Global oil prices rose sharply on Tuesday, with expectations that the OPEC+ alliance will keep its existing crude supply cuts in place when the groupings meet on 2 June, buoying prices, reports Forbes.
Oil Trading News: A Market Overview
The dollar’s weakness also saw oil being seen by investors holding other currencies as attractive.
The July contract for Brent crude, the global benchmark, rose 57 cents, or 0.7%, to $83.67 a barrel by the late evening. US benchmark West Texas Intermediate (WTI), which benefited from its continuing trading over the US Memorial Day holiday on Monday, added $1.64, or 2.1%, from the previous close to $79.36.
Oil Trading News: The Impact of Brent and WTI
In oil trading news today, both Brent and WTI were more than 1% up in the first trading day of the week.
Often there are more summer trips scheduled, along with college students home from school and Americans who want to take off on a drive to escape the stifling summer heat for at least a few days.
Plus, as Jim Ritterbusch of Ritterbusch and Associates points out, there’s been a sudden weakening of the dollar coupled with increasing consensus that the OPEC+ group of nations will be extending production cuts at their next meeting.
Oil Trading News: Dollar’s Decline and Its Consequences
The dollar’s decline to just below a more than one-week low added to oil’s appeal, making it less expensive for holders of other currencies.
The declines in the US dollar came as concerns about enduring US interest rates pushed crude to a weekly loss just a day earlier. Investors await the US core personal consumption expenditures price index (PCE), one of the Fed’s key inflation indices, due on Friday.
Oil Trading News: Interest Rates and Market Sentiment
With oil prices shooting up this year, despite expectations that interest rates would continue to rise until inflation came down, many wonder whether high interest rates have the power to slow down further price rises after all.
Economies are generally seen as too wobbly to withstand high interest rates. But it looks like the trendy new way to look at the economy in real-time – mobility tracking data – still suggests broadly strong demand.
Top Stocks Today: European Markets Edge Higher!
‘Mobility figures remain healthy, so this means the Q1 demand was strong,’ Giovanni Staunovo, an analyst at the investment bank UBS, told Bloomberg.
Oil Trading News: U.S. Travel Data Boosts Demand
Latest trading in oil markets: I think you’ll find demand for jet fuel is holding up nicely.
US domestic flight seat numbers for May are up 5% month-on-month and nearly 6% year-on-year. More than 2019 levels.
Oil Trading News: The Anticipated OPEC+ Meeting
Still coming up on the oil trading news calendar: is the online meeting of OPEC+ oil producers on Sunday.
The event is a big deal because, largely, the assumption is that the current 2.2 million barrels-per-day voluntary production cut has a good chance of remaining in place.
Oil Trading News: Canadian Market Reactions
The stock market in Canada tumbled on Tuesday as losses in the industrial sector weighed on the main stock index.
Investors were taking a look at producer price data domestically to help glean the future path of interest rate hikes by the Bank of Canada.
The prices Canadian producers paid increased by 1.5% in April as compared with March, raising in part due to higher prices for non-ferrous metal and energy products.
The producer price data illustrate in part how changes in the price of oil and other commodities can reverberate throughout the economy and impact other sectors and markets.
Oil trading news continues to demonstrate how a ‘buy low, sell high’ mentality remains critical in larger stock markets.
Oil Trading News: Investor Focus on Inflation and Central Banks
With inflation persistently on investors’ minds in Canada and abroad, markets were still watching for central bank actions.
They now expect two Bank of Canada rate cuts in 2024, a full 25 basis points in July.
Energy stocks, meanwhile, saw a 0.7% gain as oil prices rose on hopes of strong US summer fuel demand and continued supply curbs by the Organization of the Petroleum Exporting Countries (OPEC+).
Oil Trading News: Significant Energy Sector Deals
Prompted by preliminary jumps in oil trading, Energy Transfer on Thursday disclosed it would buy WTG Midstream Holdings for around $3.25 billion.
The deal, expected to close in the fourth quarter, is part of a buzz of Permian Basin dealmaking aimed at expanding transportation and processing networks in the key oil-producing region as drillers continue to send record volumes to market.
Around $2.45 billion of the deal comprises cash and Energy Transfer stock, which represents some 50.8 million newly issued Energy Transfer shares.
The acquisition is expected to expand, ‘or reduce the cost of providing’, Energy Transfer’s Permian-production capacity, the companies said.
Oil Trading News: Geopolitical Tensions Affecting Markets
Geopolitical tensions in the Gulf also weighed on oil trading news, as most stock markets in the area fell. Saudi Arabia’s benchmark index fell for a fourth day, while the Abu Dhabi index slipped to its lowest level in more than two years.
Eyes are now on US inflation data due in the coming week that could have an impact on global market sentiment. It is this mix of geopolitical and economic factors that can lead to an exploding situation in oil trading.
Oil Trading News: Institutional Investor Concerns
An association of European and North American institutional investors told the companies that: If there is a consistent pattern of shareholder disputes being resolved through litigation or government action rather than by shareholder rights, this could discourage shareowner proposals on sustainability-related matters that are material to the management of equity and fixed income portfolios.
The group was responding to a lawsuit that Exxon Mobil had launched against the activist groups behind the climate resolution.
Oil trading news like this is becoming more common, as big economic powers turn their gaze on another frontier – environmental and social governance (ESG).
