Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output. Benchmark Brent crude oil (LCOc1) was up 40 cents at $77.77 a barrel by 0950 GMT. U.S. light crude (CLc1) was up 5 cents at $67.59. "The path of least resistance for oil prices, given the supply fundamentals, remains up," Harry Tchilinguirian, oil strategist at BNP Paribas (PA:BNPP), told Reuters Global Oil Forum. Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line. But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth. U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow. Russia, the United States and Saudi Arabia are the world's three biggest oil producers by far, meeting around a third of the world's almost 100 million barrels per day (bpd) of daily crude consumption. Their combined output has risen by 3.8 million bpd since September 2014, more than the peak output Iran has managed over the last three years. Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of producers around the Middle East which dominate the Organization of the Petroleum Exporting Countries may sign a new long-term cooperation deal at the beginning of December, the TASS news agency reported. Novak did not provide details. A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output. With Middle East crude markets also tightening, many Asian refiners are seeking alternative supplies, with South Korean and Japanese imports of U.S. crude hitting a record in September. U.S. oil producers are seeking new buyers for crude they used to sell to China before orders slowed because of the trade disputes between Washington and Beijing. This is one reason that the discount for U.S. crude versus Brent has widened to around $10 per barrel, the biggest since June , traders said.
The U.S. dollar was flat against other currencies on Tuesday, as investors worried about Chinese-U.S. trade relations. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.03% to 95.09 as of 5:19 AM ET (9:19 GMT). Trade war tensions continued to worry investors. Robert E. Lighthizer, the United States trade representative met with European Union officials in Brussels on Monday to discuss trade tariffs. While Lighthizer called the talks “constructive,” a deal is not likely to be reached as soon as the White House administration would like. Meanwhile U.S. President Donald Trump wants to impose tariffs on almost all imported Chinese goods .China’s foreign ministry said on Monday that it would respond to any new steps on trade. The dollar rose against the safe-haven yen, with USD/JPY increasing 0.22% to 111.36. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion. The euro was higher as concerns over Italian debt eased. EUR/USD increased 0.13% to 1.1607. Italian government borrowing costs lowered this week after Economy Minister Giovanni Tria predicted yields would drop and the government lays out its budget for 2019. Comments from EU negotiator Michel Barnier, who said a Brexit deal in six to eight weeks is 'realistic,” continued to bolster sterling as a no-deal Brexit looked less likely. GBP/USD inched up 0.06% to 1.3034. The Australian dollar was lower, with AUD/USD down 0.08% to 0.7109 while NZD/USD fell 0.03% to 0.6524. The loonie was higher against the dollar, with USD/CAD decreasing 0.08% to 1.3154.
Oil prices rose on Monday as U.S. drilling for new production stalled and as the market eyed tighter conditions once Washington's sanctions against Iran's crude exports kick in from November. U.S. West Texas Intermediate (WTI) crude futures were at $68.23 per barrel at 0640 GMT, up 48 cents, or 0.7 percent, from their last settlement. Brent crude futures climbed 64 cents, or 0.8 percent, to $77.46 a barrel. U.S. energy companies cut two oil rigs last week, bringing the total count to 860, energy services firm Baker Hughes said on Friday. The U.S. rig count has stagnated since May, after staging a recovery since 2016, which followed a steep slump the previous year amid plummeting crude prices. Outside the United States, new U.S. sanctions against Iran's crude exports from November were helping push up prices. Energy consultancy FGE said several major Iran customers like India, Japan and South Korea were already cutting back on Iran crude. "Governments can talk tough. They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to ... say they won't risk it," FGE said. "U.S. financial penalties and the loss of shipping insurance scares everyone," it said in a note to clients. Violence in Iraq, including a rocket attack on Basra airport on Saturday, also sparked fears of supply disruptions, although so far there have been no interruptions to oil exports. U.S. rig count has stagnated since May: https://tmsnrt.rs/2NsKwpc TIGHTER OUTLOOK? With U.S. rig activity stalling and Iran sanctions looming, the oil market outlook is tightening. "Investors have largely turned positive again ... likely welcoming the return of backwardation," said Edward Bell, commodity analyst at Emirates NBD bank. Backwardation describes a market in which prices for immediate delivery are higher than those for later dispatch. It is considered a sign of tight conditions giving traders an incentive to sell oil immediately instead of storing it. The Brent backwardation between October this year and mid-2019 is currently around $2.20 per barrel <0#LCO:>. While Washington exerts pressure on other countries to fall into line and also cut imports from Iran, it is also urging other major producers to raise their output in order not to create too strong a price spike. U.S. Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as the Trump administration seeks the world's biggest exporter and producer to keep output up. One key question going forward is how demand develops amid the trade dispute between the United States and China, as well as general emerging market weakness. Asian shares on Monday were on track for their eighth straight session of declines, while China's yuan and India's rupee also came under renewed pressure as U.S. President Donald Trump threatened yet more import tariffs on Chinese goods. Consultancy FGE warned that "trade wars, and especially rising interest rates, can spell trouble for the emerging markets that drive (oil) demand growth". Despite this, FGE said the likelihood of significantly weaker oil prices was relatively low as the Organization of the Petroleum Exporting Countries (OPEC) would withhold output to prevent prices from plunging. "We see $65 per barrel as a trigger for cuts," FGE said.
