Tag: crude oil

Oil edges up on smaller US output growth estimates

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices ticked higher on Wednesday, as growth in U.S. oil production is expected to remain largely steady through 2025, easing worries of excess supply.

Brent crude futures rose 38 cents, or 0.5%, to $78.97 a barrel as of 0013 GMT, while U.S. West Texas Intermediate crude climbed 41 cents, or 0.6%, to $73.72. Both contracts had gained slightly on Monday.

U.S. domestic production will not exceed the December 2023 record of more than 13.3 million barrels per day until February 2025, the U.S. Energy Information Administration (EIA) said on Tuesday in its short-term energy outlook.

The EIA also cut its forecast for domestic oil output growth in 2024 by 120,000 barrels per day (bpd) to 170,000 bpd, sharply lower than last year’s output increase of 1.02 million bpd.

Also Read: China share buybacks climb to three-year high amid market slump

U.S. government data on oil inventory will be released later on Wednesday. U.S. crude stocks are expected to have risen 1.9 million barrels in the last week as production recovered from a cold freeze and refiners started maintenance.

Meanwhile, U.S., Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.

Traders have been closely following the situation in the Middle East, especially attacks on shipping by Iranian-backed Houthi rebels in the crucial Red Sea that has disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that sees nearly 12% of the global oil trade.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India receives first Russian Sokol oil at Vadinar after hiatus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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An oil tanker filled with Russia’s Sokol crude has discharged India’s first import of the grade in over two months, with millions of barrels still stranded across the region.

The ship — the Aframax tanker Jaguar — offloaded its cargo at Vadinar in western India, where Nayara Energy Ltd receives oil for its Gujarat refinery of the same name, according to ship-tracking data compiled by Bloomberg. The vessel can transport about 700,000 barrels of oil.

An official from Nayara Energy said Tuesday that the company is looking to get a shipment of Sokol this week. They were speaking on the sidelines of India Energy Week, currently taking place in Goa.

Vessels loaded Russian Sokol crude from other tankers in the waters around North Asia, before making their way to India

Market observers have been keenly monitoring the movement of two tankers filled with Sokol crude — Jaguar and Seagull — as the ships move closer to India’s shores. The Seagull is headed for Mumbai, where it’s due to arrive Tuesday.

Since late last year, the South Asian nation has had issues receiving cargoes of Sokol. That comes amid questions around the ownership structure of Sakhalin-1 LLC — which extracts the oil from beneath the waters of the east coast of Russia’s Sakhalin Island — and whether crude might have traded above the Group of Seven’s $60-a-barrel price cap on Russian oil.

It remains unclear if those issues have been fully resolved. As it stands, 16 more cargoes of Sokol crude meant for Indian buyers are stranded, sitting in tankers anchored off Singapore, or close to the coast of South Korea. Three more cargoes are awaiting transfer from the shuttle tankers that haul them from Sakhalin Island.

Meanwhile, some Sokol cargoes are finding takers in China, which has historically imported heavier Russian grades such as ESPO and Urals. Four January-loading Sokol cargoes have headed to Chinese ports, up from the more normal one or two cargoes per month seen recently.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India mulls national marine insurer amid Russia oil pressures

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India, a vital buyer of Russia’s oil exports, is evaluating the idea of creating its own marine insurer to protect commercial ships against risks including collisions and spills, a senior government official said.

While the idea is at its very early stages, if successful it could ultimately ease the Asian country’s dependence on western service providers, who — because of US-led sanctions — are supposed to only insure Russian crude oil shipments if they have documentation showing it cost $60 a barrel or less.

The initial evaluation, whether to create a so-called Protection and Indemnity club, is expected to be completed within two to three months, after which an outline plan should be ready, the official said, asking not to be identified discussing a sensitive government matter. New Delhi is working with banks, financial service providers and the wider insurance industry on the project, he said.

It isn’t clear how will the so-called India Club will arrange the funding or reinsurance required for providing third-party cover, or whether the South Asian nation has a shipping market size to warrant such a program.

India has been stuck between trying to secure western insurance for its imported Russian oil cargoes purchased under the price cap, or having to rely cover that isn’t from industry-standard providers. That means if something goes wrong, it’s not always clear who would pay out.

Since the war in Ukraine, the country has become a vital petroleum buyer from Moscow, alongside China, because Europe all but stopped importing from its one-time trade partner.

The initial idea would be to cover ships operating in inland waterways before extending the program to international sea going vessels, the official said.

