivery oil futures ended slightly higher, U.S. crude for December 2017 delivery fell more than 2 percent to $43.47 a barrel, weighed down in part by producer hedging, the sources said. The 2017 WTI price strip rose as high as $43.55 a barrel in early trade; a month ago, it hit a record low of $37.38 a barrel.

Trading volume in over-the-counter oil swaps was more than five times higher than the past three days combined, according to swaps data from the Depository Trust & Clearing Corp, available via Thomson Reuters Eikon. The re-emergence of hedging interest, which traders said was still limited in scope for now and mainly in the form of inquiries rather than execution, came as a surprise to some, surfacing below the $50 psychological threshold that some traders had thought would be needed to coax back producers.

The activity likely reflects both the growing investor and lender pressure to safeguard heavy debt requirements down the road, as well as the fact that drilling costs continue to decline, allowing companies to break even at lower prices. "The $45 is break-even for a lot of producers. It's not just about making a profit, it's about staying alive," one trader said. The sources declined to say which companies were active this week, but some producers have been looking for an excuse to pounce. They may have found it this week, as prices surged on news that OPEC and non-OPEC oil producing countries would come together to freeze production at January levels and key producer Iran voiced its support for the output cap.

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[waltky]

Crude oil still on the downside...

Crude oil drifts lower on U.S. employment data
Friday 26th February, 2016 -- Crude oil prices stumbled out of the gate in morning trading Thursday in New York as U.S employment figures fell, pulling pressure away from the demand side.

The U.S. Labor Department said seasonally adjusted initial claims for unemployment increased by 10,000 for the week ending Feb. 20 to 272,000. Employment has been a bright spot in a U.S. economy wary of the pressure on industries from lower crude oil prices. In mid-February, U.S. Federal Reserve Chair Janet Yellen said a weak energy sector was dragging on economic growth prospects.

Crude oil prices turned positive after a weak opening in Wednesday trading after U.S. data showed an increase in gasoline demand, a trigger likely attributed to a milder winter. Crude oil prices started the day lower in New York, however. Brent crude oil lost 0.3 percent to start the day at $34.30 per barrel. West Texas Intermediate, the U.S. benchmark price for crude oil, was down by 0.6 percent to open at $31.95 per barrel.

Midterm U.S. labor figures showed resiliency, however. No state reported an increase of more than 1,000 in initial claims. The less-volatile four-week national average of 272,000 was a reduction of 1,250 from the previous week. Data released from the U.S. Energy Information Administration show markets still favoring the supply side. Crude oil inventories for last week increased 3.5 million barrels to hit an all-time peak above 507 million barrels, data show.

Lower crude oil prices have left energy companies with few options but to trim spending and headcounts. Continental Resources, one of the largest leaseholders in U.S. shale basins, said this week it took a loss for the fourth quarter but still managed to pull more liquids from its key reserve, the Bakken play in Montana and North Dakota. Daniel J. Graeber

Crude oil drifts lower on US employment data

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Dollar, yields rise, backed by U.S. data; stocks, oil fade
Fri Feb 26, 2016 - The U.S. dollar jumped on Friday and Wall Street's stock rally faded as fresh economic data kept alive Federal Reserve rate increases, while oil prices turned negative late in the session.

The S&P 500 ended slightly lower but finished the week up 1.6 percent. Europe's FTSEurofirst 300 stock index .FTEU3 tallied a 1.6-percent rise on Friday, fueled by strength in mining shares as industrial metals such as copper CMCU3 and aluminum CMAL3 gained. The dollar rose broadly and the dollar index .DXY, a measure of the greenback's value against six major currencies, gained 0.8 percent to post its best weekly performance since November. Against the Japanese yen, the dollar rose to a more than one-week high. Treasury yields also rose after data showed U.S. consumer spending rose solidly in January and underlying inflation picked up by the most in four years. A report also showed U.S. gross domestic product growth in the fourth quarter was revised higher, to a 1.0 percent annual rate.

With equity markets off to a weak start in 2016 amid concerns about an economic slowdown, investors have been awaiting the Fed's next policy move after the central bank raised rates in December. Federal funds futures FFc1 implied traders see a 36-percent chance of the Fed raising rates in June and 53-percent chance in December, both above Thursday's levels, according to CME Group's FedWatch program. "This information today, while actually good for Main Street, is less than good for a Wall Street that has become addicted to the Fed’s largesse," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The Dow Jones industrial average .DJI fell 57.32 points, or 0.34 percent, to 16,639.97 and the S&P 500 .SPX lost 3.65 points, or 0.19 percent, to 1,948.05. The Nasdaq Composite .IXIC added 8.27 points, or 0.18 percent, to 4,590.47. European equities rallied for a second day, for a 1.6 percent gain on the week. MSCI's gauge of global stock markets .MIWD00000PUS was up just 0.1 percent. The index was set for its biggest two-week percentage increase since October. With oil's steep 1-1/2-year slide, equities' performance has been tightly linked to the commodity's daily fluctuations, with investors viewing oil as a proxy for the health of the global economy.

After an initial rally that pushed benchmark Brent crude prices to their highest level since early January, oil prices faded as players took profits on winning positions. U.S. crude CLc1 settled down 0.9 percent at $32.78 a barrel, while Brent settled down 0.5 percent at $35.10 a barrel. For the week, U.S. crude gained about 11 percent. Benchmark 10-year notes US10YT=RR fell 21/32 in price to yield 1.77 percent, up from 1.70 percent late Thursday. “We got some pretty surprising GDP data, an upward revision, and not too many people had pegged that,” said Thomas Simons, a money market economist at Jefferies LLC in New York.

