Saudis take 'big hit' as OPEC seals first joint oil cut with Russia since 2001

VIENNA -- OPEC agreed on Wednesday its first oil output cuts since 2008 after Saudi Arabia accepted "a big hit" on its production and dropped its demand on arch-rival Iran to slash output.

Non-OPEC Russia will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up oil prices.

Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with Iran and after fast-growing producer Iraq also agreed to curtail its booming output.

"OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut," said OPEC watcher Amrita Sen from consultancy Energy Aspects.

Iran and Russia are effectively fighting two proxy wars against Saudi Arabia, in Yemen and Syria, and many sceptics had said the countries would struggle to find a compromise amid frosty political relations.

Saudi Energy Minister Khalid al-Falih said ahead of the meeting that the kingdom was prepared to accept "a big hit" on production to get a deal done.

"I think it is a good day for the oil markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

OPEC produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.

Saudi Arabia will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf OPEC allies -- the United Arab Emirates, Kuwait and Qatar -- would cut by a total 0.3 million bpd.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production -- by 0.2 million bpd.

Iran was allowed to boost production slightly from its October level -- a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.

Clashes between Saudi Arabia and Iran dominated many previous OPEC meetings.

"If you get this deal done, it would be huge. You remove a lot of oil from the market and you get the Russian participation," said veteran OPEC watcher and founder of Pira consultancy Gary Ross.

He said oil could rise to $55 per barrel.

Will OPEC comply?

Falih had long insisted OPEC would do an output-limiting deal only if non-OPEC producers contributed.

OPEC president Qatar said non-OPEC producers had agreed to reduce output by a further 0.6 million bpd, of which Russia would contribute some 0.3 million.

Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.

"Russia will gradually cut output in the first half of 2017 by up to 300,000 barrels per day, on a tight schedule as technical capabilities allow,” Russian Energy Minister Alexander Novak told a briefing in Moscow.

Novak, who spoke an hour after OPEC announced its deal, did not say from which output levels Russia would cut.

A combined output reduction of 1.8 million bpd by OPEC and non-OPEC represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.

Non-OPEC Azerbaijan and Kazakhstan have said they might also cut.

OPEC suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.

The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, OPEC is like (the late US) President (Ronald) Reagan used to say: 'Trust but verify'."

OPEC will hold talks with non-OPEC producers on December 9. The organization will also have its next meeting on May 25 to monitor the deal and could extend it for six months, Qatar said.

source: interaksyon.com

Oil prices little changed as U.S. oil stocks data disappoints

SINGAPORE - Oil prices were little changed in early Asian trade on Thursday as an unexpected build in U.S. gasoline inventories offset a higher than forecast draw in U.S. crude inventories, while Brent was supported by buoyant manufacturing figures from Europe.

Brent crude for August delivery rose 10 cents to $63.59 a barrel by 0130 GMT (0930 EDT), after settling down 96 cents, or 1.5 percent, in the previous session.

U.S. crude for August delivery shed 9 cents to $60.18 a barrel, after ending the previous session down 74 cents, or 1.2 percent.

"The market is disappointed with last night's numbers," said Mike McCarthy, chief market strategist at Sydney's CMC Markets.

"The spread (between Brent and U.S. crude) had narrowed so it's not surprising it's diverging," McCarthy said.

The spread between Brent and West Texas Intermediate had narrowed towards $3 in trading on Wednesday but was widening in early trade on Thursday.

He said Brent was being supported by strong data from the Euro zone earlier this week which showed private businesses expanded at their fastest pace in four years this month.

But U.S. crude was down due to the larger than expected build in gasoline inventories after the U.S. Department of Energy's Energy Information Administration released oil stocks data on Wednesday.

The build in gasoline stocks came despite U.S. gasoline demand in the week to June 19 being at highest level for the period since 1991.

U.S. gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19, compared with a Reuters poll which expected a 304,000-barrel drop, EIA data showed.

