Tag: Brent Crude

Oil tumbles as Iran, China discuss supply

Brent crude oil fell below $58 a barrel on Tuesday on signs of growing oversupply as Iranian officials visited Beijing to seek more oil sales following the framework nuclear deal that could lead to the lifting of sanctions.

China is Iran’s largest trade partner and has bought roughly half of its crude exports since 2012, when sanctions against the Islamic Republic were tightened.

Oil markets were also pressured by a Goldman Sachs report saying prices needed to remain low for months to slow U.S. oil output growth.

Brent LCOc1 was down 70 cents at $57.42 a barrel by 1335 GMT. U.S. crude CLc1 was down 75 cents at $51.39 a barrel.

Representatives of state-run National Iranian Oil Company will meet China’s biggest crude buyers including Unipec, the trading arm of top Asian refiner Sinopec Corp (0386.HK), and state trader Zhuhai Zhenrong Corp, officials told Reuters.

Global oil markets already face a supply glut with producers pumping over 1.5 million barrels per day (bpd) more than demand in the first half of this year, analysts say.

“There is a massive oversupply. Stocks are rising and now we have the prospect of more Iranian oil coming onto the market,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.

Goldman said in a research note it expected U.S. crude inventories to top out in April and subsequently be drawn down at 350,000 bpd during the May-September period, when demand for fuel to power cars and air-conditioners is at its greatest.

Still, the bank said it saw little upside for its $40-a-barrel forecast over the next three months, anticipating inventories would rise again by October, pressuring prices into 2016.

“Prices need to remain low in coming months to achieve a sufficient and sustainable slowdown in U.S. production growth,” the bank said, adding that the U.S. outlook for 2016 made its forecast for $65-a-barrel oil next year look too high.

Source: Reuters

Shares fall and gold rises as global worries mount

Shares across the world fell sharply on Friday, pushing a global index to a six-month low, as investors worried about the prospect of a widespread economic slowdown while U.S. monetary stimulus nears its end.

Assets which depend on economic growth, such as shares and oil, have been hit by a raft of weak indicators from Europe at a time when other big economies, including China, Japan and Brazil face their own hardships.

Meanwhile, the U.S. Federal Reserve is set to wind down later this month the asset purchase programme which has boosted markets over the past two years. Many observers doubt the recent stimulus measures unveiled by the European Central Bank will make up for it.

Brent crude futures tumbled to their lowest since 2010 while gold, seen as a safe asset at times of uncertainty, was headed for its best week in nearly four months.

“There has been a barrage of negative thoughts on growth and growth assets,” Stewart Richardson, a partner of macro hedge fund, RMG Wealth Management, said.

“I believe we’re entering a bear market. We’ve been trying to be short equities and we’ve been focusing our shorts in Europe and small caps,” he said, referring to bets that shares in those markets will keep falling.

The MSCI All-Country World index .MIWD00000PUS fell 0.6 percent to its lowest level since April 18 at 404.50 points, taking its loss since the start of the week to 1.6 percent.

The index, which is eyeing its third consecutive weekly fall, has retreated by nearly 7 percent since testing an all-time high last month.

A string of dismal data from Germany and other large euro zone economies in recent weeks has fed anxieties about a possible recession in the region while the jury is still out on the European Central Bank’s proposed policy response.

The ECB’s covered bond buying programme, a key part of the bank’s latest package, has yet to kick in and some investors remain doubtful it will be sufficient to shore up growth and inflation in the currency bloc while the Fed reins in its own stimulus.

Adding to jitters about monetary policy expectations, St. Louis Federal Reserve Bank President James Bullard said he was concerned by a disconnect between the market’s view of the Fed’s rate-increase path and the central bank’s own view.

Financial markets have constantly expected much slower tightening by the Fed than U.S. central bank policymakers’ own projections.

The concerns on global growth hit oil prices hard. European benchmark Brent crude oil fell 1.1 percent at $89.08, having hit its lowest level since December 2010 at $88.11.

Gold, steady at $1,223.20, retained gains from a four-day rally and was headed for its best week in nearly four months.

Wall Street stocks had slumped 2 percent on Thursday, with the S&P 500 index .SPX hitting a two-month closing low. The CBOE volatility index .VIX, a measure of investor anxiety, rose to highs not seen since early February.

“If U.S. stocks jumped back today, then the market could go back to the same habit of assuming everything will be alright. But if they fall big for two days in a row, markets will be clearly entering a whole new phase,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp. – Reuters