Oil Prices ///
Oil gained in Asian trading Monday following supply disruptions and political instability in key producers Libya and Iraq.
Oil rose to the highest in more than a week as the preliminary trade truce between the U.S. and China fanned optimism about economic growth.
Under the terms of the agreement, U.S. energy exports to China will jump over the next two years, with the promise of an additional $18.5 billion worth of additional purchases in 2020 and $33.9 billion in 2021.
OPEC’s latest forecasts suggested a weaker outlook for global oil markets this year as surging supplies from competitors from Norway to Guyana threaten the group’s efforts to defend crude prices.
Oil traded near a six-week low as industry data showing an increase in U.S. crude stockpiles re-affirmed expectations that global markets will be oversupplied in the first part of the year.
Saudi Arabia’s energy minister said that OPEC and its allies remain focused on using production cuts to reduce oil inventories to normal levels, undeterred by the flare up of political tensions in the Middle East.
Oil headed for its biggest weekly loss since July as the prospect of an immediate confrontation between the U.S. and Iran abated, allaying fears of disruption to Middle East energy supplies.
Oil steadied after rapidly shedding all of its gains from the clash between the U.S. and Iran, as traders waited to see whether any further hostilities will disrupt exports from the Middle East.
President Donald Trump said during an address from the White House Wednesday that the U.S. no longer needs oil from the Middle East, but American refineries still use the kind of oil that region produces.
Oil’s rally faded as the U.S said Iranian airstrikes on military bases in Iraq didn’t cause any casualties, reinforcing speculation that Tehran is opting for limited retaliation over the killing of a top general.
Reports of the attacks reignited fears that Iran’s promised retaliation against the U.S. killing of a top general last week will spark a wider conflict in the Middle East that could disrupt global oil supplies.
The hedging may extend a lifeline to producers, allowing them to maintain higher output at a time when analysts are expecting growth to slow.
Oil fell from a three-month high in London as traders waited to see whether the clash between the U.S. and Iran would lead to a disruption in Middle East crude supplies.
Futures jumped by another 1.4% on Monday as the U.S. State Department warned of a “heightened risk” of missile attacks near military bases and energy facilities in Saudi Arabia.
If the rally in oil prices persists, or if Middle Eastern supplies are cut off, deeply indebted producers could lock in hedges above $60 a barrel.
“We should all be bracing for a ferocious response,” said Helima Croft, chief commodities strategist at RBC Capital Markets. “The stage is set for a retaliatory spiral that could keep markets on edge well into 2020.”
Mexico’s government hedged oil exports for this year at an average $49 a barrel, locking in protection against low crude prices, the nation’s Finance Ministry said.
Brent futures surged by more than 4% in busy trading on Friday to levels not seen since the attacks on Saudi Arabia’s oil facilities in September.
S&P 500 Index futures contracts expiring in March retreated as much as 0.7% after the attack that killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards’ Quds force.
OPEC’s output declined last month as several Persian Gulf producers stepped up their implementation of cutbacks aimed at balancing global oil markets.