Oil prices fall for second day on oversupply concerns

US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the US Energy Information Administration said in a monthly report on Monday. (AP)
Updated 17 July 2018

Oil prices fall for second day on oversupply concerns

  • Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated
  • US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August

TOKYO: Oil prices fell for a second day on Tuesday as worries about possible disruptions to supply eased and as investors focused on potential damage to global growth from the festering Sino-US trade spat.
Brent crude futures fell 32 cents, or 0.5 percent, to $71.52 a barrel by 0638 GMT to the lowest since April 17. They fell 4.6 percent on Monday.
US West Texas Intermediate futures were down 31 cents, or 0.5 percent, at $67.75 a barrel. They declined 4.2 percent on Monday.
“It is growth fears all around and more about concerns that ... trade worries will come back and bite,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“(Oil trading) volumes are abysmal and there is very little commitment at current levels.”
China is still confident of hitting its economic growth target of around 6.5 percent this year despite views that it faces a bumpy second-half as a trade row with the United States intensifies, the state planning agency said on Tuesday.
The remarks came a day after China reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated, keeping Brent crude in a $70 to $80 per barrel range in the short-term.
“Supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus” in the third quarter, the report said.
Meanwhile, an oil worker strike in Norway intensified on Monday when hundreds more walked out in a dispute over pay and pensions after employers failed to respond to union demands for a new offer.
The strike, which began last Tuesday, has had a limited impact on Norway’s oil production so far, but some drillers warned of possible contract cancelations if the dispute goes on for a month or more.
While Libyan ports are reopening, output at the country’s Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said on Saturday.
US oil output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the US Energy Information Administration said in a monthly report on Monday.
Production is expected to climb in all seven formations, with the largest gain of 73,000 bpd seen in the Permian Basin of Texas and New Mexico. All shale regions except for Appalachia are at a high, according to the data.


Oil prices surge after attacks hit Saudi output

Updated 16 September 2019

Oil prices surge after attacks hit Saudi output

  • The Houthi attacks hit two Aramco sites and effectively shut down six percent of the global oil supply
  • President Donald Trump said Sunday the US was ‘locked and loaded’ to respond to the attacks

HONG KONG: Oil prices saw a record surge Monday after attacks on two Saudi facilities slashed output in the world’s top producer by half, fueling fresh geopolitical fears as Donald Trump blamed Iran and raised the possibility of a military strike on the country.
Brent futures surged $12 in the first few minutes of business — the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20 percent — while WTI jumped more than $8, or 15 percent.
Both contracts pared the gains but were both still more than 10 percent up.
The attack by Tehran-backed Houthi militia in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said Sunday the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorized the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking ... and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.