Dollar, yields rise, backed by U.S. data; stocks, oil fade

 

[waltky]

Uncle Ferd says better gas up cheap whilst ya can - gas prices goin' up again...

Oil jumps as traders close short positions, U.S. producers cut rig count
Sun Mar 6, 2016 - Oil prices jumped on Monday, extending a rally that has lifted crude benchmarks by more than a third from this year's lows, as tightening supply and an improving global outlook strengthened the sentiment for a market recovery.

Front-month Brent LCOc1 crude futures were trading at $39.49 per barrel at 0400 GMT, up 77 cents or 2 percent from their last settlement. That is up more than a third from a low hit in January, when prices fell to levels not seen since 2003. U.S. West Texas Intermediate (WTI) futures were trading at $36.63 a barrel, up 71 cents from the last close and 40 percent above lows touched in February. "It looks at this stage as if it (oil) has formed a little bit of a bottom and perhaps we're going to see a sustained price in the $30s, maybe trending back up to $40 dollars at some point," said Ben Le Brun, market analyst at OptionsXpress. Le Brun said an improved economic outlook was pushing prices: "The macro picture takes all corners of the globe into account, and those corners seem to be improving ... and that's where I'm seeing the oil price tick higher."

Analysts said that strong U.S. payroll data had pushed markets on Friday and early Monday, but that attention was now shifting to Asia. Morgan Stanley said on Monday that China's parliament, the National People's Congress, which opens its annual session this week listed "to ease market barriers for transport, oil, and gas" among key policy targets this year. On the supply side, U.S. energy firms cut oil rigs for an 11th week in a row to the lowest level since December 2009, data showed on Friday, as producers slash costs. Drillers removed eight oil rigs in the week ended March 4, bringing the total count down to 392, oil services company Baker Hughes Inc (BHI.N) said. [RIG-OL-USA-BHI]

Beyond a tightening supply outlook, traders said a shift in sentiment was also lifting prices as they shut down short positions and abandoned bets on further falls in prices. Trading data shows that the number of managed short positions on WTI contracts - which would benefit from lower prices - have fallen more than a quarter since mid-February, with many new long positions betting on rising prices being opened. Ric Spooner, chief market analyst at CMC Markets said "there's a good prospect that Brent could hit $40 ... (it) could easily do it in the next trading session."

Oil jumps as traders close short positions, U.S. producers cut rig count

 

[waltky]

Oil goin' back up again...

Oil hits $40 a barrel amid commodities comeback
7 March 2016 - The oil price has gone above $40 a barrel for the first time this year as commodities continue to rally. Brent crude, used as an international benchmark, rose more than 5% to trade at $40.83 a barrel.

Oil dropped below $28 in January, but has since risen as part of a wider recovery in energy and metal prices. The price of iron also shot up, rising 20% amid greater optimism about Chinese economic growth and demand for the metal in the country's refineries. The price of Brent crude has now gone up more than 40% from the low it reached in January, although it remains 70% below its peak in the summer of 2014. The rise is being put down to talks taking place between oil-producing countries in an effort to curb production. No concrete agreements have been reached, but a number of key oil-producing nations are meeting in Moscow this month. Meanwhile, ratings agency Fitch said oil prices would remain at an average of $35 a barrel this year.

Supply glut

Simon French, chief economist at Panmure Gordon, urged caution over the oil price increase, saying it might be short-lived. "A large part of the oil price movement in recent days has been short covering, where investors having taken a bet on low prices are insuring themselves against the risk of higher prices. Very little has changed in the oil market to correct the supply glut," he added. Commodities in general had a strong upbeat day, with prices rising for iron ore, copper and aluminium. Iron ore rose 20%, its biggest increase in eight months, on expectations that China was cutting production. The slowing Chinese economy has led to a fall in demand for iron ore, which has partly led to a global glut. China is one of the biggest consumers of steel in the world. Iron ore was trading at $63.74 a tonne, which is the highest since June 2015.

The metal touched $38.30 in mid-December 2015. The price of copper has increased by 6.9% in 2016 and aluminium is up 5.3%. Analysis: Andrew Walker, BBC Economics correspondent: Does this rally in the price of crude oil have legs? There are reasons to suspect that it might not. Traders have certainly taken encouragement from the efforts among oil-producing countries to address the supply glut. There has been no concrete agreement, though Russia, Saudi Arabia and two others did say they would freeze production, provided others came on board. A group of producer countries are meeting in Moscow later this month. Perhaps they will agree co-ordinated action.

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Asian shares retreat on profit-taking; oil eyed
Mon Mar 7,`16 Asian shares fell on Tuesday as investors took profits after a month-long rally and investors grew wary of the market's near-term prospects ahead of major central bank meetings.

Led by China, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell more than a percent. Japan's Nikkei .N225 and South Korea's KOSPI .KS11 fell more than a percent each. "We have seen a big move in markets in a very short period of time and investors are calling time ahead of the ECB and the Fed meetings in the coming days," said Kay Van-Petersen, global macro strategist at Saxo Bank in Singapore. The European Central Bank is widely expected to ease at Thursday's policy review, but there is a lot of uncertainty about how far it would go. Meanwhile, ahead of a U.S. Federal Reserve policy meeting, fed fund futures <0#FF:> were barely pricing in one more hike this year.

