Oil prices down as Greece default looms

SINGAPORE - Oil prices extended losses in Asia Tuesday on expectations Greece will miss a key debt repayment later in the day and edge closer to a eurozone exit, analysts said.

US benchmark West Texas Intermediate (WTI) for August delivery fell 23 cents to $58.10 while Brent crude for August eased 15 cents to $61.86 in late-morning trade.

WTI sank $1.30 and Brent lost down $1.25 Monday.

Crude tracked losses in global equity markets Monday after Greek Prime Minister Alexis Tsipras stunned the world at the weekend by breaking off bailout reform talks and calling for a referendum on austerity conditions demanded by its creditors.

The move means Athens is unlikely to agree a deal to unlock bailout funds to repay an IMF debt by the end of Tuesday, putting it in default and in danger of crashing out of the eurozone.

Top European leaders including Germany's Angela Merkel France's Francois Hollande and Italy's Matteo Renzi called on the Greek people to vote for the creditors' proposals, warning a "no" would mean exiting the eurozone.

"This display of volatility comes from the uncertainty with Greece," said Daniel Ang, investment analyst with Phillip Futures in Singapore.

Ang said with the US dollar holding firm due to investors viewing it as a safe haven, oil prices would remain pressured. A stronger greenback makes dollar-priced crude more expensive for buyers using weaker currencies.

Dealers were also waiting to see if Iran and major world powers can reach a deal on curbing Tehran's nuclear program by the end of Tuesday, a deadline set by both sides.

Such an agreement would allow Western powers to remove sanctions, paving the way for more Iranian crude to hit the already oversupplied international market.

US Secretary of State John Kerry warned Monday that "it was too early to make any judgements" on whether the deal will be agreed by the deadline.

source: www.abs-cbnnews.com

Brent crude oil hits 2015 high

LONDON - Oil rose more than 3 percent on Thursday, pushing Brent crude to a 2015 high above $63 per barrel on increasing evidence that U.S. production is peaking, balancing a market that has been in heavy oversupply for more than a year.

Oil prices collapsed in the six months to January, pushing Brent down more than 60 percent to almost $45 a barrel.

But the market has gradually recovered this year as much lower prices have discouraged oil exploration and production, especially in the United States.

"People are realising that the U.S. production juggernaut is slowing, at least for now," said Virendra Chauhan, oil analyst at London-based consultancy Energy Aspects.

"U.S. production is down for the second time in three weeks and refinery runs are spiking up, driving demand higher."

Brent crude futures for June on Thursday hit $63.29 a barrel, the highest since December, after the previous much weaker front-month futures contract, for May, expired on Wednesday.

By 0835 GMT, June Brent was at $62.52 a barrel, down 80 cents from the previous close for June, but up sharply from Wednesday's close for May at $60.32.

U.S. crude was at $56.00, down 39 cents after hitting a 2015 high of $56.69 on Wednesday.

U.S. crude has been logging its strongest upswing this year as ebbing fears of an inventory overflow and renewed hedging in far-distance futures flatten the forward curve.

"We turn extremely bullish on oil," Singapore-based energy brokerage Phillips Futures said in a note to clients.

"This whole rally was primarily due to drops in U.S. crude production. We see the four-week average for crude production turning negative for the first time since July '14," it added.

Reuters technical analyst Wang Tao told Reuters Global Oil Forum that Brent could rise towards $70 a barrel in the near term, but that a sharp downturn could happen after that.

U.S. oil prices jumped on Wednesday after U.S. inventories built up more slowly than expected, although still to a new record. Talks between major oil producers also triggered speculation of production cuts, even though most analysts said these were unlikely.

Despite the oil price rally, the market remains oversupplied, analysts say.

"The recent bounce comes despite a surge in OPEC crude oil production in March which is likely to have been sustained in April," ANZ bank said.

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OPEC has no choice but to keep output unchanged- Kuwait

KUWAIT - OPEC has no choice but to keep its market share and shun oil output cuts, Kuwait's oil minister said on Thursday, reiterating the view from the emirate that the group will hold its course when it meets next in June.

