Author Topic: Oil gains on seasonal demand, U.S. shale outlook  (Read 1048 times)

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Oil gains on seasonal demand, U.S. shale outlook
« on: June 09, 2015, 10:55:48 PM »
Oil gains on seasonal demand, U.S. shale outlook

By Simon Falush

LONDON (Reuters) - Oil prices rose above $64 a barrel on Tuesday as higher seasonal demand in developed economies and expectations of falling U.S. shale production reduced the impact of a large global supply overhang.

Brent for July delivery was up $1.67 at $64.36 a barrel at 1139 GMT, having settled down 62 cents in the previous session.

Front-month U.S. crude climbed $1.33 to $59.47 a barrel, after ending the previous session down 99 cents.

Demand for oil tends to increase in the summer months as drivers take to the roads for holidays in Europe and the United States. This has helped to lessen the impact of a growing glut in supply that has led to tankers storing oil at sea.

"There is currently seasonal demand for oil, so there is less of a build in crude oil stocks," said Olivier Jakob at Petromatrix in Zug, Switzerland. "But there is still too much oil for the rally to take hold."

Hopes of more economic stimulus in China after disappointing data from the world's second-biggest economy also provided some support for oil prices.

China's consumer inflation weakened more than expected to 1.2 percent year on year in May, raising concerns about growing deflationary pressures as the economy cools. Its producer prices fell for the 38th consecutive month.

The outlook for strong supply looks entrenched, with OPEC on Friday agreeing to continue unconstrained output and Iran and Iraq potentially boosting production.

A likely fall in shale oil production in the United States also supported prices.

One New York-based trader said OPEC's decision last week to keep supply unchanged at more than 30 million barrels per day was having the intended consequence of limiting competition from the United States.

Oil production declines from the largest U.S. shale plays are forecast to deepen for a third consecutive month in July even as rig productivity remains high, monthly drilling data from the U.S. Energy Information Administration showed on Monday.

However, some analysts said that these falls in production will not make a significant dent in supply.

"We feel that at best, even with monthly declines in U.S. production, we will only be chipping away at the massive crude inventory mountain in the U.S.," Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil Forum.

Investors were awaiting weekly data on Tuesday from the American Petroleum Institute for more evidence that U.S. stockpiles were falling.

Other EIA data due on Wednesday is expected to show U.S. commercial crude oil stocks falling for a sixth straight week in the week ended June 5, a preliminary Reuters survey showed on Monday.
"Price is the most important factor to use in relation to value."  - Walter Schloss

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #1 on: June 09, 2015, 11:01:25 PM »
America's Shale Oil Boom Is Grinding to a Halt

The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt.

Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday.

With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March.

“Production has to come down because rigs drilling for oil are down 57 percent this year,” James Williams, president of energy consultancy WTRG Economics, said by phone Monday from London, Arkansas. “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.”

West Texas Intermediate crude for July delivery added 24 cents to $58.38 a barrel in electronic trading on the New York Mercantile Exchange at 8:38 a.m. London time. Futures have rebounded 30 percent since March 18 through Monday amid speculation U.S. oil drillers had laid down enough rigs to curb

Fewer Rigs
Despite the U.S. oil rig count falling for 26 straight weeks, domestic crude production surged 126,000 barrels a day, or 1.3 percent, to 9.53 million in March, the most since 1972, Energy Information Administration data show.

“We do not believe that the direction of U.S. oil output has changed,” Standard Chartered analysts including Nicholas Snowdon said in a research note June 1. “In our view, U.S. oil supply is still falling, and it is likely to carry on falling for the rest of this year.”

Shale oil output will decline by 105,000 barrels a day in July after dropping 86,000 barrels in June, according to the London-based bank.

EOG Resources Chief Executive Officer Bill Thomas said at a conference last month that U.S. production would drop through the end of the year.

The EIA’s forecasts for U.S. oil production cover the yield from major plays that together accounted for 95 percent of domestic output growth from 2011 to 2013.

Eagle Ford
Output from the Eagle Ford in Texas, the second-largest oil field in the U.S., will contract by 49,000 barrels a day in July to 1.59 million. Production in the Bakken shale region of North Dakota will slip by 29,000 to 1.24 million, the EIA said.

Yield from the Permian Basin in West Texas and New Mexico, the largest U.S. oil field, will rise by 3,000 barrels a day to 2.06 million.