The dollar traded higher against a basket of currencies on Monday amid fears of a potentially major escalation in the China-U.S. trade conflict, while Sweden's crown rose following the previous day's election. U.S. President Donald Trump warned on Friday that he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods in addition to the $200 billion already facing the risk of duties. "If there are any signs that the U.S. economy is finally hit by its own protectionist moves, then I think that's the start of full-blown risk aversion," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities. "This will at least lead to the weakness of the dollar against the yen," Yamamoto said. He warned markets didn't yet fully price in the impact of U.S. tariffs on virtually all imports from China. The dollar index (DXY), which measures the greenback against a basket of six currencies, traded about 0.1 percent higher at 95.472, not far off a three-week high of 95.737 hit on Tuesday last week. The index also found support after data showed U.S. jobs growth accelerated in August and wages notched their largest annual increase in more than nine years, boosting the prospect of faster interest rate rises by the Federal Reserve. Still, markets remained on edge about a possible new round of U.S. tariffs on imports from China. Investors have been waiting for a fresh salvo to be fired in the Sino-U.S. trade war after a public comment period for proposed U.S. tariffs on a list of $200 billion worth of Chinese imports, which includes some consumer products, ended late last week. An emerging market currency index (MIEM00000CUS) dipped more than 0.4 percent on Monday after booking its biggest weekly loss in three weeks last week. "Further tariffs are likely to lead to a weaker Chinese yuan and stronger dollar, and I think emerging market currencies will fall in response," said Minori Uchida, chief currency strategist at MUFG Bank. The Swedish crown strengthened after an election in the country on Sunday that saw support for the nationalist Sweden Democrats surge. One of the negative drivers for the Swedish crown before the election has been hedging activity against a strong showing by the Sweden Democrats, but the outcome avoided the worst of the market's fears even as the nation headed for a hung parliament. The Swedish crown rose about 0.6 percent against the euro (EURSEK=) to 10.43 crowns. The pound was flat at $1.2915 after Steve Baker, a former junior Brexit minister told the Press Association that British Prime Minister Theresa May's Conservative Party faces a "catastrophic split" if she persists with her so-called Chequers proposals on Brexit. The euro (EUR=) was 0.1 percent lower at $1.1544 after falling more than half a percent during the previous session in the wake of the U.S. job data. The Australian dollar edged lower, last trading at $0.7100, pinned near a 2-1/2-year low of $0.7097 touched earlier in the day.
Oil prices fell on Wednesday as a tropical storm hitting the U.S. Gulf coast weakened and had a lower impact on production than initially expected. U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $69.14 per barrel at 0642 GMT, down 73 cents, or 1 percent, from their last settlement. International Brent crude futures (LCOc1) fell 60 cents, or 0.8 percent, to $77.57 a barrel. Prices had jumped the previous day as dozens of U.S. oil and gas platforms in the Gulf of Mexico were shut in anticipation of damage from tropical storm Gordon. However, the storm had shifted eastward by Wednesday and was weakening, reducing its threat to producers on the western side of the Gulf. Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA, said many crude futures traders were "caught long and wrong over the past 24 hours due to the tropical storm buying frenzy", adding that "prices pulled back considerably as the magnitude of the storm suggests production losses will be limited". A typhoon also hit Japan's east coast overnight, with some damage to oil refineries in the Osaka region, although operator JXTG (T:5020) said its operations were not significantly affected. Innes said the price outlook for crude was still bullish, in large part because of U.S. sanctions targeting Iran's oil sector from November. "With the anticipation of up to 1.5 million barrels per day affected by the U.S. sanctions on Iran, one would expect prices to move higher in the weeks ahead." Other voices, however, cautioned on the risks to oil demand if turmoil in emerging markets starts hitting economic growth. "My sense is that the big issue going forward, if this emerging market crisis morphs into something more troubling, is not just (oil) demand growth but total demand," said Greg McKenna, chief market strategist at futures brokerage AxiTrader. Emerging markets are a key driver of global oil demand growth, but several of them - especially Turkey and Argentina but also Indonesia and South Africa - have seen their currencies and stock markets come under pressure in recent months amid inflation, a strong U.S.-dollar (DXY) and escalating global trade disputes. "If emerging markets get worse ... that will impact crude markets," he said. Striking a balance between maximising revenue and keeping a lid on prices in order not to stall demand, top crude exporter Saudi Arabia is managing its own supply with a goal to keep crude prices in a range between $70 and $80 per barrel, OPEC and industry sources told Reuters this week.