Federal Finance Minister Nirmala Sitharaman in October said that India-based P&I unit was needed to reduce the South Asian nation’s vulnerability to international sanctions and to extend greater strategic flexibility in shipping operations.

Indian shippers presently rely on the international market, in particular the London-based The International Group of P&I Clubs, a group of 12 clubs that between themselves provide marine liability cover for about 90% of the world’s ocean-going tonnage.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Red Sea crisis dampens fuel price cut prospects; observers stress sub-$75 crude importance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amid the ongoing Red Sea crisis, the hope for a reduction in fuel prices is under threat, according to industry sources closely monitoring the situation. The escalation of geopolitical tensions in the region has prompted a reconsideration of earlier expectations.

According to industry insiders, the recent surge in crude oil prices, escalating from $73 to $80 per barrel, has injected complications into the previously optimistic outlook. While initial projections hinted at a possible fuel price reduction, the current geopolitical landscape has altered the equation.

There’s a strong case for a #FuelPrice cut if #crude sustains below $75 but #RedSea crisis remains a concern as last few days saw #brent climbing back to $80 from $73/bbl: Industry sources to @Sapna_CNBC pic.twitter.com/brWQcvbRpp

— CNBC-TV18 (@CNBCTV18Live) December 28, 2023

Crucially, industry sources highlight a “much stronger” case for a fuel price cut should crude prices manage to stay below the $75 per barrel threshold on a sustained basis. The volatility in crude oil prices, coupled with geopolitical tensions, is now a cause for close monitoring within the energy sector.

In 2023, Brent crude experienced a significant drop of up to 25% from its September high of $97 per barrel.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Suez Canal crisis: Experts analyse where crude oil prices could be headed

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ongoing crisis in the Red Sea has led to worries about a rise in crude oil prices. However, experts are mostly confident that the spike may not be significant given the US economy has been resilient and China is subdued.

Ed Yardeni, President at Yardeni Research, expects crude oil prices to hover in the $90-$95 per barrel range.

“On the one hand, we have the US economic outlook looking good and on the other hand, China remains depressed. So, I don’t worry too much about crude oil going up to $100,” he told CNBC-TV18.

The recent tension in the Middle East has contributed to the increase in oil prices, with a new attack on shipping in the Red Sea causing vessels to avoid the vital shipping route. Global benchmark Brent traded near $81 a barrel after a 2.5% rise on Tuesday, while West Texas Intermediate surpassed $75. The attack on the vessel MSC United VIII occurred on its way to Pakistan from Saudi Arabia, despite efforts by the US and other nations to form a maritime task force to prevent such incidents.

Also Read | Oil holds large gain as fresh Red Sea attack puts market on edge

The Houthi militants based in Yemen are behind the latest attack, adding to the concerns already raised by US strikes on targets in Iraq. These events signal that the Israel-Hamas conflict could potentially escalate into a broader conflict, posing a threat to stability in the Middle East. It’s important to note that Hamas is designated as a terrorist organization by both the US and the European Union.

Peter McGuire, CEO of XM Australia, believes crude oil prices could gain $5-$10 if the Suez Canal crisis escalates.

However, keeping the geopolitical risks aside, and purely based on the demand-supply dynamics, he expects Brent to hover in the range of $70-75 per barrel and WTi in the high 60s or early 70s.

Also Read | Explosions reported, unmanned aircraft and missiles sighted in Red Sea shipping lane off Yemen coast

(with input from Bloomberg)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India finds no takers for rupee payment for oil imports

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s push for rupee to be used to pay for the import of crude oil has not found any takers as suppliers have expressed concern about the repatriation of funds and high transactional costs, the oil ministry told a parliamentary standing committee.

The default payment currency for all contracts for the import of crude oil is the US dollar as per the international trade practice. However, in a bid to internationalise the Indian currency, the Reserve Bank of India on July 11, 2022, allowed importers to pay with rupees and exporters to be paid in rupees.

While there has been some success with non-oil trade with a select few countries, the rupee continues to be shunned by oil exporters.

”During FY 2022-23, no crude oil imports by oil PSUs were settled in Indian rupee. Crude oil suppliers (including UAE’s ADNOC) continue to express their concern on the repatriation of funds in the preferred currency and also highlighted high transactional costs associated with the conversion of funds along with exchange fluctuation risks,” the oil ministry told the parliamentary department related standing committee.

The ministry, whose submissions are part of the committee’s report which was tabled in Parliament last week, said Indian Oil Corporation (IOC) has informed that it incurred high transaction costs as crude oil suppliers pass on the additional transactional costs to IOC.

