OIL STOCKS & PRICES UP
FT - Oil prices hit their highest level since 2014 on Thursday, moving above $74 a barrel and lifting energy companies to the top of global stock indices.
Production cuts by Opec and Russia over the past 16 months have helped crude prices rally, with the latest increase also tracking rising geopolitical risks to supplies, from Venezuela's economic spiral to the risk of the US reimposing sanctions on Iran.
Brent crude touched its highest level since 2014 on Thursday, taking the international marker's year-to-date gain to almost 8 per cent. At the time the production curbs were approved, Brent was trading around $55 a barrel.
Opec's ministerial committee on Friday is to meet large crude producers from outside the cartel led by Russia to assess the effect so far of their 1.8m barrels a day supply curbs.
While prices have rallied and global inventories have fallen, Opec is still seen as increasingly likely to maintain the cuts into 2019. Saudi Arabia, the cartel's largest producer and de facto leader, has given little indication it wants to reduce the cuts, even as prices hit new heights.
Brent crude rose as much as 1.3 per cent to $74.72. At the time the production curbs were approved in January 2017, Brent was trading at about $55 a barrel.
"We are rapidly transitioning from a market drowning in oil to a new reality of undersupply and low storage levels," said Richard Robinson, manager of the Ashburton Global Energy Fund.
"At the same time, the market is facing heightened risk to current supply — as a result of the lack of spend and increasing political volatility in oil-producing nations — such as Venezuela, Angola and Iran. The seed is being sown for a structurally higher oil price, combined with heightened probability of risk premium," he added.
Fears about the impact on global growth of the US-China trade dispute eased as the two countries held back from a further escalation this week, while confirmation of high-level talks between Washington and North Korea also brightened the geopolitical backdrop.
In the US, the rebound for crude has brought investors back to resource stocks in April, after a moribund showing for the sector for the rest of 2018. The energy component of the S&P 500 was up 9 per cent over the month to date, outperforming a rise of about 2.6 per cent for the wider S&P 600.
The trading pattern was also helped by a drop of 1.1m barrels in US inventories, according to data released on Wednesday.
Oil-linked currencies also stood out, making notable gains over the month to date on global markets. The Australian and Canadian dollars gained by about 2 per cent against their US equivalent. Norway's krone was up 0.6 per cent over the same period against the euro.
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API - American Petroleum Institute reported that the first four months of this year saw U.S. petroleum demand average 750 thousand barrels a day above the same period in 2017 despite higher prices, a sign of solid economic activity. April also saw the U.S. produce a record 10.5 million barrels per day (MBD) of oil.
IMF - “Egypt’s growth has continued to accelerate during 2017/18, rising to 5.2 percent in the first half of the year from 4.2 percent in 2016/17. The current account deficit has also declined sharply, reflecting the recovery in tourism and strong growth in remittances, while improved investor confidence has continued to support portfolio inflows. In addition, gross international reserves rose to $44 billion by end-April, equal to 7 months of imports.
BAKER HUGHES A GE - U.S. Rig Count is up 1 rig from last week to 1,046, with oil rigs unchanged at 844, gas rigs up 1 to 200, and miscellaneous rigs unchanged at 2. Canada Rig Count is up 4 rigs from last week to 83, with oil rigs up 6 to 38 and gas rigs down 2 to 45.
REUTERS - Brent crude futures LCOc1 were at $79.57 per barrel at 0310 GMT, up 27 cents, or 0.3 percent from their last close. Brent broke through $80 for the first time since November 2014 on Thursday. U.S. West Texas Intermediate (WTI) crude futures were at $71.62 a barrel, up 13 cents, or 0.2 percent, from their last settlement.