Additionally, China's February exports data released in morning trade disappointed analysts' expectations, falling 25.4 percent from a year earlier, while imports fell by 13.8 percent. Still, risk sentiment was broadly upbeat as the impressive rally in commodities markets spilled over into an array of assets such as the high-yielding Australian dollar AUD=D3 and mining giant Glencore (GLEN.L), which is up 5 percent and 35 percent, respectively in a week. Some investors talked about a potential bottom being formed in the commodity markets as large bearish bets are unwound and hopes of more coordinated measures from oil-producing countries to stem tumbling prices grew.

Brent crude futures LCOc1 jumped to as high as $41.04 per barrel on Monday, extending their recovery from a 12-year trough of $27.10 hit in January. U.S. crude futures CLc1 also rose to $38.11 per barrel, its highest since early January. Further improving the mood in the battered commodity sector, spot iron ore price .IO62-CNI=SI surged almost 20 percent, hitting a near nine-month high on the back of China's plans to boost short-term output. Ecuador's Foreign Minister, Guillaume Long, said his government will host a meeting in Quito on Friday with Venezuela, Colombia, Ecuador and Mexico "to reach consensus over oil, especially prices."

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[william the wie]

China deciding to storm the plan with more unsalable apartments and buildings and an occupancy rate on sold building of less than 1% being decreased is extend and pretend at the most psychotic Ievel I've ever heard of. Oil will keep rising until it comes apart at the seams.

 

[waltky]

Good news for Russia...

Oil rally lifts Wall Street, extending tight correlation
9 Mar.`16 - U.S. stocks rose in low volume on Wednesday, led once more by the direction of the price of oil and energy sector shares.

Crude oil and U.S. equity prices have been linked for much of 2016 to a degree that has surprised many investors. Wednesday's market action extended that trend, with WTI crude <CLc1> rising nearly 5 percent and the S&P 500 energy sector <.SPNY> up 1.5 percent. Chevron <CVX.N> jumped 4.6 percent to $92.82 and gave the biggest boost to the energy sector. "It's not about oil being a barometer of the global economy," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "A lot of it has to do with psychology."

U.S. crude and the S&P 500 have been directionally correlated on all but six trading days this year, according to Wunderlich data. "Stability in that asset class (oil) for a period of time will allow for the correlation to break down," said Hogan. Since Feb. 11, the S&P 500 has gained 8.8 percent, but it is still down 2.7 percent for the year.

The Dow Jones industrial average <.DJI> rose 36.26 points, or 0.21 percent, to 17,000.36, the S&P 500 <.SPX> gained 10 points, or 0.51 percent, to 1,989.26 and the Nasdaq Composite <.IXIC> added 25.55 points, or 0.55 percent, to 4,674.38. In a week with a thin economic data calendar, markets will turn to the European Central Bank, which is expected to further ease monetary policy on Thursday. Biotechnology stocks came under pressure a day after the U.S. government proposed a test program that would lower incentives to use higher-priced drugs when alternative treatments are available.

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[waltky]

Oil prices may have bottomed out, now rising again...

Oil price 'may have bottomed out'
Fri, 11 Mar 2016 - There is evidence that oil prices are stabilising and could even begin to rise again, says the International Energy Agency.

It said lower oil output in the US and other countries was helping to curb the glut in the supply of oil. The increase in supply from Iran has also been less dramatic than first feared, the IEA said. Oil prices have plummeted 70% since June 2014, falling as low as $27 per barrel earlier this year. The IEA, which coordinates energy policies of industrialised nations, said it now believed non-Opec output would fall by 750,000 barrels per day (bpd) in 2016, compared with its previous estimate of 600,000 bpd. US production is forecast to decline by 530,000 bpd this year, it said. "There are clear signs that market forces... are working their magic and higher-cost producers are cutting output," the IEA said.

Supply and demand

There has been an oversupply of oil from booming US output in recent years, thanks to the spread of fracking. Meanwhile, members of the oil-producing cartel Opec have been reluctant to cut supply in order to "put a floor" under the the oil price, for fear of losing market share against higher-cost producers. These two factors sent oil prices tumbling at the end of 2014 and throughout 2015. Lower demand for oil from China, the world's second-largest consumer of commodities, has also hurt oil prices and prompted fears of a global economic slowdown.

Many of the major oil firms have reported dramatic falls in profits and cut back billions of pounds in investments in exploration, while at least 5,000 jobs have been lost in the North Sea oil industry over the last 18 months. Prices hit a 12-year low in January, but have since recovered to about $40 per barrel after leading Opec nation Saudi Arabia and top non-Opec producer Russia said they could freeze output. Brent crude on Friday was 1.9% higher at $40.79, while US West Texas Intermediate oil was 2.5% higher at $38.77 per barrel.

The IEA said Opec output fell by 90,000 bpd in February because of production outages in Nigeria, Iraq and the United Arab Emirates, which lost a combined 350,000 bpd. "Meanwhile, Iran's return to the market has been less dramatic than the Iranians said it would be; in February we believe that production increased by 220,000 bpd and provisionally, it appears that Iran's return will be gradual," the IEA said. Iran has promised to add as much as one million bpd to global supply after securing a deal with the West in January that has seen the easing of international sanctions, imposed on the Islamic Republic over its nuclear programme.