"Of course we are concerned because the price of oil will affect our budget ... within OPEC we don't have any other choice than keeping the ceiling of production as it is because we don't want to lose our share in the market," Ali al-Omair told reporters in Kuwait city.

Many OPEC oil ministers, including Saudi Arabia's Ali al-Naimi, have defended the group's November decision not to cut production but instead defend market share and curtail the output of more expensive producers such as the United States.

The accord pushed oil prices below $50 per barrel, extending a sharp decline that began in June amid a global glut of crude and weakening demand.

Since the oil price collapse, OPEC officials have said they wanted non-OPEC producers to cooperate with the group but those attempts have made little progress.

"If there is any type of arrangement with (countries) outside OPEC, we will be very happy," Omair said on Thursday, without elaborating.

Oil prices have recovered slightly since to over $60 a barrel, but have fell again over the past days. Brent crude for May delivery fell towards $55 a barrel on Thursday following a bigger than expected crude stock build in the United States that fueled concerns of an oversupply in the world's largest oil consumer.

Omair said he expected higher prices by the end of the year.

"There are indications that at end of 2015 the economic growth rates will improve and this would make the prices improve," he said.

OPEC has said it believes oversupply, as much as 1.5 million barrels per day, will evaporate as oil demand picks up and U.S. oil production growth slows.

However, should U.S. oil producers prove more resilient than OPEC expects, the glut could persist and grow if Western powers and Iran reach a nuclear deal allowing Tehran to increase its oil exports.

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Oil turns lower in Asia, US crude stays below $50

SINGAPORE - Oil turned lower in Asia Tuesday as a feeble rebound failed to take hold, with prices under pressure in an oversupplied market.

US benchmark West Texas Intermediate (WTI) for April delivery was down 29 cents to $49.16. Brent crude for April fell 17 cents to $58.73 in afternoon trade, reversing gains in the morning.

WTI shed $1.36 in New York and Brent lost $1.32 in London the day before as US crude stockpiles lingered at historic levels, contributing to a global oversupply.

A closely watched report on US weekly crude stockpiles is next due on Wednesday, with a Bloomberg News survey saying inventories are expected to rise by 3.75 million barrels.

US oil stockpiles are already at their highest level on record at this time of year.

Globally, crude supplies are also being boosted after oilfields in eastern Libya resumed pumping to the port of Hariga after a pipeline was repaired, and oil producer Oman plans to ramp up output to 980,000 barrels a day this year, according to Bloomberg.

Crude prices lost about 60 percent of their value to about $40 between June and late January owing to an oversupply in world markets, a weak global economy and a strong dollar.

Prices have risen above multi-year lows following a slowdown in US oil drilling activities, but analysts say volatility is likely to continue for some time.

"It is apparent by now that drilling in the US will slow, global production growth is expected to be lower, and demand, at least in the US, is reacting positively to lower prices," British bank Barclays said in a report.

"In short, the market is forecast to remain oversupplied for most of 2015, but expectations beyond that are for more balanced fundamentals."

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Oil tops $60 for first time in 2015

LONDON - Oil rose above $60 a barrel on Friday for the first time this year, bringing its gain this week to almost 4 percent, supported by signs that deeper industry spending cuts may curb excess supply.

Also supporting oil, growth in Germany's gross domestic product beat expectations, as did plans for a meeting between Greek officials and creditors. Euro zone GDP data is due later on Friday.

The price of Brent crude collapsed from $115 in June to $45.19, the lowest in almost six years, in January due to oversupply. Since January, mounting signs of lower industry spending have helped prices move higher.

Apache Corp, a top U.S. shale oil producer, said on Thursday it would cut capital spending and its rig count in 2015 following the price collapse, keeping its output growth mostly flat.

Brent for April delivery was up 76 cents at $60.04 by 0917 GMT, after briefly gaining more than $1. The March contract expired overnight. U.S. crude was up 61 cents at $51.82.