That was despite a larger than expected fall in U.S. crude inventories, which fell for the eighth straight week, by 4.9 million barrels to 462.99 million, in the week ending June 19, compared with analyst expectations of a 2.1 million barrel draw, the EIA said.

source: interaksyon.com

U.S. shares drop on Greece uncertainty, rate hike anticipation

NEW YORK - A setback in Greek debt talks pushed U.S. and European shares lower on Friday, along with investor views that positive U.S. data may accelerate the timing for a hike in interest rates.

Oil prices fell on concerns production may rise further.

The International Monetary Fund delegation left Greek debt negotiations on Friday because of "major differences" with Athens on the same day that EU officials held their first formal talks on the possibility of Greece defaulting.

"It's largely the Greek situation again, and that's been played out on a day-to-day basis where you had a huge rally followed by a decline predicated on whether they are coming closer or moving further from a resolution," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

However, the darkening Greek outlook failed to fluster Prime Minister Alexis Tsipras, who holed up with his negotiators after proclaiming optimism at an open air concert.

The euro inched higher against the dollar after Tsipras'comments even though equity and bond investors were skeptical.

"You have to question whether (the Greeks are) looking at reality," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

U.S. Treasuries prices ended little changed, with longer-dated yields holding below seven-month highs as concerns about a Greek default supported safety demand for bonds ahead of a Federal Reserve policy meeting next week.

A U.S. consumer sentiment survey and production data, after strong retail sales data on Thursday, gave a rosy view of the U.S. economy ahead of the Federal Reserve's June 17 policy statement, which may provide clues on timing for the first U.S. rate hike in nearly a decade.

"Both of these led the market, coupled with yesterday's report, to think that the first hike from the Fed could be closer," said OakBrook's Sampson, adding that lift-off could be in the fall, ahead of her previous expectation.

The Dow Jones industrial average fell 140.53 points, or 0.78 percent, to 17,898.84, the S&P 500 lost 14.75 points, or 0.7 percent, to 2,094.11 and the Nasdaq Composite dropped 31.41 points, or 0.62 percent, to 5,051.10.

The S&P and the Dow showed slight gains for the week while the Nasdaq fell slightly.

Oil fell for a second straight day as investors took profits after Saudi Arabia said it was ready to raise production to record highs, adding to worries over global oversupply.

Brent crude settled down $1.24, or 2 percent, at $63.87. For the week, Brent ended up 0.7 percent. U.S. crude fell 81 cents, or 1.3 percent, to $59.96. It rose 1.5 percent on the week.

In the late afternoon, the dollar index was unchanged after a day of choppy trading against a basket of major currencies while the euro was essentially flat after rising earlier in the day.

MSCI's all-world country index fell 0.4 percent but was on track for its first weekly gain in four, while the pan-European FTSEurofirst 300 index fell 0.8 percent.

source: interaksyon.com

Brent drops toward $59 as dollar firms on U.S. jobs data

SINGAPORE - Brent crude fell toward $59 a barrel on Monday as a promising U.S. jobs report pushed the dollar up, offsetting geopolitical tensions and the threat of output cuts in Libya and Iraq.

The dollar hit a more than 11-year high against a basket of currencies after data showed the U.S. unemployment rate fell to the lowest since May 2008 in February, making commodities priced in the greenback costlier for holders of other currencies

Brent eased 43 cents to $59.30 by 0445 GMT, after dropping 75 cents in the previous session. It fell 4.6 percent last week in its biggest decline since the week ended Jan. 9.

U.S. crude was down 27 cents at $49.34. It closed down $1.15 on Friday to complete a third week of declines.

Goldman Sachs  said in a note that oil prices would reverse recent gains on rising global inventories, with U.S. crude expected to drop to around $40 a barrel.

Oil prices rose by almost a third between January and February on the back of Middle East supply disruptions, strong winter demand and high refinery margins.

But the focus is now on the dollar, analysts said.

