Oil steady near $70/bbl on hopes of recovering demand

By Laura Sanicola

NEW YORK (Reuters) – Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 22 cents, or 0.3%, to $69.41 a barrel by 1:25 p.m. EST (1825 GMT) while U.S. West Texas Intermediate crude was at $65.85 a barrel, fell 17 cents, or 0.3%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

“Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

U.S. drillers are also holding back, cutting the number of oil and natural gas rigs operating for the first time since November, according to data from energy services firm Baker Hughes Co.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million barrels per day this year compared with 11.32 million bpd in 2020.

Earlier this week, the government revised down 2021’s decline expected in U.S. crude production. Output is seen falling 160,000 bpd to 11.15 million bpd, a smaller decrease than its previous monthly forecast for a 290,000-bpd drop.

(Additional reporting by Shadia Nasalla, Florence Tan; Editing by Marguerita Choy and David Gregorio)

Iran says U.S. move to seize oil shipment is ‘act of piracy’

DUBAI (Reuters) – Iran said on Monday that a U.S. move this month to seize a cargo of oil on the grounds that it came from Tehran was an act of piracy, adding that the shipment did not belong to the Iranian government.

Washington filed a lawsuit earlier this month to seize the cargo, alleging that Iran sought to mask the origin of the oil by transferring it to several vessels before it ended up aboard the Liberian-flagged Achilleas tanker destined for China.

Washington said the cargo contravened U.S. terrorism regulations.

“This shipment does not belong to the Iranian government. It belongs to the private sector,” Foreign Ministry spokesman Saeed Khatibzadeh told a weekly news conference.

He did not elaborate on what he meant by the private sector.

The Achilleas last reported its position on Sunday as anchored within the Galveston Offshore Lightering Area, which is outside the U.S. Gulf port of Galveston, Refinitiv ship tracking data showed on Monday.

A U.S. official said last week that Washington had sold more than a million barrels of Iranian fuel seized under its sanctions program last year.

Tensions have mounted between Washington and Tehran since 2018, when former U.S. President Donald Trump abandoned Iran’s 2015 nuclear deal with six major powers and reimposed sanctions on the country.

U.S. President Joe Biden has pledged to revive the nuclear deal if Tehran returns to full compliance with the accord.

“It is very unfortunate that such an act of piracy is happening under the new U.S. administration … a solution should be found to stop such acts of piracy by anyone for any reason,” the spokesman Khatibzadeh added.

(Additional reporting by Jonathan Saul in London; Writing by Parisa Hafezi; Editing by Susan Fenton)

Oil jumps 2%, hits highest in year as producers limit supply

By Jessica Resnick-Ault

NEW YORK (Reuters) – Oil prices rose more than 2% on Tuesday, reaching their highest in 12 months after major producers showed they were reining in output roughly in line with their commitments.

The U.S. and global benchmarks rallied as optimism about more U.S. economic stimulus added to market bullishness from supply cuts.

Brent crude was up $1.22, or 2.2%, at $57.57 a barrel by 12:03 EST (1703 GMT) for its third straight day of gains, touching $58.05, the highest levels since January last year.

U.S. oil gained $1.26, or 2.3%, to $54.81, after touching a session high of $55.26, the highest in a year.

The rally began as OPEC production increases were less than expected.

OPEC crude production rose for a seventh month in January but the increase was smaller than expected, a Reuters survey found.

Voluntary cuts of 1 million bpd by OPEC’s de facto leader, Saudi Arabia, are set to be implemented from the beginning of February through March.

Russian output increased in January but is in line with the supply pact, while in Kazakhstan oil volumes fell for the month.

The rally picked up steam as the U.S. Congress looked ready to adopt an economic stimulus package, and as cold U.S. weather boosted heating oil demand.

“You got the U.S. economic stimulus package that no one thought we would get,” said Bob Yawger, director of energy futures at Mizuho in New York.

A cold snap and heavy snow in the U.S. northeast drove the margin for heating oil to an 8-month high of $15.88, lending further support to crude.

However, energy giant BP flagged a difficult start to 2021 amid declining product demand, noting that January retail volumes were down about 20% year on year, compared with a decline of 11% in the fourth quarter.

Oil demand is nevertheless expected to recover in 2021, BP said, with global inventories seen returning to their five-year average by the middle of the year.

(Additional reporting by Noah Browning and Aaron Sheldrick; Editing by David Evans, David Goodman and David Gregorio)

Oil slips on coronavirus fears, strong dollar

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices fell slightly on Monday as a stronger dollar, fears over soaring COVID-19 cases around the world and the slow pace of vaccination against the coronavirus outweighed a better-than-expected quarterly rebound for China’s economy.