Seeking 'balance'

 

[waltky]

Now that oil has rebounded, what will Janet Yellen do?...

Crude Oil Rebounds, All Eyes on US Fed Rate Decision
March 11, 2016 — Going into Friday trade, U.S. stocks were set to post their fourth weekly gain as the S&P 500 was up eight out of nine days. All 10 sectors in the index were trading higher. Since the February 11 low, the S&P 500 has gained nearly 9 percent to trade just below 2 percent year-to-date.

Both the S&P 500 and Dow Jones Industrial Average traded through key technical levels on the charts. Traders look at these levels to confirm bullish action (or bearish, depending on the prevailing trend). The rebound was mostly led by the energy sector with crude oil trading at its best prices in over three months. While crude oil is enjoying the spotlight, natural gas is quietly making a rebound after falling to multi-decade lows on March 1. Phil Davis, Founder of Phil’s Stock World, joined us this week, explaining why he is building positions in the physical commodity of natural gas, as well as the United States Natural Gas ETF, ticker symbol UNG.

Demand for natural gas dropped to a 31-year low in recent weeks, while storage remained at all-time highs. Davis said, “With the advent of liquid natural gas (LNG) exporting, you now have a set global price. LNG will now be exported around the world, and this oversupply will start to draw down leading to higher prices in natural gas.” Another factor contributing to the surge in stocks is participation from the financial sector, which was largely unexpected because low-to-negative interest rates are a challenge to bank earnings and growth. Just this Thursday, the European Central Bank (ECB) announced it was cutting its main interest rate and expanding its massive bond-buying program.

Steven Kalayjian of KnowVera said more Quantitative Easing (QE) from central banks is bad for the markets because it artificially inflates asset prices. “Since 2008, global central banks, including the Federal Reserve, have cut rates over 650 times, which has not spurred any economic growth. In fact, global GDPs are in a decline,” Kalayjian said. “The recent rally is based on false hope of more Quantitative Easing when markets should be moving on solid fundamentals like strong corporate earnings and healthy economic data.”

Mark Friedgan, Co-Founder & CIO of Eligo Energy, is in agreement with Kalayjian. “While QE may have been necessary to preserve the global economy when it began, after more than seven years of various forms of QE worldwide, it must eventually end,” Friedgan said. “The concern I have is that this end to artificial government influence on the economy will result in a day of reckoning for investors who have been chasing yield in both exchange-traded assets and private investment. The economy and markets must prove that they can survive and grow substantially without this government tailwind.”

Week Ahead:

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Oil prices stable as market seen bottoming, but oversupply lingers
Sun Mar 13, 2016 - Oil prices were stable in early trading on Monday, with global oversupply and slowing economic growth weighing on markets but prospects of falling production lending some support.

U.S. crude futures were trading at $38.41 per barrel at 0239 GMT, down 10 cents from their last settlement. But international Brent futures were up 6 cents at $40.45 a barrel. While Morgan Stanley said that oil prices had likely bottomed out, it warned that a slowing economy and high production would prevent sharp rises. "Oil prices now seem to have bottomed, even though they are likely to stay subdued for the rest of this year before starting to move higher in 2017," the U.S. bank said, adding that cheap oil had not provided the economic boost to growth that many had hoped for. "When oil prices are falling below production costs, the income gains for consumers will be smaller than the costs to producers and falling oil prices become a negative-sum game," it said.

For 2016, the bank said it was "no longer looking for an acceleration in 2016 GDP growth" and that the risk of a global recession was now 30 percent. Following a 70 percent price rout between mid-2014 and early 2016, oil markets are in flux. Many analysts expect a modest price recovery, while others see another slump. The International Energy Agency (IEA) on Friday said that oil prices had bottomed out due to U.S. and other output cuts outside the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC).

A female employee fills the tank of a car at a petrol station in Cairo, Egypt​

The U.S. rig count fell for a 12th straight week last week to a total of 386, its lowest since December 2009 as drillers continue to slash capital expenditure. Others, like Goldman Sachs, warn that ongoing global overproduction, which continues to see over 1 million barrels of crude produced in excess of demand every day, will pull prices back down again. So far, demand in core markets like China remains strong. China's January-February refinery throughput rose 4.6 percent compared to the same period a year earlier to 87.08 million tonnes (10.59 million barrels per day), official data showed on Saturday.

The data release came shortly after China reported record daily crude imports of 8 million barrels per day. In traded markets, sentiment leans towards higher prices, with the amount of managed short positions open for U.S. crude, which would profit from falling prices, down over 40 percent since mid-February, while the amount of trades betting on price increases stands near record highs. "The shift in sentiment in commodity markets continues to gather strength ... The worst may be over for commodity markets," ANZ bank said.

Oil prices stable as market seen bottoming, but oversupply lingers

 

[waltky]

Oil price dips as Iran rejects cap deal...

Oil price falls as Iran rejects output freeze deal
Mon, 14 Mar 2016 - Oil prices fall by nearly 3% after Iran puts off plans to join nations proposing a freeze on production.