"The U.S. dollar is continuing to strengthen. In the short-term it's more about the dollar than anything else," said Ben LeBrun, market analyst at Sydney's OptionsXpress.

U.S. economic data to be released on Tuesday could lead to a further strengthening of the U.S. dollar which would be negative for commodities including oil, said LeBrun.

He said geopolitical issues in North Africa and the Middle East "are all playing second fiddle to the U.S. dollar".

Goldman said in its note that "absent further unexpected OPEC disruptions, we expect Brent oil prices and timespreads to reverse their recent strength".

Members of the Organisation of the Petroleum Exporting Countries (OPEC) should not cut output to "subsidize" higher-cost shale, OPEC Secretary-General Abdullah al-Badri has said.

In Libya, up to 10 foreign workers are missing in the latest attack on the country's oil fields by Islamist militants and there is a possibility they have been taken hostage, Czech and Libyan officials said on Saturday.

Brent should trade within a range of $55.36-$63.04 this week, said Singapore's Phillip Futures in a note on Monday.

U.S. crude should trade between $48.45-$55.02 although prices could move sharply upwards if the U.S. refinery strikes end this week, Phillip Futures said.

source: interaksyon.com

Oil up from early sell-off as Brent sets 2015 high

NEW YORK - Oil closed up after a weak start on Tuesday, with Brent crude rising to a 2015 high of $63 a barrel as short-covering returned to a market depressed earlier by worries about euro zone stability.

Threats to Middle East crude production and the falling U.S. oil rig count seemed to spur market bulls despite global inventory data suggesting an oversupply of up to 2 million barrels per day, analysts and traders said.

"We're in this mode where the market continues to discount bearish news," said Dominick Chirichella, senior partner at the Energy Management Institute in New York. "Certainly there is some positive news out there about Libya and rest of the Middle East, but I don't see anything that's overly bullish."

Options for the front-month March contract in U.S. crude oil also expired on Tuesday, possibly adding to the rebound, brokers said. A similar upward move was observed a month ago when options expired in the previous front-month contract for U.S. crude.

Brent oil's front-month contract for April delivery settled up $1.13 at $62.53 a barrel, rebounding from the day's low of $60.27. The session peak of $63 was the highest since Dec. 18.

U.S. crude futures for March CLc1 closed up 75 cents at $53.53, versus an intraday low at $50.81.

Oil prices slumped about 60 percent between June and January on fears of a supply glut. Since February began, they have rebounded more than 10 percent on short-covering spurred by speculation that the market had hit bottom and concerns about fighting in the Middle East.

Violence in Libya has shut all major ports and oil exports from the country have collapsed to just a trickle.

Iraq's semi-autonomous Kurdistan Regional Government has threatened to withhold oil exports if Baghdad failed to send its share of the budget.

The International Energy Agency's chief economist Fatih Birol said on Tuesday the rise of Islamic State presented a major challenge for the investment necessary to prevent an oil shortage in the next decade.

Market bears, meanwhile, point to a Reuters poll that shows U.S. commercial crude oil stockpiles likely rose again in the week ended Feb. 13 to record highs above 420 million barrels.

Oil was down earlier in the day after Greece rejected an international bailout plan. In east Ukraine, pro-Russian rebels and government forces fought street-to-street, further dampening hopes that a European-brokered peace deal will end the conflict.

source: interaksyon.com

Oil prices extend slide as growing glut triggers floating storage

SINGAPORE - Oil prices slid in early Asian trade on Wednesday after touching their lowest in nearly six years the previous session, with analysts predicting further falls as oversupply plagues the market.

Oil tumbled 5 percent to near six-year lows on Tuesday, with the Brent crude international benchmark briefly trading at par to U.S. prices for the first time in three months as some traders moved to take advantage of ample U.S. storage space.

February Brent crude had dropped 40 cents since its last settlement to $46.19 a barrel by 0238 GMT. U.S. crude for February was trading at $45.60 a barrel, down 29 cents.

