OIL PRICES: BELOW $50
Oil extended losses below $50 a barrel amid speculation that U.S. crude inventories will expand, exacerbating a global supply glut that's driven prices to the lowest level since April 2009.
Futures fell as much as 1.4 percent in New York, declining for a fourth day. Stockpiles in the world's biggest oil consumer probably rose by 750,000 barrels last week, a Bloomberg News survey shows. A gauge of the dollar held near a nine-year high, diminishing the investment appeal of commodities, as the Federal Reserve weighs raising interest rates and amid concern that Greece will leave the European Union.
Oil slumped almost 50 percent in 2014, the most since the 2008 financial crisis, after the Organization of Petroleum Exporting Countries resisted calls to cut output as they compete with U.S. producers. The market faces "more problems" this year, according to Morgan Stanley, with surging exports from countries including Russia and Iraq contributing to a surplus that Qatar estimates at 2 million barrels a day.
"No one is willing to cut supplies while the strong dollar is playing a negative role with uncertainties growing in Europe," Will Yun, an analyst at Hyundai Futures Corp. in Seoul, said by phone today. "Even if prices fall below $40, the market may not be too surprised."
West Texas Intermediate for February delivery dropped as much as 72 cents to $49.32 a barrel in electronic trading on the New York Mercantile Exchange and was at $49.57 at 4 p.m. Singapore time. The contract slid $2.65 to $50.04 yesterday, the lowest close since April 28, 2009. The volume of all futures traded was about 40 percent above the 100-day average.
Brent for February settlement decreased as much as 83 cents, or 1.6 percent, to $52.28 a barrel on the London-based ICE Futures Europe exchange. It lost $3.31, or 5.9 percent, to $53.11 yesterday, the lowest since May 1, 2009. The European benchmark crude traded at a premium of $3.05 to WTI today.
U.S. crude inventories probably increased to 386.2 million barrels in the week ended Jan. 2, according to the median estimate in the Bloomberg survey of eight analysts before a report from the Energy Information Administration tomorrow.
Distillate stockpiles, including heating oil and diesel, are projected to have gained by 2.13 million barrels, the survey shows, while gasoline supplies may have climbed 4.5 million.
The euro was steady after weakening against the dollar yesterday amid speculation the European Central Bank has moved closer to large-scale sovereign-bond purchases. Greece began an election campaign that Prime Minister Antonis Samaras said may lead to an exit from the euro region should the opposition Syriza party win.
Saudi Arabia, the world's largest oil exporter, raised prices for shipping crude to Asia in February. Its main Arab Light grade will sell for $1.40 a barrel below the average of Middle East benchmark Oman and Dubai grades, according to an e-mailed statement yesterday.
Last month, state-owned Saudi Arabian Oil Co. offered a $2 discount for Arab Light exports, the steepest in at least 14 years. The move was followed by Iraq, Kuwait and Iran, bolstering speculation that OPEC's Middle East producers were prepared to let prices fall to defend market share amid the North American shale boom.
U.S. output climbed to 9.14 million barrels a day through Dec. 12, the highest in weekly data that started in January 1983, according to the EIA. OPEC's 12 members, which supplies about 40 percent of the world's oil, pumped 30.56 million a day in November, exceeding their collective target of 30 million for a seventh straight month, a separate Bloomberg survey of companies, producers and analysts shows.
Production may expand from fields in West Africa, Latin America, the U.S. and Canada in addition to increased supplies from Russia and Iraq, Morgan Stanley said in an e-mailed report yesterday. Iran may boost overseas exports by about 500,000 barrels a day if western sanctions are lifted, the bank said.
In Libya, a Greek-operated oil tanker was bombed near a port in the east after it failed to provide details of its itinerary, said Ahmad al-Mismari, a spokesman for the military. The air strike killed two sailors, underscoring a rising threat to shipments from the OPEC nation where violence is escalating.
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.