Oil minister Bijan Zanganeh said Iran would only join discussions to cap output after its production reached four million barrels per day. In February, Saudi Arabia struck a deal with Russia and other Opec nations to freeze oil output at January levels. But Iran wants production to hit pre-sanction levels before beginning talks. At the weekend, Mr Zanganeh said: "I have already announced my view regarding the oil freeze and I'm saying now that as long as we have not reached four million in production, they should leave us alone. "When we reach this level of production, we can then co-operate with them." In its monthly oil market report published on Monday, Opec said Iran produced 3.1 million barrels per day in February, a rise of 187,000 barrels on the previous month.

Surplus woes

Brent crude prices fell 2.7% to $39.32. Oil recently rose above $40 per barrel for the first time this year. Prices have sunk nearly 70% since reaching a $115 a barrel in June 2014. However, Opec, the cartel of oil-producing nations, has refused to cut make significant cuts to output amid a slowdown in demand from large industrial countries such as China, coupled with the shale energy boom in the US. In its most recent report, Opec said its output slowed marginally in February, by 175,000 barrels per day to 32.38 million, on lower production from Iraq, Nigeria and the United Arab Emirates. Overall, it expects demand for 2016 to reach 31.5 million barrels per day, a fall of 100,000 barrels on its previous forecast, but a rise of 1.8 million barrels per day on last year.

Bjarne Schieldrop, chief commodities analyst at SEB Markets in Oslo, said a two million barrel-per-day surplus in oil supplies would continue to weigh on prices in the short term. "We are likely to see $35 a barrel before we see $45 a barrel," he said. Russia's energy minister, Alexander Novak, who met Mr Zanganeh in Tehran on Monday to discuss a separate oil and gas swap deal, was quoted as saying "Major oil producers shall co-ordinate with each other. "However, since Iran's production decreased under sanctions, we totally understand Iran's position to increase production and revive its share in the global markets."

Oil price falls as Iran rejects output freeze deal - BBC News

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Oil falls as worry over growing stockpile cuts short rally
Mon Mar 14, 2016 - Oil prices fell about 3 percent on Monday on concerns that a six-week market recovery has gone beyond fundamentals as U.S. crude stockpiles continue to build and Iran maintains little interest in joining major producers in freezing production.

Crude inventories across the United States likely hit record highs for a fifth straight week last week, rising 3.3 million barrels, a Reuters poll of analysts said. [EIA/S] Stockpiles at the Cushing, Oklahoma grew almost 850,000 barrels to 69.6 million in the week to March 11, bringing storage at the delivery hub for U.S. crude futures to near capacity, traders said, citing market intelligence firm Genscape. The Organization of the Petroleum Exporting Countries, meanwhile, said global demand for crude from its members, including Saudi Arabia and Iran, will be less than previously thought in 2016 due to competing non-OPEC supply. OPEC supply will likely exceed demand by about 760,000 barrels per day, up from 720,000 bpd it implied earlier.

Russia said OPEC's meeting with other key oil producers on an output freeze will probably be held in Doha in next month. It said Iran supports the plan, while Tehran says it wants to double its crude exports to 4 million bpd first. "All the data out there is suggesting higher supply and lesser demand for oil, and that could only mean lower prices," said Phillip Streible, market strategist at RJO Futures in Chicago. U.S. crude futures CLc1 settled down $1.32, or 3.4 percent, at $37.18 a barrel, while Brent LCOc1 finished down 86 cents, or 2 percent, at $39.53.

Monday's price slide came after last week's rally of 7 percent in U.S. crude, which was up for a fourth straight week. Brent gained 4 percent last week, up for a third week in a row. Investment bank Morgan Stanley predicted a $25-$45 trading range for U.S. crude in an oversupplied but volatile market, concurring with several analysts' views. "From a longer-term perspective over the coming four to six weeks, we still anticipate an ultimate crude price decline to the $26-28 area," said Jim Ritterbusch at Chicago energy consultancy Ritterbusch & Associates.

Money managers, including hedge funds, raised their bullish bets on U.S. crude for a third week in a row to November highs last week, but cut net long positions in Brent. "I think we are back to inventory watching and the pressure will start moving to the bulls' positioning as the market will likely have little patience with large net (stockpile) builds," said Scott Shelton, broker with ICAP in Durham, North Carolina.

Oil falls as worry over growing stockpile cuts short rally

 

[waltky]

Oil prices bouncin' `round the $36-$39/bbl. range...

Global stocks dip, dollar on tenterhooks for Fed; oil bounces
Wed Mar 16, 2016 - Asian shares were mostly lower on Wednesday while the dollar dithered as markets waited anxiously for the Federal Reserve to provide guidance on the risk of U.S. rate hikes this year.

=snip=

Oil prices did manage a bounce after data from industry group American Petroleum Institute (API) showed U.S. crude stockpiles rose by less than half what analysts expected.

U.S. crude CLc1 gained 49 cents to $36.33 a barrel, while Brent LCOc1 rose 40 cents to $39.14. [O/R]

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[waltky]

Granny says dey not tellin' us we runnin' outta oil again an' purt soon we all gonna be ridin' horses an' chariots again...

Oil at 2016 high, U.S. crude above $40 on output freeze hopes
17 Mar.`16 - Oil prices hit 2016 highs on Thursday, with U.S. crude surging 5 percent to pierce the $40 barrier, on optimism that major producers will strike an output freeze deal next month amid rising crude exports and gasoline demand in the United States.