Analysts said prices would stay under pressure as oversupply hurts both the American WTI contract and globally traded Brent, with some traders beginning to book ships for oil storage.

"Our latest forecast calls for Brent oil to average $45 per barrel during 1Q15 (the first quarter of 2015)," Nomura bank said on Wednesday.

Oil storage trends also imply further price falls, with U.S. stocks possibly approaching 80 percent of capacity by the upcoming spring season, according to U.S.-based PIRA Energy Group.

"The last time the United States built inventories in December was in the middle of the financial crisis in 2008," the firm said.

Outside the United States, some of the world's biggest oil traders have booked supertankers to store at least 25 million barrels at sea in recent days, seeking to take advantage of the crash in crude prices and make a profit down the line.

"Once floating storage starts, there is very little support on the downside for Brent spreads," Energy Aspects said.

U.S. crude prices have been cheaper than Brent almost without interruption as soaring North American shale oil production pulled down prices while the rest of the world market remained more tightly supplied.

But with oil producer club OPEC deciding late last year to maintain its output despite slowing Asian and European economic growth and to defend its market share, including against surging U.S. competition, a glut has also appeared outside the United States, pulling down Brent prices close to U.S. levels.

"The closing gap looks to be solidifying Saudi Arabia's strategy to curb shale production and protect market share," ANZ bank said.

source: interaksyon.com

Global stocks fall, oil dips as Japan slips into recession

LONDON - Shares fell and the oil price slid on Monday after data showed Japan had slipped into recession, raising concerns about global growth.

European shares opened lower. They followed Tokyo's Nikkei index which lost 3 percent, its biggest one-day drop since August on news that the world's third-largest economy unexpectedly shrank by an annualised 1.6 percent in the third quarter.

This followed a 7.3 percent contraction in the previous quarter caused by a rise in the national sales tax and ran counter to economists forecasts for a 2.1 percent rebound.

The data initially pushed the yen to a seven-year low against the dollar, but as Tokyo stocks fell the Japanese currency rebounded.

It also shaved $1 off the price of Brent crude oil and sent ripples across Europe, where the FTSEurofirst 300 pan-European share index was down 0.3 percent.

Data on Friday showed euro zone economic output expanded more than expected in the third quarter but remained weak.

Leaders from the G20 group of countries agreed on Sunday a package of measures they said would add an extra 2.1 percentage points to growth over five years. They also agreed steps to tackle climate change and crack down on tax avoidance.

But financial markets focused on Japan's economic downturn.

"It's a bit of shock for the market, because people believed that the Bank of Japan had everything under control. But overall, the initial negative reaction shouldn't last too long. Investors still expect central bank action worldwide to support the global economy," FXCM analyst Nicolas Cheron said.

Other Asian shares also fell. MSCI's main index of Asia-Pacific stocks outside Japan lost 0.5 percent.

Chinese equities dropped as profit taking outweighed buying by foreign investors as a landmark Hong Kong-Shanghai trading link debuted on Monday.

The Shanghai Composite ended down 0.2 percent and Hong Kong's Hang Seng lost 1 percent.

The yen was the big mover on foreign exchange markets. After the GDP data, it fell to as low as 117.06 to the dollar but later rebounded and was last at 116.12, up 0.3 percent on the day.

The dollar index dipped 0.1 percent as a result and the euro made a similar gain versus the greenback.

As the Japanese data stoked concerns about the global economy, undermining stronger-than-expected U.S. retail sales data on Friday, German 10-year Bund yields also fell, opening down 2 basis points at 0.77 percent, just above a record low of 0.716 percent.

Brent crude last traded at $78.32 a barrel, down 1.4 percent after the Japanese data was seen hitting global demand.

"This is another knock on crude oil prices, another bearish factor," said Tony Nunan, oil risk manager at Mitsubishi Corp.

Eyes remain on possible OPEC production cuts when the oil cartel meets next week.

Gold held near two-week highs on a softer dollar. Spot gold was last at $1,185.60.

source: interaksyon.com