Oil prices mixed as producers release more supply in the market

US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels. (Reuters)
Updated 19 July 2018
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Oil prices mixed as producers release more supply in the market

  • The US Energy Information Administration also reported US oil production reached a record 11 million barrels per day
  • US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels

TOKYO: Oil prices were mixed on Thursday as the market struggled to digest signs of strong gasoline demand in the US, the world’s biggest consumer of the fuel, with a statement from oil producers that they are putting more crude on the market.
Brent crude futures fell 11 cents, or 0.2 percent, to $72.79 a barrel at 0401 GMT. West Texas Intermediate (WTI) crude futures climbed 6 cents, or 0.1 percent, to $68.82.
Both benchmarks rose by 1 percent on Wednesday after inventory data from the US Energy Information Administration reported on Wednesday US gasoline stockpiles fell along with supplies of distillate fuels. Motor fuel demand also rose from the week before and was up from a year earlier.
However, the EIA also reported US oil production reached a record 11 million barrels per day (bpd). The US has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.
Also, a meeting of members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer monitoring their supply pact reported on Wednesday that compliance with the agreement has declined, meaning more oil is available to the market.
The bullish tone sparked by the gasoline data is unlikely to last, said Stephen Innes, head of trading APAC at brokerage OANDA.
“President Trump is doing everything in his power to lower gasoline prices,” he said.
“With Russia quick to offer the President a supply olive branch and Saudi Arabia mainly in his back pocket when it comes to increasing their supply, its challenging to see (the) gasoline numbers turning the bearish market’s tide,” he said.
Gasoline inventories fell by 3.2 million barrels last week, while distillate stockpiles, which include diesel and heating oil, dropped by 371,000 barrels, the EIA said on Wednesday.
A Reuters poll taken before the data release had forecast that gasoline stocks would be unchanged and distillate stockpiles would show a build of around 900,000 barrels.
A sharp jump in crude oil inventories in the US also added to the bearish tone in the market.
US crude stocks rose by 5.8 million barrels last week, compared with a forecast of a decline of 3.6 million barrels.
Oil markets have fallen over the last week as Saudi Arabia and other members OPEC member and Russia have increased production and as some supply disruptions have eased.
OPEC and non-OPEC’s compliance with oil output curbs has declined to around 120 percent in June from 147 percent in May, two sources familiar with the matter told Reuters on Wednesday.


Moody’s upgrades Egypt’s rating to B2, expects more economic growth

Updated 18 April 2019
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Moody’s upgrades Egypt’s rating to B2, expects more economic growth

  • Moody’s believes Egypt’s large domestic funding base would support its resilience to refinancing shocks
  • The ratings agency expects energy price hikes as part of Egypt’s fuel subsidy reform

CAIRO: Rating agency Moody’s has upgraded Egypt’s sovereign rating, saying ongoing economic reforms will help improve its fiscal position and boost economic growth.
Moody’s upgraded the long-term foreign and local currency issuer ratings of Egypt to B2 from B3. The outlook was changed to stable from positive.
The decision was based on “Moody’s expectation that ongoing fiscal and economic reforms will support a gradual but steady improvement in Egypt’s fiscal metrics and raise real GDP growth,” the agency said in a statement late on Wednesday.
Moody’s also said it believed Egypt’s large domestic funding base would support its resilience to refinancing shocks despite the government’s very high borrowing needs and interest costs.
Moody’s said it expected a steady improvement of Egypt’s fiscal position, “albeit from very weak levels.”
Maintained primary budget surpluses combined with strong nominal GDP growth would help reduce the general government debt/GDP ratio to below 80 percent by the 2021 fiscal year from 92.6 percent in the 2018 fiscal year, it said.
Egypt’s fiscal year runs from July to June.
Moody’s also said it expected energy price hikes as part of Egypt’s fuel subsidy reform, which it believed would be completed in the 2019 fiscal year. This, along with the fiscal reforms implemented in the last few years, would allow the government to maintain the primary budget balance in surplus in the next few years, Moody’s said.
The upgraded rating was expected, but still good news for Egypt, said Allen Sandeep, head of research at Naeem Brokerage.
“It should help its case for new international bond issuances as we move forward,” he said.
Egypt is pushing ahead with tough economic reforms as part of a three-year $12 billion IMF loan deal signed in 2016.
The reforms, aimed at attracting investors who fled during the 2011 uprising, have included new taxes, deep cuts to energy subsidies and a currency devaluation. The reforms have helped the economy recover, but have also put the budgets of tens of millions of Egyptians under strain.