The EIA’s oil-production forecasts are based on the number of rigs drilling in each play and estimates on how productive they are.

U.S. drillers are retreating from oil fields as OPEC, which accounts for more than a third of the world’s oil, continues to resist calls to curb its own supply. The 12-nation group decided last week to instead maintain a combined daily crude-production target of 30 million barrels. Output from the group has exceeded that level for each of the past 12 months, according to data compiled by Bloomberg.

Pyrrhic Victory
The EIA expects production from the shale plays to fall in July by 93,000 barrels a day, the largest drop since the boom began. The steepening decline provides some validation to OPEC members who decided to preserve their market share and let falling prices force others to cut back, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $3.4 billion.

It may be a Pyrrhic victory for some OPEC members, such as Venezuela, whose budgets have been hampered by oil prices that fell more than 50 percent from last summer. The declines in U.S. production might not be piling up fast enough to boost crude revenues for them, O’Grady said.

“You’re seeing production go down, but is it going down fast enough?” O’Grady said by phone Monday. “If you’re a country like Venezuela, is it happening fast enough for you to basically be saved? That’s really the rub.”
"Price is the most important factor to use in relation to value."  - Walter Schloss

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #2 on: June 09, 2015, 11:17:27 PM »
Gold rises on weaker dollar, but U.S. rate view caps gains

By Jan Harvey

LONDON (Reuters) - Gold rose on Tuesday as the dollar edged lower and commodities picked up across the board, though gains were capped by caution as investors awaited clearer signals on the timing of a U.S. interest rate rise.

A retreat in the U.S. currency helped gold rebound further after it fell for a third straight week last week. The dollar eased on lingering worries about whether U.S. authorities were comfortable with its recent strength. [FRX/]

Spot gold was up 0.7 percent at $1,181.80 an ounce at 0931 GMT, while U.S. gold futures for August delivery were up $7.10 an ounce at $1,180.70.

"The market is really dollar-driven at the moment," MKS's head of trading Afshin Nabavi said. "(But) I don't think the fall in gold is over. We're not seeing any kind of real interest on the physical front, so for me it points to an eventual breach of $1,150."

"For the moment, everyone's cautious. We're still stuck in a range, but it's getting lower and lower -- it's probably at $1,150-$1,185 for the time being. We just have to see what news comes out of the United States."

Gold fell to $1,162.35 on Friday, its lowest since March 19, after upbeat U.S. payrolls data bolstered expectations the Federal Reserve would lift rates for the first time in nearly a decade in September.

That would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Intensifying speculation that the Fed could raise interest rates sooner than many expect put pressure on stocks in Europe and Asia on Tuesday, though this failed to give the dollar a significant boost.

Commodities were generally stronger, with benchmark Brent crude oil futures up 1.6 percent and copper prices higher.

Investor positioning continued to reflect bearish sentiment. Holdings of SPDR Gold Trust, the world's top gold-backed exchange-traded fund, are at their lowest since mid-January, undermining any gains in the metal.

In the physical markets, there were signs of bargain-hunting by Chinese consumers after Friday's drop in prices. Premiums on the Shanghai Gold Exchange were about $2.50 an ounce to the global benchmark, up slightly from $1.50-$2 last week.

Expectations of a further drop in prices and better returns from surging equities in China have tamed demand for gold in Asia despite recent price declines.

Among other precious metals, silver was up 1.3 percent at $16.12 an ounce, while platinum rose 0.8 percent to $1,111.50 an ounce and palladium was up 0.9 percent at $748 an ounce.
"Price is the most important factor to use in relation to value."  - Walter Schloss

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #3 on: June 09, 2015, 11:34:32 PM »
Oil price up tomorrow what counter to buy??

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #4 on: June 10, 2015, 04:58:11 AM »
Oil price up tomorrow what counter to buy??

Sell on bounce ??

Offline Eric yk

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #5 on: June 10, 2015, 09:49:13 AM »
why no up no volume one???

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #6 on: June 10, 2015, 09:55:51 AM »
why no up no volume one???

Investors/players

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Offline Eric yk

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Re: Oil gains on seasonal demand, U.S. shale outlook
« Reply #7 on: June 10, 2015, 07:20:50 PM »
the oil price was up!!!! why most of the oil counter still quiet one??????