RUSSIAN SANCTIONS: OIL 5 MB/D
Crude-oil futures extended overnight gains in Asian trading hours Tuesday on indications of stronger U.S. oil demand and as European Union officials mull tighter sanctions against Russia.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $105.09 a barrel at 0456 GMT, up $0.50 in the Globex electronic session. September Brent crude on London's ICE Futures exchange rose $0.24 to $107.92 a barrel.
U.S. refineries ran at 93.8% of capacity in the week ended July 11, the highest level for the week since 2005, according to the U.S. Energy Information Administration.
The EIA's weekly inventory survey is due on Wednesday. The American Petroleum Institute, a trade body, will publish its weekly data later Tuesday and markets expect U.S. stockpiles to fall further, supporting oil prices.
Meanwhile, European Union foreign ministers are expected to approve sanctions against a range of Russian oligarchs on Tuesday in response to the suspected downing of a Malaysia Airlines jetliner by Moscow-backed rebels in eastern Ukraine.
However, the extent of the sanctions and the impact on the energy sector are unclear, especially considering that Russia is one of the world's largest oil and gas producers.
"Russia is exporting almost five million barrels of crude oil a day. If you want to impose sanctions on them, meaning that they don't export crude oil, the market doesn't have replacement barrels of that magnitude," Johannes Benigni, head of consulting firm JBC Energy said.
He said Europe alone takes up 3.5 million barrels a day of Russian crude and it would be much more expensive for them to buy oil from elsewhere, a move that would hurt European refiners already reeling from weak margins and multiple closures.
Nymex reformulated gasoline blendstock for August--the benchmark gasoline contract--rose 91 points to $2.9005 a gallon, while August heating oil traded at $2.8645, 57 points higher.
ICE gasoil for August changed hands at $884.25 a metric ton, up $4.75 from Monday's settlement.
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BP and its partners in Azerbaijan's giant ACG oil production complex agreed Thursday to extend the production sharing contract by 25 years to 2049 and to increase the stake of state-owned SOCAR, reducing the size of their own shares.
The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first quarter of 2017, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday. Brent crude futures LCOc1, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.
“The principal risk regarding Russian and Chinese activities in Venezuela in the near term is that they will exploit the unfolding crisis, including the effect of US sanctions, to deepen their control over Venezuela’s resources, and their [financial] leverage over the country as an anti-US political and military partner,” observed R. Evan Ellis, a senior associate in the Center for Strategic and International Studies’ Americas Program.