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Hurricane Delta Has Moved On but Perfect Storm Now Hits Oil By Investing.com

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© Reuters.

By Barani Krishnan

Investing.com – The effects of Hurricane Delta may be wearing off, but the perfect storm arrived anyway on Monday for crude prices, driving the market down almost 3%.

The lifting of a force majeure at Libya’s largest oilfield, the end of a Norwegian oil industry strike and signs that U.S. producers were adding to output as Delta exited the Gulf Coast of Mexico came together to roil the market.

Adding to the weight on oil was a forecast by seevol.com that show stockpiles at Cushing, the delivery point for contracted U.S. crude, up by 3.9 million barrels for the week ended Oct. 9.

“Overall, the crude market appears to have failed at the 50 day and 200 day moving average and just got back under the 100 day this morning,” said Scott Shelton, energy futures broker at ICAP (LON:) in Durham, North Carolina.

“I still think the market is rudderless and susceptible to MACRO-driven rallies, but the information is looking worse for oil despite improving margins, and I think we could see another move to $38.” 

New York-traded , the key indicator for U.S. crude prices, settled at $39.43 per barrel, down $1.17, or 2.9%, on the day. The move wiped out almost a third WTI’s 9.5% gain for last week. 

London-traded crude, the global benchmark for oil, settled down $1.13, or 2.6%, at $41.71. Brent rose 9.1% last week.

Production in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), is expected to rise to 355,000 barrels per day (bpd) after force majeure at the Sharara oilfield was lifted on Sunday.

Rising Libyan output will pose a challenge to OPEC+ – a group comprising OPEC and allies including Russia – and its efforts to curb supply to support prices.

Hurricane Delta, which inflicted the biggest blow in 15 years to energy production in the U.S. Gulf of Mexico last week, was downgraded to a post-tropical cyclone at the weekend.

Workers headed back to production platforms on Sunday and French oil major Total restarted its 225,500 barrel per day Port Arthur refinery in Texas.

Prices were also pressured by a jump in new COVID-19 cases, which has raised the specter of more lockdowns which could dampen demand for oil.

Infections are at record levels in the U.S. Midwest. In Europe, British Prime Minister Boris Johnson announced new coronavirus lockdown measures while Italy — which shocked the world with the horror of its Covid-19 saga in March — was preparing fresh nationwide restrictions.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Commodities

Oil Down Over Smaller-Than-Expected Crude Oil Draw, Gasoline Build By Investing.com

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© Reuters.

By Gina Lee

Investing.com – Oil was down on Thursday morning in Asia, continuing losses from the previous session. The U.S. Energy Information Administration (EIA) reported a smaller-than-expected draw in U.S. crude oil supplies, adding to worries of an oversupply as fuel demand continues to weaken.

were down 0.41% to $41.56 by 12:20 AM ET (4:20 AM GMT). fell 0.50% to $39.83, slipping below the $40 mark.

EIA data released on Wednesday showed a , smaller that the predicted 1.021 million-barrel draw and much smaller than the previous week’s 3.818 million-barrel draw.

Wednesday’s data also showed that a , against the 1.829 million-barrel draw predicted and the previous week’s 1.626 million-barrel draw.

“The latest EIA report showed an unexpected increase in gasoline inventories, which came at the same time as reduced gasoline output because of refinery outages due to Hurricane Delta. So the implication is gasoline demand is pretty soft,” National Australia Bank (OTC:) head of commodity research Lachlan Shaw told Reuters.

The American Petroleum Institute reported a surprise on Tuesday.

Investors remain concerned about weak fuel demand as the number of COVID-19 cases in Europe and some U.S. states continues to climb. Fears were also exacerbated by China’s decision to restrict outbound travel to curb the spread of the virus.

Diminishing hopes that the U.S. Congress would be able to pass the latest stimulus measures before the Nov. 3 election also contributed to a worsening outlook.

“The resurgence in COVID-19 cases is seeing the U.S. motorist increasingly putting the brakes on. This makes the negotiations on a U.S. stimulus package even more important,” ANZ Research said in a note.

However, NAB’s Shaw warned that even if Congress approved the measures in time, any uplift would likely be temporary.

“It might improve the demand tone for a week or two, but with the COVID-19 spread accelerating there are headwinds there,” he said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Spurred by reform, China’s niche LNG buyers to pour in investments, double imports By Reuters

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2/2
© Reuters. FILE PHOTO: A villager walks past the gas pipeline construction instead of coal-powered boilers in Xiaozhangwan village of Tongzhou district on the outskirts of Beijing

2/2

By Chen Aizhu

SINGAPORE (Reuters) – A group of niche Chinese gas firms is set to make waves in the global market with plans to invest tens of billions of dollars and double imports in the next decade as Beijing opens up its vast energy pipeline network to more competition.

The companies, mostly city gas distributors backed by local authorities, are ramping up purchases of liquefied (LNG) as newly formed national pipeline operator PipeChina begins leasing third parties access to its distribution lines, terminals and storage facilities from this month.