Oil Trading News: A Comprehensive Summary
Futures of global oil prices rose to a two-week high, fuelled by expectations of supply cuts from OPEC+ and a weaker US dollar.
Benchmark Brent climbed above $110 a barrel, while U S West Texas Intermediate (WTI) also rose above $109 a barrel, a region where it has been trading. Robust US demand this summer’s driving season has lent a hand to further price rallies.
But, at the same time, some analysts have expressed concerns that US interest-rate hikes will cap further upside.
Next week’s inflation data release will shed more light on the market’s direction, with the OPEC+ meeting eyed in coming weeks.
These days, it is harder to find negative news. Real-time mobility data has shown that people have been moving freely without any signs of reluctance anywhere.
Air traffic flow has also increased; the overall scene is quite promising for the oil market.
Oil Trading News: Sudan Pipeline Repaired, Set to Resume Operations Soon
A Sudanese oil pipeline damaged in clashes in February will start pumping South Sudanese crude oil in a matter of two weeks, an official from the South Sudan oil ministry told Reuters on Tuesday.
This correction to the oil trading news sheet involves the Petrodar pipeline.
This was a consortium project involving China National Petroleum (CNPC), Sinopec, and Malaysia’s Petronas.
Historically it has pumped around 100,000 barrels per day (bpd) of South Sudanese crude oil more than 1,500km (932 miles) to a Red Sea coast terminal in Sudan.
Oil Trading News: Conflict-Related Disruptions
Officials in Sudan favored the army and blamed the stoppage on the rival Rapid Support Forces (RSF), particularly on an RSF-led group in control of the area where the damaged pump station was located.
The RSF denied these allegations.
Along with the importance of the country for oil trading news, regional conflicts are having a greater impact on how the energy sector operates.
Oil Trading News: Technical Challenges
South Sudan’s Dar Blend crude – waxy and with a low sulfur content – has to be kept hot to stop it from solidifying inside the pipeline.
‘We repaired the induced break but you have gelling along the line,’ said William Anyak Deng, an undersecretary in South Sudan’s oil ministry, confirming the jargon.
It is a technical issue, true, but it remains an important part of the oil trading story today.
Oil Trading News: Economic Implications
That 90% of government revenue comes from oil, which also subsidizes basic goods and services. In turn, Sudan takes a fixed transit charge for allowing the flow of oil across its territory.
Both countries need that oil revenue, and, as we have seen, South Sudan might fail economically and politically without it in the short term.
Oil Trading News: Resumption of Exports
But progress in repairing the line is being held up by the 13-month war between North and South Sudan. Most of the crude flows to storage tanks where the wax solidifies as it cools. Then the oil will flow, although whether hot water or diesel will be used to wash the wax away is a question ‘we are still discussing’, Deng said. Oil trading news is now all about the Gulf.
Oil Trading News: International Cooperation
But then again, China, one of four companies in the Petrodar consortium (which originally awarded the contract), pledged its continuing ‘support and cooperation’ over the pipeline issues as well. ‘We all believe that an independent, effective and melic Mazir-Mombasa pipeline can make a huge contribution to the development of the two countries,’ declared China’s ambassador to South Sudan, Ma Qiang, in a statement clearly in the international key.
Oil Trading News: Key Points
Pipeline Repair And Resumption: A key oil pipeline into Sudan that was damaged in February is to be repaired and resume operations within two weeks, according to oil trading news.
Petrodar pipeline: A consortium, including China’s CNPC, Sinopec, and Malaysia’s Petronas, pumps 100,000 bpd of South Sudan’s crude via the privately operated Petrodar pipeline.
Conflict effect: the stoppage was identified as the RSF by Sudanese auxiliary armed forces allies; the RSF said that wasn’t the case; again, note the conflict-related disruptions in articles on oil trading.
Technical complications: the patch job caused parts of the pipeline to gel, as South Sudan’s Dar Blend is a waxy crude that needs to be heated to help it flow.
Economic Significance: Oil is critical for South Sudan’s economy; it accounts for 90% of the country’s foreign exchange earnings, and the Petrodar pipeline carries about two-thirds of South Sudanese oil exports.
Looming Economic Collapse: Analysts warn of economic meltdown in South Sudan, and social and political instability if the pipeline is not reconstituted as a principal revenue stream.
Oil exports will be resumed once they find hot water or diesel to melt the wax from the pipeline. Exports Resumption Schemes: 1) Oil will be exported as soon as water or diesel is used to clear the ever-lasting wars in the pipe, which could not find its end soon.
International involvement: ‘China has pledged to continue to work with the United States and other countries to resolve the issue.’
Strategic Significance: Strategic Significance: the importance of the Petrodar pipeline for regional oil-trading news is clear as it is one of the two main pipelines for Sudan.
Pipeline Outlook: With access to oil trading news, it is vital for Sudan and South Sudan that this vital economic lifeline is successfully reopened once more to avoid economic catastrophe.
Conclusion
In summary, recent oil trading news points to a continuation of positive developments in the global oil market amid expectations of OPEC+ keeping its supply cuts in place, the continued fall of the greenback, as well as positive demand indications from the U.S. summer travel season.
The question of what impact higher interest rates will have on oil prices is still up in the air.
The market sentiment is generally cautiously optimistic, with investors and analysts closely watching the latest developments in the major economies and the next decisions by OPEC+.
Oil trading news demonstrates the complexity and dynamism in prices due to a set of economic and political factors.