Brent crude was down 23 cents, or 0.4%, at $54.87 per barrel at 1720 GMT, and West Texas Intermediate U.S. crude fell 19 cents, or 0.4%, to $52.17.

“Corona-induced economic fears, a stronger U.S. dollar and more pessimistic investor sentiment are all playing their part in the fact that Brent is trading … around $3 lower than last Wednesday,” said Commerzbank analyst Eugen Weinberg.

The benchmarks had rallied in the past few weeks, buoyed by COVID-19 vaccine rollouts and a surprise cut in output by Saudi Arabia. But the slow pace of vaccination has raised doubts over how soon economies could recover.

A UK official said Britain’s vaccine rollout was limited by a “lumpy” manufacturing process, and Pfizer Inc said it was distributing fewer doses of its vaccine in Europe in January than originally contracted.

“Vaccination campaigns, although ongoing, are lagging the speed needed to fast-track a global recovery in the first quarter and the comeback for oil demand will be slow,” said Rystad Energy’s head of oil markets Bjornar Tonhaugen.

The U.S. dollar strengthened for a third consecutive day on Monday to a four-week high, weighing on crude prices. Oil is usually priced in dollars, so a stronger dollar makes crude more expensive for buyers with other currencies.

Security concerns ahead of this week’s U.S. presidential inauguration are also dragging on investor sentiment, said PVM Oil analyst Tamas Varga.

“In addition to the coronavirus running amok, this week’s tense presidential inauguration can also cause unease amongst investors,” he said.

Oil prices clawed back some losses after Chinese data showed the economy of the world’s biggest oil importer picked up speed in its recovery from the pandemic.

Prices also found support in a drop in Libyan oil output, with Waha Oil Company reducing production by up to 200,000 barrels per day because of maintenance on the main pipeline that links the Al-Samah and Al-Dhahra oilfields to Es Sider port.

(Reporting by Bozorgmehr Sharafedin in London; Additional reporting by Aaron Sheldrick in Tokyo and Rod Nickel in Winnipeg, Manitoba; Editing by Jason Neely, Mark Potter and Jane Merriman)

Oil steady as U.S. inventory drop contends with demand woes

By Laila Kearney

NEW YORK (Reuters) – Oil prices were little changed on Wednesday, supported by a bigger-than-expected drop in U.S. crude inventories but under pressure as rising global COVID-19 cases threatened global fuel demand.

Brent crude prices were down 7 cents at $56.51 a barrel by 10:55 a.m. EST (1555 GMT). An earlier rise took prices as high as $57.42 a barrel, the strongest since Feb. 24.

U.S. West Texas Intermediate (WTI) was down 11 cents, or 0.3%, at $53.32. The session high of $53.93 was its highest since Feb. 20.

U.S. crude inventories fell by 3.2 million barrels in the week to Jan. 8 to 482.2 million barrels, exceeding analysts’ expectations in a Reuters poll for a 2.3 million-barrel drop, as refiners increased crude runs, the Energy Information Administration said.

“The strong tick higher in refining activity has resulted in the fifth consecutive draw to oil inventories, pushing them to their lowest since last March,” said Matt Smith, director of commodity research at ClipperData.

Refinery crude oil runs were up by 274,000 barrels per day in the last week, EIA said.

Adding to optimism over a tightening market, Saudi Arabia cut supplies of crude for February loading for at least three Asian buyers while meeting requirements of at least four others, several refinery and trade sources told Reuters.

But rising COVID-19 cases that continue to spur restrictions on travel and other activities by governments across the world limited oil prices and the pandemic is expected to cast a shadow on the market for months to come, analysts said.

“While I see crude prices trading higher over the coming months, investors need to be mindful that the road to higher oil demand and prices will remain bumpy,” UBS oil analyst Giovanni Staunovo said.

Governments across Europe announced tighter and longer coronavirus lockdowns on Wednesday over fears about a fast-spreading variant first detected in Britain, with vaccinations not expected to help much for another two to three months.

China recorded the biggest daily jump in COVID cases in more than five months, despite four cities in lockdown, increased testing and other measures aimed at preventing another wave of infections in the world’s second biggest economy.

(Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in TOKYO; Editing by Kirsten Donovan, Philippa Fletcher and David Gregorio)

Oil hits 11-month high near $57 on tight supply expectations

By Laura Sanicola

NEW YORK (Reuters) – Oil hit an 11-month high just below $57 a barrel on Tuesday, bolstered by Saudi Arabia’s plans to limit supply, offsetting worries that rising coronavirus cases globally would curtail fuel demand.

Brent crude was up 90 cents, or 1.6%, at $56.56 a barrel by 1118 EST (1618 GMT) after touching its highest since last February at $56.75. U.S. West Texas Intermediate (WTI) gained 82 cents, or 1.6%, to $53.07.