The acceleration in demand in what is already the world’s fastest-growing market for the super-chilled fuel is a boon for producers such Royal Dutch Shell (L:), Total (SA:) and traders like Glencore (L:) faced with oversupply and depressed prices .

Just last month, UK’s Centrica (L:) signed a 15-year binding deal to supply Shanghai city gas firm Shenergy Group 0.5 million tonnes per year of LNG starting in 2024.

“They’re very, very interested in imports…we’re talking to a lot of them already,” said Kristine Leo, China country manager for Australia’s Woodside Energy (AX:) which signed a preliminary supply deal with private gas distributor ENN Group last year.

China could buy a record 65-67 million tonnes of LNG this year and is expected to leapfrog Japan to become the world’s top buyer in 2022. Imports could surge 80% from 2019 to 2030, according to Lu Xiao, senior analyst at consultancy IHS Markit.

Graphic: China’s LNG imports vs Asian spot prices – https://fingfx.thomsonreuters.com/gfx/ce/gjnvwljenpw/Pasted%20image%201603272485635.png

State-owned Guangdong Energy Group, Zhejiang Energy Group [ZJGVTA.UL], Zhenhua Oil and private firms like ENN were quick to take advantage of the market reforms and low spot prices for LNG, said Chen Zhu, managing director of Beijing-based consultancy SIA Energy.

Their imports will reach some 11 million tonnes this year, up 40% versus 2019, more than 17% of China’s total purchases, said Chen.

For years such companies have worked to expand a domestic consumer base among so-called “last mile” gas users like tens of millions of households, shopping malls and factories such as ceramic makers, but they had to rely on state majors for supplies.

With greater access to distribution networks, they are now incentivized to build their own import terminals that could account for 40% of the country’s LNG receiving capacity by 2030, versus 15% now, Chen said.

Frank Li, assistant to president of China Gas Holdings (HK:), a private piped gas distributor, said his company has been in talks with PipeChina for infrastructure access as it prepares to import LNG next year.

GUANGDONG BUYERS

In Southern China’s industrial hub Guangdong, companies like Guangzhou Gas, Shenzhen Gas and Guangdong Energy hold small stakes in LNG facilities operated by China National Offshore Oil Company. They imported their first cargoes from these terminals last year.

Guangzhou Gas is set to import 13 LNG shipments this year, up from five last year, after “tough negotiations” with CNOOC (NYSE:) won it access to terminals, said Vice President Liu Jingbo.

“The reform is bringing us diversified supplies, helping us cut cost,” Liu told Reuters.

Some companies also plan to beef up trading expertise by opening offices overseas, such as in Singapore, executives said.

“Naturally, companies will be thinking of growing into a meaningful player globally,” said a trading executive with Guangdong Energy, adding that his firm looks to Tokyo Gas (T:), Japan’s top gas distributor and trader, as a model.

The rise of niche players will erode some market share held by state giants CNOOC, PetroChina (HK:) and Sinopec (HK:), prompting them to scale back gas infrastructure investment and focus on global trading, while extending into retail gas distribution at home, officials said.

“National majors’ investment in terminals and pipelines were previously self-driven for integration. Now that these assets have been spun off, the drive to build new facilities will subside,” said a PetroChina official.





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Commodities headed for bull market in 2021 on inflation fears, stimulus: Goldman Sachs By Reuters

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© Reuters. FILE PHOTO: Gold bullions are displayed at Degussa shop in Singapore

(Reuters) – A weaker U.S. dollar, rising inflation risks and demand driven by additional fiscal and monetary stimulus from major central banks will spur a bull market for commodities in 2021, Goldman Sachs (NYSE:) said on Thursday.

The bank forecast a return of 28% over a 12-month period on the S&P/Goldman Sachs Commodity Index (GSCI), with a 17.9% return for precious metals, 42.6% for energy, 5.5% for industrial metals and a negative return of 0.8% for agriculture.

Markets are now increasingly concerned about the return of inflation, the Wall Street bank said.

Expansionary fiscal and monetary policies in developed market economies continue to drive interest rates lower and create demand for hedging the tail risks of inflation, lifting demand for precious metals, Goldman Sachs said in a note.

Goldman forecast gold prices at an average of $1,836 per ounce in 2020 and $2,300 per ounce in 2021, and expects silver prices to be at around $22 per ounce in 2020 and $30 per ounce next year.

was trading at $1,915.04 per ounce by 0527 GMT, while silver was at $24.85 per ounce.

Gold, widely viewed as a hedge against inflation and currency debasement, has gained 26% this year, benefiting from unprecedented global stimulus and near-zero interest rates.

Non-energy commodities could see an “immediate upside” as the market balances tighten ahead of expectations on strong demand from China and weather-driven risks, the Goldman Sachs analysts said.

The bank maintained a “neutral” view on commodities in the near term and “overweight” in the medium term.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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