A weaker dollar <.DXY> after a Federal Reserve policy decision on Wednesday that indicated two U.S. rate hikes this year instead of four also drew oil buyers using currencies such as the euro <EUR=>. [FRX] OPEC kingpin Saudi Arabia and non-OPEC producers led by Russia will meet on April 17 in the Qatar capital Doha, aiming for the first global supply deal in 15 years. "The remote possibility that a coordinated supply control effort comes from this meeting, assuming it even happens, has put market bears on the defensive," said Pete Donovan, broker with Liquidity Energy in New York. Oil prices have surged more than 50 percent from 12-year lows since the Organization of the Petroleum Exporting Countries floated the idea of a production freeze, boosting Brent up from around $27 a barrel and U.S. crude from around $26.

On Thursday, the front-month in U.S. crude's West Texas Intermediate (WTI) futures <CLc1> settled up $1.74, or 4.5 percent, at $40.20, after scaling a 2016 high of $40.26. Brent crude's front-month <LCOc1> finished up $1.21 at $41.54, after earlier reaching the year's peak of $41.60. "For now, the market is staying well supported," said Olivier Jakob, oil analyst at Petromatrix. "It will be difficult to return to the lows of the year." WTI also hit a premium against Brent <CL-LCO1=R> in intraday trading, the first time since January, as traders piled into the U.S. crude market on bets of an uptick in domestic oil exports.

Venezuela's state-run PDVSA bought two more cargoes of WTI this month after becoming Latin America's first importer of U.S. oil since January after an export ban was lifted. "We're seeing increasing export activity in the U.S. Gulf, with over 2-1/2 million barrels currently loaded on tankers, ready to depart, and there's potentially more," said Matt Smith who tracks crude loadings for New York-headquartered Clipperdata. U.S. crude has also gained traction on smaller stockpile builds of late, and surging gasoline consumption. U.S. crude inventories last week climbed to its fifth straight week of record highs but by just 1.3 million barrels, a much smaller build than forecast, government data showed. Gasoline demand rose 6.4 percent over the past four weeks from a year ago.

Oil at 2016 high, U.S. crude above $40 on output freeze hopes

 

[william the wie]

If it stays this high for 10 days straight the oil supply will go up. The next running of the stops could send prices even higher as the shorts are forced to cover.

 

[waltky]

Oil prices still on the down side...

Crude prices fall from 2016 highs as U.S. oil rig count rises
Fri Mar 18, 2016 - Crude prices settled lower on Friday after the U.S oil rig count rose for the first time since December, renewing worries of a supply glut after an output freeze plan helped boost the market to 2016 highs and multi-week gains.

U.S. energy firms this week added one oil rig after 12 weeks of cuts, according to data by industry firm Baker Hughes. The addition, coming after oil rigs had fallen by two-thirds over the past year to 2009 lows, showed crude drilling picking up again after a 50 percent price rally since February. [RIG/U] "The rig count and crude prices have a direct relationship for sure," said Pete Donovan, broker at Liquidity Energy in New York. Brent crude LCOc1 finished down 34 cents, or 0.8 percent, at $41.20 a barrel, having risen $1 earlier to a 2016 high of $42.54. U.S. crude CLc1 settled down 76 cents, or 1.9 percent, at $39.44, after also gaining $1 to a year high of $41.20.

Despite the retreat, oil posted multi-week gains, with Brent up for a fourth straight week and U.S. crude a fifth week in a row. Both benchmarks rose about 2 percent this week. Global oversupply in oil had knocked crude prices down from mid-2014 highs above $100 a barrel to 12-year lows earlier this year, bringing Brent to around $27 and U.S. crude to about $26. Over the past two months, prices rallied to reach above $40 after the Organization of the Petroleum Exporting Countries (OPEC) floated the idea of a production freeze at January's highs.

The combination of declining oil output, smaller crude stockpile builds and surging gasoline consumption in the United States also helped the recovery, although some analysts said the rally had been overdone. "The market is probably too long here and needs a correction," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina. Some traders who had been bearish oil and lost money recently were eyeing fresh bets to price crude lower. "I think this rally will stall," said Tariq Zahir, who profited mostly over the last year on bets that U.S. crude for nearby delivery will fall against longer-dated contracts. "I took off several shorts and booked losses but on the first sign of weakness, I'm jumping back in."

Crude prices fall from 2016 highs as U.S. oil rig count rises

See also:

Shares on best run in two years as dollar steadies
18 Mar.`16 - World equity markets were poised for a fifth week of gains on Friday, their best run in more than two years, as a 2016 high for oil, the dollar's recent decline and a more optimistic view of the economy combined to boost investor confidence.

=snip=
Oil rose above $42 a barrel, hitting its highest this year and extending a rally into a fourth week, on expectations of a production freeze by major exporters, stronger seasonal demand and dollar weakness.

Brent crude's front-month contract was up 64 cents, or 1.5 percent, at $42.18 a barrel after touching a 2016 high of $42.54. U.S. crude gained 52 cents to $40.72 a barrel.

Oil prices have surged by more than 50 percent from 12-year lows hit in December after the Organization of the Petroleum Exporting Countries (OPEC) toyed with a production freeze that lifted Brent from about $27.

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Related:

In oil price plunge, North Sea industry faces perfect storm
Mar 18,`16 -- It's Thursday night and the Spider's Web pub is packed with beefy guys in windproof jackets and massive backpacks. The exhausted oil rig workers pile their bags against the wall, play pool or just slump in the leather seats, knocking back pints of beer.