Saudi Arabia plans to cut output by an extra 1 million barrels per day (bpd) in February and March to keep inventories in check.

The Saudi cut is part of an OPEC-led deal in which most producers will hold output steady in February. Last year’s record cuts from OPEC and its allies helped oil recover from historic lows reached in April. Some analysts believe the oil complex is underestimating supply levels.

“Storage at Cushing is only 10.2 million barrels below the all-time record high, so there is no problem with supply here in the U.S., but the complex is responding positively to this chatter about undersupply,” said Bob Yawger, director of energy futures at Mizuho.

Oil also gained on expectations for a drop in U.S. crude stockpiles. Analysts expect crude inventories to fall by 2.7 million barrels for a fifth straight week of declines.

The first of this week’s two supply reports, from the American Petroleum Institute, is due at 4:30 p.m. EST (2130 GMT).

The market is also being supported by the prospect of increased economic stimulus in the United States. President-elect Joe Biden, who takes office on Jan. 20, has promised “trillions” in extra pandemic-relief spending.

However, oil price gains were capped by demand concerns as coronavirus cases rise around the world.

Chinese authorities introduced new curbs in areas surrounding Beijing on Tuesday and Japan is to widen a state of emergency beyond Tokyo.

(Additional reporting by Alex Lawler and Jessica Jaganathan; Editing by Kirsten Donovan, David Goodman and David Gregorio)

Trump replaces Republican head of energy regulatory panel who supports carbon markets

WASHINGTON (Reuters) – President Donald Trump demoted Neil Chatterjee, the Republican head of an energy regulation panel, after he promoted the use of carbon markets by U.S. states to curb climate change.

Trump replaced Chatterjee, who had been chairman of the Federal Energy Regulatory Commission, or FERC, with fellow Republican James Danly, who had been a commissioner, Chatterjee said on Twitter late Thursday.

If Joe Biden becomes president it is likely he would quickly name a Democratic FERC chair.

Last month Chatterjee had promoted putting a price on carbon emissions, an idea backed by many former Republican politicians and leading companies as a way to lower emissions of pollutants scientists say are warming the planet.

The White House did not immediately respond to a request for comment.

Carbon pricing has struggled to gain support in the U.S. Congress and in the administration of Trump, who doubts climate science and wants to cut costs on coal, oil and natural gas.

In a proposed policy statement on Oct. 15 Chatterjee said that carbon pricing by U.S. states is an “important market-based tool that has wide support from across sectors.” He also held a conference exploring how a carbon tax would world in power markets.

Josh Price, an analyst at Height Capital Markets, said in a note to clients that the proposed blessing for state-led carbon pricing schemes was a “direct threat to coal.”

Chatterjee’s term was due to end on June 30, and he said he would serve out the rest of that as a commissioner. He once worked on pro-fossil-fuel policies as an aide to Senate Majority Leader Mitch McConnell of coal-producing Kentucky.

FERC, an independent panel of the Energy Department, regulates the transmission of electricity and natural gas across states and reviews large energy projects.

Chatterjee told the Washington Examiner that his demotion was “perhaps” because he has supported carbon markets and that if the demotion was retribution, he was proud of his independence.

Danly said in a statement that Chatterjee had left his mark on FERC by brokering an agreement on terminals for natural gas exports and taking other actions to help “secure our American energy independence.”

(Reporting by Timothy Gardner in Washington; Editing by Matthew Lewis and Cynthia Osterman)

IEA says oil demand recovery set to slow for rest of 2020

By Noah Browning

LONDON (Reuters) – The International Energy Agency (IEA) trimmed its 2020 oil demand forecast on Tuesday, citing caution about the pace of economic recovery from the pandemic.

The Paris-based IEA cut its 2020 outlook by 200,000 barrels per day (bpd) to 91.7 million bpd in its second downgrade in as many months.

“We expect the recovery in oil demand to decelerate markedly in the second half of 2020, with most of the easy gains already achieved,” the IEA said in its monthly report.

“The economic slowdown will take months to reverse completely … in addition, there is the potential that a second wave of the virus (already visible in Europe) could cut mobility once again.”

Renewed rises in COVID-19 cases in many countries and related lockdown measures, continued remote working and a still weak aviation sector are all hurting demand, the IEA said.

China – which emerged from lockdown sooner than other major economies and provided a strong prop to global demand – continues a strong recovery, while a virus upsurge in India contributed to the biggest demand drop since April, the IEA said.

Increasing global oil output and the downgraded demand outlook also mean a slower draw on crude oil stocks which piled up at the height of lockdown measures, it added.