The dollar was trading near one-and-a-half week highs against a currency basket on Wednesday, as safe haven demand continued to be underpinned persistent concerns over trade tensions and emerging market stresses. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.17% to 95.59 by 04:01 AM ET (08:01 GMT), not far from Tuesday’s one-and-a-half week highs of 95.68. Demand for the dollar was bolstered by the risk-off mood in markets amid fears over the impact on global growth from the Trump administration’s protectionist trade policies and strains in emerging markets. U.S. President Donald Trump could slap tariffs on an additional $200 billion worth of imports from China as soon as Thursday, which would ratchet up the trade row with Beijing. Data overnight showed that business activity in China slowed in August, indicating that the trade dispute with the U.S. is hitting demand. Trade talks between the U.S. and Canada were due to resume later Wednesday, with Trump threatening to leave Canada out of a new deal already negotiated with Mexico. The dollar was almost unchanged against the yen, with USD/JPY last at 111.49. The euro was lower against the firmer dollar, with EUR/USD down 0.2% to 1.1557. The pound was also pressured lower, with GBP/USD sliding 0.3% to 1.2816 as worries over the prospect of a no-deal Brexit continued to weigh. The Australian dollar was lower, with AUD/USD down 0.28% to 0.7156 despite data overnight showing that the country’s economy grew at the fastest pace in six years in the second quarter. In emerging markets, Turkey’s lira was pressured lower amid lingering concerns over the country’s economic and currency crisis. Deteriorating relations between the U.S. and Ankara and worries about Erdogan's increasing control over monetary policy and the economy have seen the lira tumble more than 40% this year. Argentina’s peso also fell, re-approaching record lows against the dollar as the country’s government scrambled to deal with a fresh economic crisis. Emerging market currencies have been hard hit by concerns that higher U.S. interest rates will pressure countries that have borrowed heavily in dollars in recent years.
Gold prices fell Monday morning in Asia, a day after Chinese President Xi Jinping gave a speech about his government’s determination to engage in economic reforms amid an escalating trade war between Beijing and Washington. Gold futures for December delivery were down by 0.15% to $1,204.90 per troy ounce at 1:20AM ET (05:20 GMT) on the Comex division of the New York Mercantile Exchange. Xi told UN Secretary-General Antonio Guterres in Beijing that “China’s determination to fully deepen reforms will not change. We are willing to use practical actions to drive all parties to jointly adhere to trade liberalization and facilitation and build an open world economy.” The U.S. and China slapped 25% tariffs on $16 billion worth of products on each other in late August, rattling markets, while Reports suggested that the Trump administration was prepared to impose tariffs on an additional $200 billion of Chinese goods as soon as this week. In other news, Japanese Prime Minister Shinzo Abe said on Sunday that his country’s relationship with China had returned to a “normal track”. The leader of the world’s third largest economy, Abe, is expected to visit the world’s second largest, China, at the end of October. Abe also said last Friday that the financial conversation with China was “extremely good” and both countries will keep on cooperating in macro-economic policies and measures. Chan Chun Sing, Singaporean Trade and Industry Minister, said on Saturday that trade talks between 16 signatories of the China-supported Regional Comprehensive Economic Partnership (RCEP), including China, Japan, Australia, India, New Zealand, South Korea and the 10 members of the Association of Southeast Asian Nations (ASEAN), had agreed on key elements of the deal last week and a broad agreement is expected to be reached in November. “We are looking for that broad agreement, that milestone to be achieved, or what we call substantial conclusion, when the leaders meet at the end of the year.” The U.S. dollar index, tracking the greenback against a basket of currencies, rose 0.05% to 95.1 on Monday.
Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once U.S. sanctions bite from November, but gains were limited by higher supply from OPEC and the United States. Brent crude oil (LCOc1) was up 45 cents at $78.09 a barrel by 0905 GMT. U.S. crude (CLc1) was 15 cents higher at $69.95. The two benchmarks have risen strongly over the last two weeks with Brent gaining more than 10 percent on expectations that global supply will tighten later this year. U.S. sanctions are already curbing exports from Iran. "Exports from OPEC’s third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of U.S. sanctions," said Stephen Brennock, analyst at London brokerage PVM Oil Associates. "Fears of an impending supply crunch are gaining traction." Stephen Innes, head of trading for Asia-Pacific at brokerage OANDA, said Brent was "supported by the notion that U.S. sanctions on Iranian crude oil exports will eventually lead to constricted markets". Edward Bell, analyst at Emirates NBD bank in Dubai, agreed: "Iranian production is already showing signs of decline, falling by 150,000 bpd last month ... (as) importers of Iranian barrels will already be moving away from taking shipments." But global oil markets are still fairly well supplied. Production by the Organization of the Petroleum Exporting Countries rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd, a Reuters survey showed. [OPEC/O] Output was boosted by a recovery in Libyan production and as Iraq's southern exports hit a record high. U.S. drillers added oil rigs for the first time in three weeks, increasing the rig count by 2 to 862. The high rig count has helped lift U.S. crude production by more than 30 percent since mid-2016 to 11 million bpd. Meanwhile, trade disputes between the United States and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon. China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month, a private survey showed on Monday. OANDA's Innes said it was too early to say whether economic slowdown would put a serious dent in oil prices. "It isn't at all clear that such type of economic headwinds will topple oil prices," Innes said.
China's foreign ministry on Friday said that putting pressure on Beijing over trade won't work, after a report that U.S. President Donald Trump is prepared to quickly ramp up a trade war between the two countries. Ministry spokeswoman Hua Chunying made the comments at a daily news briefing in Beijing. Bloomberg reported that Trump has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week.
The dollar edged up against its peers on Friday, finding support as the latest episode of U.S.-China trade tensions dulled investor risk appetite, with weakness in emerging market currencies also helping lift the greenback. The dollar index against a basket of six major currencies (DXY) was a shade higher at 94.748. The index had nudged up about 0.15 percent overnight, ending a four-day losing streak. The greenback, which tends to attract safe haven bids in times of market turmoil and political tensions, drew its latest swell of support as investors braced for the next round of the U.S.-China trade conflict. Bloomberg News reported on Thursday that U.S. President Donald Trump is prepared to quickly ramp up a trade war with China and has told aides he is ready to impose tariffs on $200 billion more in Chinese imports as soon as a public comment period on the plan ends next week. "There is an ongoing trend to buy the dollar on the trade friction theme, which has negatively affected emerging market currencies and in turn fuels the dollar's rise," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. "The euro has also taken hits, due to the euro zone's perceived exposure to emerging market economies." The euro was down 0.1 percent at $1.1662 (EUR=) after losing about 0.3 percent overnight when a rise in Italian government bond yields put additional pressure on the currency. Italian bond yields spiked on Thursday amid concerns that tax cuts and welfare spending proposed by the country's ruling coalition could worsen its debt situation. The Italian/German bond yield spread reached its widest since 2013 as a result. The Turkish lira weakened for its fifth day, last down 1.5 percent at 6.7495 per dollar and creeping back toward the record low of 7.24 per dollar plumbed on Aug. 13. "It is a bit of stretch to attribute all the euro's woes to turbulence in emerging market currencies like the Turkish lira and the Argentine peso," said Daisuke Karakama, chief market economist at Mizuho Bank. "That said, the prospect for emerging currencies remain bleak overall and will continue to fan risk aversion. And the euro is not a currency that the market gravitates toward in times of 'risk off'," Karakama added. Argentina's peso lost nearly one-fifth of its value on Thursday and fell to a record low versus the dollar. The peso has slid as investors' faith in President Mauricio's ability to tackle the economic crisis his country faces has evaporated. A huge hike in interest rates from Argentina's central bank did little to arrest the peso's fall. The South African rand dipped 0.35 percent to 14.76 per dollar after retreating more than 2 percent in overnight trade. China's yuan was about 0.15 percent firmer in onshore trade at 6.8344 per dollar after shedding 0.35 percent the previous day. The Japanese yen stood little changed at 111.000 . The yen, another perceived safe haven along with the dollar and Swiss franc, had advanced 0.6 percent on Thursday. The Swiss currency rose for the sixth successive session to reach 0.9680 franc per dollar , its strongest since mid-April. The pound stood little changed at $1.3009 . Sterling surged 1.2 percent this week, touching a four-week peak of $1.3043 on Thursday, boosted by reduced risk of a no-deal Brexit for Britain.