The RBI, it said, had last year permitted the opening of rupee vostro accounts in the partner trading country. Under this mechanism, Indian importers undertaking imports through this mechanism shall make payment in Indian rupee which shall be credited into the special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier.

”Payments for crude oil can be made in Indian rupee, subject to the suppliers’ complying with regulatory guidelines in this regard,” the ministry said. “Currently, Reliance Industries Ltd and oil PSUs do not have an agreement with any crude oil supplier to make purchases in Indian currency for the supply of crude oil.” India is the world’s third-largest energy consumer. With its domestic production meeting less than 15 per cent of its needs, the country imports the remaining crude oil, which is converted to fuels such as petrol and diesel at refineries.

In the 2022-23 (April 2022 to March 2023) fiscal, India spent USD 157.5 billion on import of 232.7 million tonnes of crude oil. Iraq, Saudi Arabia, Russia, and UAE were its biggest suppliers. Of this, 141.2 million tonnes came from the Middle East, accounting for 58 per cent of all supplies.

In the current fiscal, India imported 152.6 million tonnes of crude oil between April and November for USD 113.4 billion.

”India’s consumption would be about 5.5-5.6 million barrels per day. Out of that, we import about 4.6 million barrels per day, which is about 10 per cent of the overall oil trade in the world,” the ministry told the committee.

On price volatility, the ministry said PSU oil firms are impacted by the volatility in prices of crude oil but only to the extent of fuel and loss.

Also read: Oil set for weekly gain as Red Sea attacks, OPEC unity in focus

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India slashes windfall profit tax on crude oil and diesel exports

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Monday (December 18) cut the windfall profit tax on crude oil produced in the country and on exports of diesel.

The tax, levied in the form of Special Additional Excise Duty or SAED, on domestically produced crude oil has been reduced to ₹1,300 from ₹5,000 per tonne, according to an official notification.

Also Read: Growth rate at 6%, India will remain lower middle economy by 2047, says Raghuram Rajan

SAED on the export of diesel has been reduced to ₹0.50 a litre from ₹1 per litre. However, the levy on export of jet fuel or ATF has been hiked to ₹ 1 per litre from nil earlier. SAED on petrol will continue to be zero. The new tax rates will come into effect from Tuesday.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil prices fall on China concerns, scepticism on OPEC+ cuts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices fell in Wednesday Asian morning trading as markets continue to doubt the impact of OPEC+ cuts and take cues from a worsening demand outlook in China.

Brent crude futures fell 8 cents, or 0.1%, to $77.12 a barrel by 0101 GMT. U.S. WTI crude futures were down 13 cents, or 0.2%, at $72.19 a barrel.

Both benchmarks closed at their lowest level since July 6 in the previous session, with WTI seeing four consecutive days of declines.

Voluntary output cuts of about 2.2 million barrels per day (bpd) for the first quarter of 2024 by the Organization of the Petroleum Exporting Countries and allies such as Russia (OPEC+) have failed to support market sentiment, amid scepticism over whether the cuts would be implemented in full.

The cuts include an extension of Saudi and Russian voluntary cuts of 1.3 million bpd.

Comments from Russian deputy prime minister Alexander Novak that OPEC+ was “ready to take additional actions to eliminate speculation and volatility” did not significantly influence market sentiment.

Russian President Vladimir Putin is set to visit key OPEC members Saudi Arabia and the United Arab Emirates on Wednesday for talks that are expected to include oil market cooperation.

Bearish sentiment has also been driven by concerns over China’s economic health.

On Tuesday, rating agency Moody’s lowered the outlook on China’s A1 rating to negative from stable, citing “increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector”.

China will release preliminary trade data, including crude oil import data, on Thursday.

In the U.S., crude oil and fuel inventories rose in the week to Dec. 1, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks increased by 594,000 barrels, the sources said on condition of anonymity. Gasoline stockpiles gained by 2.8 million barrels, while distillate inventories rose nearly 1.9 million barrels.

U.S. government data on inventories is due on Wednesday.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil prices settle up as Iraq backs more output cuts from OPEC+

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices gained about 2% on Friday as Iraq voiced support for OPEC+’s oil cuts ahead of a meeting in two weeks and as some speculators covered massive short positions ahead of weekend uncertainty.

Still, prices settled with weekly losses of 4%, their third straight weekly decline.