The agency now predicts implied stock draws in the second half of the year of about 3.4 million barrels per day, nearly one million bpd less than it predicted last month, with July storage levels in developed countries again reaching record highs.

However, preliminary data for August showed industry crude oil stocks fell in the United States, Europe and Japan.

As output cuts eased among producers from the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, global oil supply rose by 1.1. million bpd in August.

After two months of increases, recovery among countries outside the OPEC+ pact stalled, with production in the United States falling 400,000 bpd as Hurricane Laura forced shut-ins.

(Reporting by Noah Browning; editing by Jason Neely)

Oil markets flat as restarts begin at storm-hit energy operations

By Erwin Seba

HOUSTON (Reuters) – Energy companies on Friday continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut by Hurricane Laura as oil markets largely shrugged off the storm’s impact.

Some 300 offshore production facilities and half-dozen refineries halted ahead of a Category 4 storm that hit the coast of Louisiana early Thursday with winds of 150 mile per hour (240 kph). The destructive winds cut a narrow path through the area, sparing facilities not directly in its path.

However, Citgo Petroleum’s 418,000-barrel per day Lake Charles, Louisiana, plant was on the storm’s path, and repairs could take four to six weeks, according to Mizuho Securities. The company did not reply to requests for comment.

Motiva Enterprises, operator of the largest U.S. refinery, and Valero Energy Corp on Friday began restarting their Port Arthur, Texas, refineries.

U.S. crude futures traded at $43.08 per barrel at midday, up four cents, up slightly from $42.34 a week ago. U.S. gasoline futures were up 2 cents, less than 2% higher than they were a week ago.

About 84%, or 1.56 million barrels per day, of U.S. Gulf of Mexico crude output and 60% of natural gas offshore production were shut on Thursday, the U.S. Department of Interior reported.

Exxon Mobil Corp said its 369,024 bpd Beaumont, Texas, refinery, about 50 miles (80 km) west of the storm’s landfall, required “minor repairs,” a spokesman said. The company was taking steps to restart once power and port operations were restored.

Cheniere Energy Inc’s and Cameron LNG’s Cameron liquefied natural gas plants in Louisiana took almost no pipeline gas early on Friday, according to preliminary data from Refinitiv.

“Refiners may be reluctant to quickly return to production when the product they make is a money losing proposition,” Robert Yawger, director of energy futures at Mizuho Securities, wrote on Friday.

The ports of Beaumont, Orange and Sabine, Texas, and Cameron and Lake Charles, Louisiana, remained closed on Friday, according to the U.S. Coast Guard.

Houston, the United States’ largest energy export port, restarted operations on Thursday and had nearly halved the list of 53 vessels waiting on Thursday to reenter the port.

One-way movement and other restrictions were in place on Friday at points along the Houston Ship Channel, according to the U.S. Coast Guard.

(Reporting by Erwin Seba; writing by Gary McWilliams; Editing by Marguerita Choy and David Gregorio)

Iraq is open for U.S. business, prime minister says; Trump eyes oil prospects

WASHINGTON (Reuters) – President Donald Trump on Thursday said U.S. companies were involved in many prospects in Iraq’s oil business, as Iraqi Prime Minister Mustafa al-Kadhimi declared his country open for American business and investment.

Trump told reporters before a meeting with the Iraqi leader that the U.S. military had very few troops in Iraq and looked forward to the day when it did not have to be there, but would help the country if neighboring Iran should do anything.

Al-Kadhimi took office in April, becoming the third Iraq head of state in a chaotic 10-week period that followed months of deadly protests in the country, which has been exhausted by decades of sanctions, war, corruption and economic challenges.

The meeting comes amid a new spike in tensions between the United States and Iran after Washington said it would move to reinstate all U.S. sanctions on Iran at the United Nations.

Washington is pushing to extend a U.N.-imposed arms embargo against Iran that is due to expire in October under Tehran’s 2015 nuclear deal with world powers. Trump withdrew the United States from the deal in 2018 and reimposed crippling sanctions on Iran.

Five U.S. firms, including Chevron Corp, signed agreements on Wednesday with the Iraqi government aimed at boosting Iraq’s energy independence from Iran.

The U.S. Department of Energy said in a statement that Honeywell International Inc, Baker Hughes Co, General Electric Co, Stellar Energy and Chevron signed commercial agreements worth as much as $8 billion with the Iraqi ministers of oil and electricity.

The agreements were signed following a meeting of the Iraqi ministers with U.S. Energy Secretary Dan Brouillette, as well as a roundtable in Washington on Wednesday with the Iraqi prime minister and the U.S. energy industry.

(Reporting by Jeff Mason; writing by Andrea Shalal; editing by Diane Craft and Dan Grebler)