"During the last weeks, crude oil rebounded driven by improved market sentiment and by expectations that low prices will lead to lower supply growth in 2015," said Daniela Corsini, analyst at Intesa Sanpaolo, in a report.

Besides Apache's update, Royal Dutch Shell's chief executive said on Thursday supply might not be able to keep up with growing demand as companies reduce budgets, and France's Total announced investment and job cuts.

Still, analysts at JBC Energy in Vienna pointed out in reference to Apache's moves that spending cuts can easily be reversed.

"While the company expects North American onshore production to be flat this year, they emphasise their flexibility to come back very quickly if the price environment or the cost structure changes sufficiently," JBC said.

"This is generally what makes most people doubt that the latest rally can be sustained."

A weaker U.S. dollar, which makes dollar-denominated commodities cheaper for holders of other currencies, has also supported oil this week, analysts say.

source: www.abs-cbnnews.com

Oil jumps after Saudi king's death amid huge market shifts

SINGAPORE - Oil prices jumped in early Asian trading on Friday as news of the death of Saudi Arabia's King Abdullah added to uncertainty in energy markets already facing some of the biggest shifts in decades.

Abdullah died early on Friday and his brother Salman became king, the royal court in the world's top oil exporter and birthplace of Islam said in a statement carried by state television.

U.S. benchmark WTI crude futures rose more than 2 percent to a high of $47.76 a barrel in early Asian trading. International benchmark Brent futures opened up almost 1.5 percent higher at $49.10 per barrel at 0100 GMT.

The Saudi King's death comes amid some of the biggest shifts in oil markets in decades.

"The fear of the unknown is going to be supportive to crude oil prices," said John Kilduff, partner, Again Capital LLC in New York.

"King Abdullah was the architect of the current strategy to keep production high and force out smaller players instead of cutting," he added.

Oil prices have more than halved since peaking in June last year as soaring supplies clash with slowing demand.

Booming U.S. shale production has turned the United States from the world's biggest oil importer into the biggest producer, producing more than 9 million barrel per day.

To combat soaring output and falling prices, many oil exporters, such as Venezuela, wanted the 13-member Organization of the Petroleum Exporting Countries (OPEC) to cut output in order to support prices and revenues.

Yet, led by Saudi Arabia, OPEC announced last November it was keeping output steady at 30 million barrels per day.

Brent, which had already fallen to $77 per barrel by the time of the OPEC meeting, dropped another quarter over the next month as the market digested the fact OPEC would not come to the rescue.

OPEC's decision not to act, led by Saudi Arabia, was aimed at defending market share against U.S. shale producers as well as other non-OPEC exporters such as Brazil or Russia.

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Oil prices plunge again as UAE defends holding production

Brent drops below $46 a barrel, lowest since early 2009

LONDON - Brent and U.S. WTI crude oil prices fell to their lowest levels in almost six years on Tuesday as a big OPEC producer stood by the group's decision not to cut output to tackle a glut in the market.

Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly U.S. shale oil, and weaker-than-expected demand in Europe and Asia.

Rather than cutting output to try to balance the market, producers from the Organization of the Petroleum Exporting Countries (OPEC) are offering discounts to customers in an attempt to defend market share.

At 0903 GMT, February Brent crude was down $1.40 to $46.03 a barrel, after dipping as low as $45.23, its lowest since March 2009.

U.S. crude for February was down $1.28 at $44.79 per barrel, off an intraday low of $44.41.

"The market is in a bit of a panic now and the momentum is really quite negative. We haven't seen any actions or comments that could reduce this aggressive selling," said Ole Hansen, senior commodity strategist at Saxo Bank.

On the contrary, the United Arab Emirates' oil minister, Suhail bin Mohammed al-Mazroui, said on Tuesday that OPEC's November decision not to cut output had been the right one. He also said U.S. shale oil was an important part of global oil supplies.

He added that the market would stabilise at a level at which conventional producers could sell profitably, "whether $60 or $70 or $80".

Oil prices have fallen so far that the front-month February contract is now trading about $7 below the July contract, encouraging traders to hire tankers to store oil at sea.

The aim is to buy cheap oil now and sell it at a higher price at a future date, when demand picks up again.

At present, deflationary pressures are beginning to build in both Asian and European economies as demand remains weak.

The downward pressure on prices is so large that even record Chinese crude imports for December, above seven million barrels per day for the first time as the world's second largest oil consumer took advantage of low prices to build up its strategic reserves, could not lift the market for long.

Banks have slashed their oil price outlook, with analysts at Goldman Sachs cutting their average forecast for Brent in 2015 to $50.40 a barrel from $83.75.


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Saudis block OPEC output cut, sending oil price plunging

VIENNA - Saudi Arabia blocked calls on Thursday from poorer members of the OPEC oil exporter group for production cuts to arrest a slide in global prices, sending benchmark crude plunging to a fresh four-year low.

Brent oil fell more than $6 to $71.25 a barrel after OPEC ministers meeting in Vienna left the group's output ceiling unchanged despite huge global oversupply, marking a major shift away from its long-standing policy of defending prices.

This outcome set the stage for a battle for market share between OPEC and non-OPEC countries, as a boom in U.S. shale oil production and weaker economic growth in China and Europe have already sent crude prices down by about a third since June.

"It was a great decision," Saudi Oil Minister Ali al-Naimi said as he emerged smiling after around five hours of talks.

OPEC said in a statement that members had agreed to roll over the ceiling of 30 million barrels per day, at least 1 million above OPEC's own estimates of demand for its oil next year.

"It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market's turn to dictate prices and they will certainly go lower," said Dr. Gary Ross, chief executive of PIRA Energy Group.

The wealthy Gulf states have made clear they are ready to ride out the weak prices that have hurt the likes of Venezuela and Iran - OPEC members which face big budget pressures, but cannot afford to make cuts themselves. Venezuela and Algeria had calling for output cuts of as much as 2 million bpd.

Venezuelan Foreign Minister Rafael Ramirez said he accepted the decision as a collective one and hoped that lower prices would help drive some of the higher-cost U.S. shale oil production out of the market.

"In the market, some producers are too expensive," he said.

The OPEC statement made no mention of any need for members to stop overproducing, nor of any extraordinary meeting to reconsider the ceiling before a regular session next June.

BATTLE OVER MARKET SHARE

The Organization of the Petroleum Exporting Countries accounts for a third of global oil output.

Gulf producers could withstand for some time a battle over market share that would drive down prices further, thanks to their large foreign-currency reserves.

Members without such a cushion would find it much more difficult, as would a number of producers outside the group. Russia's rouble, which has been sliding for much of this year, extended losses on Thursday to trade more than 2 percent lower than the previous close against the U.S. dollar.

Russia is already suffering from Western sanctions over its actions in Ukraine and needs oil prices of $100 per barrel to balance its budget.

A price war might make some future U.S. shale oil projects uncompetitive due to high production costs, easing competitive pressures on OPEC in the longer term.

"Why would Saudi cut production in the current environment? Why would they want to support Iran, Russia or U.S. shale producers? So they must have decided: let the market establish the price. Once the market goes to a new equilibrium, prices will go higher," PIRA Energy's Ross said.

Kuwaiti Oil Minister Ali Saleh al-Omair said OPEC would have to accept any market price of oil, whether it were $60, $80 or $100 a barrel. Iraq's oil minister, Adel Abdel Mehdi, said he saw a floor at $65-70 per barrel.

"We interpret this as Saudi Arabia selling the idea that oil prices in the short term need to go lower, with a floor set at $60 per barrel, in order to have more stability in years ahead at $80 plus," said Olivier Jakob from Petromatrix consultancy.