”This was the perfect technical storm. We came into this week with an almost record short position and now we’re seeing some short covering going into the weekend,” said Phil Flynn, an analyst at Price Futures Group.

Flynn noted that in addition to Iraq’s comments, Saudi Arabia and Russia confirmed this week that they would continue oil output cuts through year end.

In the U.S., energy firms cut the number of oil rigs operating for a second week in a row to the lowest since January 2022, energy services firm Baker Hughes said. The rig count points to future output. Brent futures rose $1.42, or 1.8%, to settle at $81.43 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.43, or 1.9%, to settle at $77.17.

Brent and WTI notched their third straight weekly losses for the first time since May, although both benchmarks exited technically oversold territory.

”Concerns about demand have replaced the fear of production outages related to the Middle East conflict,” analysts at Commerzbank said.

Weak Chinese economic data this week increased worries of faltering demand. Refiners in China, the largest buyer of crude from Saudi Arabia, the world’s largest exporter, asked for less supply for December.

U.S. consumer sentiment fell for a fourth straight month in November and households’ expectations for inflation rose again.

U.S. Federal Reserve Bank of San Francisco President Mary Daly said she is not ready to say yet whether the Fed is done raising rates, echoing Fed Chair Jerome Powell’s comments on Thursday.

Higher interest rates can reduce oil demand by slowing economic growth.

In Britain, the stagnating economy failed to grow in the July-to-September period but did avoid a recession, according to the UK’s Office for National Statistics.

UPCOMING OPEC MEETING

OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia, will meet on Nov. 26.

Iraq’s oil ministry said Baghdad is committed to the OPEC+ agreement on determining production levels.

Chances Saudi Arabia will extend its output cut into the first quarter of 2024 ”is certainly increasing given renewed market concerns about Chinese demand and the broader macro outlook,” RBC Capital Markets analyst Helima Croft said.

Analysts at Capital Economics said OPEC+ might cut supply further if prices continue to fall.

”We are sticking with our forecast of Brent ending both this year and next year at around $85 per barrel,” the research firm said in the note.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Why are oil traders scared of the Fed?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Crude oil prices rose from a low of $67 in June to a high of $94 towards late September. As of the latest reading, WTI Crude had recouped some of its recent losses to trade at $83, about 1% higher, even though the New York benchmark is still on track for 10% losses in October.

This means oil has fallen in a month which saw hostilities break out between Israel and Hamas, an event that would have typically spiked prices. Oil prices may still surge if the conflict escalates.

Crude oil also remained jittery ahead of the US Federal Reserve’s meeting on October 31 and November 1, as traders weigh the possibility of hawkish commentary from the central bank and other economic cues.

Also Read: Federal Reserve, geopolitics threatens US Dollar’s seasonal year-end slump

For the Fed’s November 1 announcement, traders are hoping that the central bank will not up its benchmark rate beyond the current 5.25-5.5% range, a 22-year high.

But beyond the rate decision itself, traders will focus on the Fed’s commentary.

Forecasts by the US central bank from September showed that a majority of its policymakers see the Fed’s benchmark overnight interest rate ending this year at 5.6%, which implies one more interest rate hike in the next three months. They also now anticipate an end-of-2024 policy rate of at least 5.1%, half a percentage point higher than they projected three months ago.

A high rate of interest is negative for crude as it slows economic activity and strengthens the US dollar.

Traders are also keeping an eye on economic data.

Also Read: European Central Bank presses pause after barrage of hikes to tame inflation

Today, China’s factory activity, as measured by its purchasing managers’ index, unexpectedly shrunk, outlining continuing troubles for the world’s second-largest economy.

And tomorrow (November 1), the US non-farm payrolls data is expected, where the economy is seen adding 182,000 jobs in October, as opposed to 336,000 in September. Analysts also expect the unemployment rate to remain at 3.8% and wage growth to slow to 4%, a post-pandemic low.

Weak jobs data indicating a slowing economy will act as a dampener for oil prices. Analysts believe that the Fed has limited options to combat the slowdown. The central bank continues to battle inflation, which has come off a high of 5.3% in February to 3.4% in September but remains above the central bank’s target of 2%.

The World Bank recently said oil could fall to as low as $81 as global growth slows.

Also Read: US Fed minutes flag high rates for “some time” while risks shift

This means that as markets head into the Fed meeting, the likely scenario that could put crude oil on an upward trajectory is the central bank saying it expects prices – and hence rates — to come down sooner than expected.

Barring that, or the Middle East conflict snowballing into a regional war, crude oil will likely remain weak.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow