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Energy Sector Update for 08/10/2018: BHGE, XOM, CVX, RDS.A, RDS.B, BP, E, COP, TOT, PBR, PBR.A, EC, SLB, HAL, NOV, SPN


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(Updates with the price move, the IEA/EIA reports and general market commentary from the first paragraph.)

Crude climbed intraday after the International Energy Agency ( IEA ) revised up on Friday its forecast for the global oil demand. But, for the week, prices ended lower because of demand concerns relating to the US-China trade dispute as well as a faster-than-expected surge in the supply of oil from Russia.

Brent and West Texas Intermediate ( WTI ) futures were firmer after media reports cited the International Energy Agency as saying in a monthly research note that it was lifting its forecast for global oil demand growth by 110,000 barrels a day to 1.5 million barrels for 2019.

Oil was also supported as US sanctions against Iran were all but certain to tighten supply from one of the biggest oil producers in the world. Analysts expect Iranian crude exports to fall by between 500,000 and 1.3 million barrels per day, with buyers in Japan, South Korea and India already dialling back orders, a report from Reuters said.

The IEA also warned that the full reimposition of sanctions by November would put more pressure on the Organization of the Petroleum Exporting Countries (OPEC) exports, creating a bullish set-up for oil prices .

Additionally, investors have been concerned that the trade dispute between the US and China could eventually hit global growth even though crude is not on the Chinese retaliatory list yet.

In an update on Friday, China's Ministry of Commerce called the US measures "unreasonable" and said it had to counter them "to safeguard its legitimate rights and interests and the multilateral trading system," the Wall Street Journal reported.

However, the IEA monthly report also had some bearish news baked in it for the market as it stoked supply concerns, which were further exaggerated after Baker Hughes ( BHGE ) data showed late Friday that the US oil rig count climbed to a 41-month high.

The IEA report said Russian crude output jumped by 150,000 barrels a day in July to 11.21 million barrels per day. The "significantly sharper acceleration than expected" brought total Russian production to near its peak scaled in October 2016, the agency was cited as saying.

Additionally, a separate report from the Wall Street Journal noted that global oil supply soared by 300,000 barrels a day in July to 99.4 million barrels per day, in part due to stronger output from Kuwait and the United Arab Emirates, which are members of the OPEC, which was encouraged earlier this year by US President Donald Trump to raise output.

Meanwhile, the number of oil rigs operating in the US jumped by 10 to 869, the highest level since March 3, 2015, according to Baker Hughes, which tracked the seven-day period ending Aug. 10.The combined oil and gas rig count in the US rose by three to 1,057, as gas rigs edged up by three to 186.

In Canada, the number of oil rigs in operation dropped by 12 to 140, while the number of gas rigs slipped by two to 69. Consequently, the North American total fell by one to 1,266 in the week and compared with 1,169 a year ago, the data showed.

The US crude inventories data was also bearish this week, keeping a lid on oil prices.

US crude stocks fell much less than expected this week. The Energy Information Administration said Wednesday stockpiles slumped by 1.4 million barrels over a week to July 8 versus expectations of a 3.3 million-barrel plunge in a Reuters' survey of analysts.

Intraday Friday, Brent and WTI futures were higher by about 1%, losing some of their gains after the jump in the US oil rig count seen late Friday in data from Baker Hughes.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.



This article appears in: Investing , Energy
Referenced Symbols: IEA , WTI , BHGE , XOM , CVX



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