"In other words, it should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States."

source: www.abs-cbnnews.com

Asian shares, oil prices tumble on growth worries

TOKYO - Asian shares shuddered and Brent crude oil prices tumbled to their lowest since 2010 on Friday after weak German export data raised fears that Europe's economic woes could drag down the global economy.

A bleak market day dawned in Europe, where futures for the Euro STOXX 50 STXEc1, the UK's FTSE 100 FFIc1, Germany's DAX FDXc1 and France's CAC FCEc1 were all down more than 1 percent, indicating that opening losses were likely.

"European markets face the prospect of a weak open and the bulls will hope for improvement in French and Italian industrial production today. One suspects the negative news low will continue," Chris Weston, chief market strategist at IG in Melbourne, said in a note.

Many investors fear that the gradually recovery U.S. economy - the world's largest, but comprising less than a quarter of the entire global economy - cannot escape unscathed as Europe stalls and other big economies, including China, Japan and Brazil, face their own hardships.

"The global economy continues to recover moderately. But the degree of recovery varies quite a lot from country to country," Japanese Finance Minister Taro Aso told reporters in Washington, where he's attending the annual International Monetary Fund meetings.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.5 percent in late afternoon trade, leaving it down 0.8 percent for the week.

Japan's Nikkei share average ended down 1.2 percent as the yen strengthened on safe-haven bids, and skidded 2.6 percent this week. Japanese markets are closed on Monday for a holiday.

Hong Kong's Hang Seng Index was down 1.8 percent, undermined by global growth fears as well as concern about a possible flare-up in pro-democracy protests there after students said they would maintain their campaign after the city government canceled talks.

Worries about global growth hit oil prices hard. European benchmark Brent crude oil fell as low as $88.11 a barrel, its lowest since December 2010. It last stood at $88.77, down 1.4 percent on the day.

U.S. crude futures plunged 1.9 percent to $84.14, after dropping as low as $83.59, their lowest since July 2012.

The latest tumble was a reverberation from Germany's downbeat data on Thursday, which showed exports from the engine of the euro zone economy fell 5.8 percent in August, the worst decline since January 2009.

A string of dismal data from Germany in recent weeks has fed anxieties about recession in the euro zone.

Wall Street stocks slumped 2 percent on Thursday, with the S&P 500 index hitting a two-month closing low. The CBOE volatility index, a measure of investor anxiety, rose to highs not seen since early February.

"If U.S. stocks jumped back today, then the market could go back to the same habit of assuming everything will be all right. But if they fall big for two days in a row, markets will be clearly entering a whole new phase," said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.

Anxieties about global economic growth smothered a short-lived rally in equity markets around the world that was sparked by speculation the Federal Reserve would not rush interest rate rises.

Adding to jitters, St. Louis Federal Reserve Bank President James Bullard said he was concerned by a disconnect between the market's view of the Fed's rate-increase path and the central bank's own view.

Financial markets have constantly expected much slower tightening by the Fed than U.S. central bank policymakers' own projections.

Federal funds rate futures are pricing in rate hikes to just above 0.50 percent by the end of next year, far below the Fed board members' median forecast above 1.25 percent.

The 10-year U.S. Treasuries yield fell to a 16-month low of 2.2790 percent on Thursday before bouncing back slightly on profit-taking. It last stood at 2.324 percent, down from the U.S. close of 2.327 percent.

The euro steadied on Friday, inching slightly higher to $1.2297. It had reached a 2-1/2 week high of $1.2791 early on Thursday, before the downbeat German data knocked it lower.

The risk-off mood underpinned the yen, with the dollar trading at 107.80 yen, having fallen to three-week low of 107.53 yen on Thursday.

The dollar's index against a basket of six major currencies edged down to 85.510. It slipped as low as 84.937 on Thursday, its lowest level since late September, moving away from a four-year high of 86.746 hit one week ago.

Spot gold edged down 0.1 percent to $1,222.40 an ounce but retained most of its gains from a four-day rally, and was headed for its best week in nearly four months on safe-haven buying.

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