But despite the drink, there's not much laughter. It's not work that bothers them, but the prospect that the work will end. "I'm worried," says Fraser Jamieson, an engineer who has spent the past 20 years on North Sea oil rigs. "We're all worried." The North Sea oil industry, the biggest and oldest in Europe, is struggling with a toxic combination of aging, drying wells and the recent plunge in oil prices, which is forcing companies to rethink investments and putting thousands of jobs at risk. Estimates suggest more than a third of some 330 oil fields in the U.K. North Sea will close in the next five years. "There is a sort of perfect storm," said Dorrik Stow, director of the Institute of Petroleum Engineering at Heriot-Watt University in Edinburgh, Scotland. "Those cumulative factors are going to negatively impact on the North Sea unless there is a fairly significant upsurge in the price of oil."

Brent crude, the benchmark for international oil, hit a 12-year low of $27.10 a barrel in January amid slowing economic growth in China and increased production in the U.S. That's down from more than $100 a barrel as recently as September 2014. While prices have recovered somewhat, Brent traded for about $42 on Friday and most experts don't expect a significant rebound soon. Low prices are causing turmoil internationally in an industry that has been going through booms and busts ever since 1859, when the first drilling rig was built in Titusville, Pennsylvania. For the North Sea, each new bust accelerates its downward spiral, hurting the countries that tap it - Britain, Norway and to a lesser extent the Netherlands.

Norway on Thursday slashed interest rates in a bid to help the economy manage the oil sector's drop. In Britain, the government this week offered tax relief to oil companies to protect jobs and stem a decline in government income. Tax revenue from the industry dropped to 2.1 billion pounds ($3 billion) last year from 10.9 billion pounds in 2011-12. Some of the biggest platforms are being dismantled as the industry forecasts production will drop to 45 million tons of oil equivalent this year, less than a third of the 150 million tons produced in 1999. Shell, for example, has started the process of decommissioning the Brent oilfield - which has produced 3 billion barrels of oil equivalent since 1976 and gave its name to the international crude oil benchmark.

Oil companies are expected to invest about 1 billion pounds ($1.4 billion) in new projects this year, compared with a recent average of 8 billion pounds, industry association Oil & Gas U.K. says. And it is hitting workers hard. Some 5,500 people have lost their jobs, or 15 percent of the 36,600 directly employed in the industry at the end of 2013, according to Oil & Gas U.K. The group estimates that total direct and indirect employment supported by the industry has fallen to 375,000 from a peak of 440,000. If the oil price remains around $30 a barrel for the rest of 2016, almost half of the North Sea fields "are likely to be operating at a loss, deterring further exploration and capital investment," according to Oil & Gas U.K. "2016 is going to be quite pivotal," said Fiona Legate, a research analyst at Wood MacKenzie. "We will see distress sales, and it will be make or break for a lot of companies."

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[waltky]

Crude oil prices back up above $40/bbl...

Oil futures dip as commodity rally gathers breath
Mon Mar 21, 2016 - Oil prices dipped in Asian trade on Tuesday, giving up gains from the previous session after data showed U.S. crude inventories fell for the first time since January and as commodity prices paused from their recent rally.

U.S. crude futures for May LCOK6, the front month from Tuesday, were down 6 cents at $41.46 a barrel at 0245 GMT, after settling up 0.8 percent at $41.52 on Monday. The previous front month settled at $39.91 before expiring on Monday. Brent crude futures for May delivery LCOc1 were 12 cents lower at $41.42 a barrel after rising 0.8 percent on Monday. Brent has risen more than 50 percent from 12-year lows in January. "The current risk-on environment remains conducive for commodity prices to consolidate after a strong rebound in the last six weeks," ANZ said in a morning note. "However, a further improvement in fundamentals will be needed for bulks, crude oil and base metals to rally further."

Stockpiles at the Cushing, Oklahoma delivery hub for U.S. crude fell 570,574 barrels to 69.05 million in the week to March 18, traders said on Monday, citing data from market intelligence firm Genscape. Cushing inventories had previously risen toward 70 million barrels, causing market participants to fear they could hit capacity. Iran may join other oil producers planning to freeze production to support prices at a later date, OPEC's secretary general said on Monday, as the country is seeking to raise its exports after Western sanctions were lifted on Tehran in January.

Producers from the Organization of the Petroleum Exporting Countries and non-members are due to meet on April 17 in Qatar discuss the output freeze. Iran is keen to increase its oil exports, which fell by more than half during the sanctions over Tehran's disputed nuclear program, and has said it should not be bound by a production freeze until it can recover its market share.

Oil futures dip as commodity rally gathers breath

 

[waltky]

Oil falls but still above $40/bbl...

Oil futures fall after API stockpile build reasserts glut concerns
Wed Mar 23, 2016 - Oil prices fell on Wednesday after figures from an industry group showed U.S. crude stockpiles rose last week more than expected, reinforcing concerns that the global supply glut continues unabated.

The front-month contract in U.S. crude futures was down 44 cents at $41.01 a barrel by 0628 GMT. It struck a 2016 high of $41.90 in the previous session before closing at $41.45. The contract has rebounded more than 50 percent since hitting its lowest level since 2003 in February. Brent crude was 40 cents lower at $41.39, reversing gains in the previous session when it finished at $41.79. Brent has also surged more than 50 percent since hitting a multi-year low in January of $27.10 a barrel. "Net supply in the short-term should still be in excess and thus brings us to believe that the current uptrend is unsustainable," said Phillip Futures analyst Daniel Ang in a note on Wednesday.

