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Reuters
an hour ago
- Business
- Reuters
OPEC+'s crude output hike comes amid tepid Asian oil demand: Russell
LAUNCESTON, Australia, June 2 (Reuters) - The crude oil market devotes considerable energy to what OPEC+ says, but perhaps a little less to what it actually does when it comes to the supply of the world's most important commodity. The eight members of the wider group that had implemented voluntary production cuts met at the weekend and decided to raise output by 411,000 barrels per day (bpd) in July, the third straight month of the same increase. More than half of the lift in output will be split among the big three of the OPEC+ group, namely Saudi Arabia, Russia and the United Arab Emirates. However, there are two questions that need answering. Firstly, will the eight members party to the agreement actually increase output by the agreed volumes, and secondly, if they do will they find buyers for the additional oil? A point worth noting is that OPEC+, and much of the wider market, talk in terms of production, but the more important metric is export volumes, as it's the amount of crude flowing around the globe that sets the price and the supply-demand balance. The group's top producer, Saudi Arabia, actually saw weaker exports in April of 5.75 million bpd, down from March's 5.80 million bpd, according to data complied by commodity analysts Kpler. Saudi Arabia's exports kicked up to 6.0 million bpd in May, the Kpler data showed, and are expected to rise even further in June, suggesting that there is a lag between output agreements and actual exports. Russia's seaborne exports of crude were 5.07 million bpd in March, remained largely flat at 5.12 million bpd in April and then dipped to 4.82 million in April, showing that the agreed increase in output didn't translate into higher shipments. The question still remains as to whether any additional oil is actually needed, especially in the top-importing region Asia. In the statement after the May 31 meeting, OPEC+ reiterated its view that the global oil market has "healthy" fundamentals "as reflected in low inventories." This is the position they have held since they started easing the 2.2 million bpd of voluntary production cuts in April. However, the Organization of the Petroleum Exporting Countries monthly report for May showed crude inventories in the developed world rose in March by 21.4 million barrels to 1.323 billion barrels, which is 139 million barrels less than the average from 2015-2019. In other words, inventories in the Organisation for Economic Cooperation and Development are slightly below the pre-COVID average, and are were already rising before OPEC+ started raising output. Inventories outside the OECD are less visible, and especially in China, the world's largest crude oil importer. Even though China doesn't disclose commercial and strategic stockpiles, the amount of surplus crude can be estimated by subtracting the volumes processed by refiners from the total available from domestic output and inventories. On this basis, China's surplus oil has surged in recent months, hitting 1.98 million bpd in April, the most since June 2023, and up from 1.74 million bpd in March. China increased oil imports in March and April as it secured discounted cargoes from Iran and Russia. But it appears that China's appetite for crude eased in May, despite the lower global prices. China's seaborne imports are estimated at 9.43 million bpd in May by Kpler, down from 10.46 million bpd in April and 10.45 million bpd in March. China's weaker appetite in May contributed to a drop in arrivals in Asia, the world's top-importing region, with Kpler estimating 24.2 million bpd, down from 24.85 million bpd in April. For the first five months of the year, Asia's seaborne crude imports are estimated at 24.45 million bpd, down 320,000 bpd from the same period in 2024. This means that despite the near 30% drop in global crude benchmark Brent futures between mid-January and the low so far this year of $58.50 a barrel on May 5, Asia's demand for oil hasn't increased. So far the impact of lower prices has been muted, and while demand may yet rise in coming months in response to cheaper oil, it's also possible that the economic uncertainty unleashed by U.S. President Donald Trump's trade war is crimping fuel consumption. Brent futures gained on Monday by more than $1 to $63.84 a barrel. The gain in prices suggests that the market had been expecting a larger output increase from the OPEC+ group of eight for July. There remains a high degree of uncertainty for the demand outlook, given the distortions being created by the Trump trade war. But there is also uncertainty over the supply outlook and questions as to whether OPEC+'s top producers will increase export volumes and seek market share over prices. The views expressed here are those of the author, a columnist for Reuters.
Globe and Mail
2 hours ago
- Business
- Globe and Mail
US-China Trade Tensions and Fears of a Big OPEC+ Production Hike Weigh on Crude
July WTI crude oil (CLN25) Friday closed down -0.15 (-0.25%), and July RBOB gasoline (RBN25) closed down -0.0221 (-1.08%). Crude oil and gasoline prices today fell to 3-week lows. Dollar strength Friday weighed on crude prices along with the escalation of trade tensions between the US and China, the world's two largest crude consumers. Crude prices also came under pressure Friday after Reuters reported that OPEC+ is considering a July increase in crude production of more than an earlier projected +411,000 bpd. Losses in crude were limited after Libya threatened to shut down its oil production and exports after a militia group stormed the country's state oil headquarters. Also, the outlook for smaller US crude production is bullish for oil prices after Friday's weekly report from Baker Hughes showed active US oil rigs fell to a 3-1/2 year low. Crude prices fell Friday as an escalation of trade tensions between the US and China could lead to slower economic activity and reduced demand for crude. US Treasury Secretary Bessent said that trade talks with China were "a bit stalled," and President Trump accused China of violating its tariff agreement with the US. Crude prices came under pressure Friday after Reuters reported that OPC+ is considering an output increase for July that would be above the +411,000 bpd increase it agreed to for June. Weakness in the crude crack spread is negative for oil prices. Friday's crack spread fell to a 1-1/2 month low, discouraging refiners from purchasing crude oil and refining it into gasoline and distillates. Crude found support Friday after Libya's government said it may halt its crude production and exports in protest after a militia group stormed the state oil company's headquarters. Citigroup estimates that a shutdown of Libyan oil exports could result in a loss of up to 600,000 bpd of crude to global oil markets. Crude oil has support from comments from President Trump, who said that Russian President Putin was "playing with fire" for his continued attacks on Ukraine. CNN reported Tuesday that Mr. Trump could move ahead with new sanctions on Russia in the coming days. Also, Senator Graham said he has the votes in Congress to pass a sweeping sanctions bill against Russia that would slap a 500% tariff on any country that buys Russian energy products. Concern about a global oil glut is negative for crude prices, following Bloomberg's report last Thursday that OPEC+ is considering a 411,000 bpd crude production hike for July when it meets on May 31. On May 3, OPEC+ agreed to raise its crude production level by 411,000 bpd in June. Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq. OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production. OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026. OPEC Apr crude production fell -200,000 bpd to 27.24 million bpd. Doubts about a nuclear deal between Iran and the US supported crude oil prices. Iranian Supreme Leader Ali Khamenei said last Tuesday that he doesn't think negotiations with the US will succeed, and he urged the Trump administration to stop "talking nonsense." President Trump recently said Iran will face "something bad" if it doesn't quickly accept a US proposal over its nuclear program. Crude has support on the outlook for smaller global oil supplies after the US State Department recently slapped sanctions on an international network that facilitated the shipment of millions of barrels of Iranian oil to China. The State Department sanctioned the alleged Iranian front company called Sepehr Energy Jahan Nama Pars for using revenue from the sales of crude to fund the development of weapons, including ballistic missiles and drones, nuclear proliferation, and Iran's "terrorist proxies." A decline in crude oil held worldwide on tankers is bearish for oil prices. Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days fell by -4.2% w/w to 95.40 million bbl in the week ended May 23. In a supportive factor for crude oil prices, the US on January 10 imposed new sanctions on Russia's oil industry that could curb global oil supplies. Russian oil product exports in March rose to a 5-month high of 3.45 million bpd, according to data compiled by Bloomberg from analytics firm Vortexa. Weekly vessel-tracking data from Bloomberg showed Russian crude exports fell by -90,000 bpd w/w to 3.4 million bpd in the week to May 18. Thursday's EIA report showed that (1) US crude oil inventories as of May 23 were -6.2% below the seasonal 5-year average, (2) gasoline inventories were -3.1% below the seasonal 5-year average, and (3) distillate inventories were -17.4% below the 5-year seasonal average. US crude oil production in the week ending May 23 rose +0.1% w/w at 13.401 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6. Baker Hughes reported Friday that active US oil rigs in the week ending May 30 fell by -4 to a 3-1/2 year low of 461 rigs. The number of US oil rigs has fallen over the past two years from the 5-year high of 627 rigs posted in December 2022.
Reuters
4 hours ago
- Business
- Reuters
Oil rebounds after OPEC+ sticks to same output hike in July vs June
SINGAPORE, June 2 (Reuters) - Oil prices rebounded more than $1 a barrel in early Asian trade on Monday after OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, in line with market expectation. Brent crude futures climbed $1.06, or 1.69%, to $63.84 a barrel by 2244 GMT while U.S. West Texas Intermediate crude was at $61.95 a barrel, up $1.16, or 1.91%. The Organization of the Petroleum Exporting Countries and their allies decided on Saturday to raise output by 411,000 barrels per day in July, the third straight month of increase by the same amount, as the group known as OPEC+ looks to wrestle back market share and punish over-producers. The group had been expected to discuss a bigger production hike. "Had they gone through with a surprise larger amount, then Monday's price open would have been pretty ugly indeed," analyst Harry Tchilinguirian of Onyx Capital Group wrote on LinkedIn. Oil traders said the decision for a 411,000-bpd output hike has already been priced into Brent and WTI futures which slipped more than 1% last week.
Yahoo
4 hours ago
- Business
- Yahoo
Oil rebounds after OPEC+ sticks to same output hike in July vs June
By Florence Tan SINGAPORE (Reuters) - Oil prices rebounded more than $1 a barrel in early Asian trade on Monday after OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, in line with market expectation. Brent crude futures climbed $1.06, or 1.69%, to $63.84 a barrel by 2244 GMT while U.S. West Texas Intermediate crude was at $61.95 a barrel, up $1.16, or 1.91%. The Organization of the Petroleum Exporting Countries and their allies decided on Saturday to raise output by 411,000 barrels per day in July, the third straight month of increase by the same amount, as the group known as OPEC+ looks to wrestle back market share and punish over-producers. The group had been expected to discuss a bigger production hike. "Had they gone through with a surprise larger amount, then Monday's price open would have been pretty ugly indeed," analyst Harry Tchilinguirian of Onyx Capital Group wrote on LinkedIn. Oil traders said the decision for a 411,000-bpd output hike has already been priced into Brent and WTI futures which slipped more than 1% last week. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
LBCI
a day ago
- Business
- LBCI
OPEC+ announces sharp increase in July oil production
Saudi Arabia, Russia, and the six other OPEC+ members announced on Saturday a huge increase in crude production for July. They will produce 411,000 barrels a day — the same amount as in May and June — according to a statement, which is more than three times the group had previously planned. AFP