The American Petroleum Institute (API), an industry group, said in a report after Tuesday's oil market settlement that U.S. crude stockpiles rose 8.8 million barrels last week to reach a record high of 531.8 million. The stockpile growth reported by the API was 5.7 million barrels higher than estimates from analysts polled by Reuters. Official crude inventory data from the U.S. government will be released later on Wednesday. The official U.S. data is likely to show that oil inventories rose to a record high for a sixth straight week, while oil product stockpiles probably fell, a Reuters survey showed. "Near-term direction is likely to center on the degree of increase in U.S. stockpiles," ANZ bank said in a note on Wednesday.

Adding to the glut is the revival of Iranian barrels on the international market after sanctions were lifted in January. Iran's crude oil exports have risen to 2.2 million barrels per day (bpd) since sanctions were lifted, an increase of 900,000 bpd, a senior official was quoted as saying on Tuesday. "Until January we could only export 1.3 million barrels of oil but two months after the (lifting of) sanctions we are exporting 2.2 million barrels of oil per day," Vice President Eshaq Jahangiri was quoted as saying by the Shana agency. Iranian flows may also increase as ship insurers have stepped in to plug a shortfall in cover for transporting Iranian oil resulting form the fact that U.S. reinsurers are still restrained by U.S. sanctions, according to officials involved in the initiative.

Oil futures fall after API stockpile build reasserts glut concerns

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In oil rout, some U.S. energy bosses were spared the pain
Wed Mar 23, 2016 - More cash, lower targets and bigger share awards - not all U.S. energy bosses are feeling the full impact of tumbling oil prices in their paychecks. Some oil and gas companies are making it easier for their top managers to meet performance goals or are offering more cash as a prolonged oil slump keeps share prices at lows not seen in five years, filings show.

Among the beneficiaries are bosses of both solid performers and struggling companies, and the changes may rankle investors facing losses. Oilfield services company Schlumberger NV, for example, used lower earnings targets for the second half of 2015, which helped its CEO Paal Kibsgaard receive total pay of $18.3 million, only slightly below the 2014 level. The company's shares fell 18 percent last year, about half the decline of its index and have since recovered about 7 percent.

Linn Energy , meanwhile, whose shares nosedived 87 percent last year under the weight of its swelling debt and dwindling financing options, announced a new incentive plan last month for its top executives that focuses more on cash rather than stock. Dallas-based oil and gas exploration company Exco Resources Inc will offer its directors restricted stock worth $140,000 a year – about 10 times the value of shares awarded in 2014, according to securities filings, even though its shares fell 43 percent last year.

In another example, Halcon Resources Corp - built by its CEO Floyd Wilson, who has made a fortune launching and selling off oil companies - disclosed in a securities filing last week that Wilson received $3 million and three other top executives $800,000 each in exchange for an agreement to stay for at least another year.

A representative for Halcon, which has hired financial and legal advisors to navigate the downturn, did not return messages. Schlumberger declined to comment beyond its recent proxy statement. An Exco representative said the new plan makes its director pay more competitive and aligns their compensation with performance of the company. A representative for Linn Energy told Reuters in February the compensation changes were designed to ensure management stayed on to secure the company's future. The company did not respond to requests for further comment. Offering executives financial incentives to stay through upheaval, be it a merger or restructuring, is a common practice.

ONE WAY BET?

 

[waltky]

US glut sends domestic oil prices downward...

U.S. oil falls after big jump in stockpiles
Wed Mar 23, 2016 - U.S. oil prices fell in Asian trading on Thursday, adding to a slump in the previous session, after stockpiles rose for the sixth week to another record, sapping the strength of a two-month rally in prices.

U.S. crude futures CLc1 were down 10 cents at $39.69 a barrel at 0302 GMT, trading further below the important $40 level. It closed down $1.66, or 4 percent, at $39.79 a barrel on Wednesday. That marked the sharpest one-day drop for the front-month contract in U.S. crude since Feb. 11. Brent crude futures LCOc1 were up 7 cents at $40.54 a barrel, after trading lower earlier in the session. They finished the last session down $1.32, or 3.2 percent, at $40.47 a barrel. Earlier this week, both benchmarks had risen by more than 50 percent from multi-year lows that hit in January.

The U.S. government's Energy Information Administration (EIA) said crude stockpiles climbed by 9.4 million barrels last week - three times the 3.1 million barrels build forecast by analysts in a Reuters poll. <EIA/S> The continued rise in stockpiles is grinding away at the gains in prices that were largely driven by plans of major producers, including Saudi Arabia and Russia, to freeze production. "OPEC production is still high and Iran is expected to continue to ramp up," said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. "I expect crude to come back down again and test the $35 level again if we continue to get builds," he said.

The market was also supported by a release showing crude stockpiles at the Cushing, Oklahoma, delivery hub - an important data point - fell for the first time in seven weeks. USOICC=ECI Things could get worse for oil bulls, with trading houses betting on oil markets being over supplied for at least two more years and looking to extend or lock in new leases on storage tanks.

U.S. oil falls after big jump in stockpiles