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Mohamed Mohamoud

Author and the owner of idman news

July 24, 2021

Idman news

Wararka Jaraaidyada Soomaalida ay qoreen

Oil mixed as traders eye Texas output recovery and next week’s OPEC+ meetings


Oil futures traded on a mixed note on Tuesday, with U.S. prices inching lower as the global benchmark flipped between modest losses and gains after touching their highest intraday levels in 13 months.

Traders eyed the pace of recovery in Texas energy output in the wake of last week’s winter storms, as well as speculation surrounding a decision on production by major oil producers next week.

“The near-term focus is on getting operations in Texas back to normal, after extreme winter conditions caused a temporary drop in U.S. crude production of around 40%,” said Robbie Fraser, manager of global research and analytics at Schneider Electric. “While most production should be able to make a quick return, refineries face a more challenging path, with potential damage to infrastructure complicating a complete recovery.”

Still, “downside risk further out remains pronounced with millions of barrels of OPEC+ and potential U.S. shale production awaiting a return,” he said in a note. The Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, will hold meetings next week and are expected to make a decision on oil production levels.

However, “for now, the market remains focused on a stronger-than-expected global demand recovery,” said Fraser.

West Texas Intermediate crude for April delivery
CL.1,
-0.26%

CLJ21,
-0.26%

fell 21 cents, or 0.3%, to $61.49 a barrel on the New York Mercantile Exchange after trading as high as $63.

April Brent crude
BRNJ21,
-0.05%
,
the global benchmark, rose 5 cents, or less than 0.1%, to $65.31 a barrel on ICE Futures Europe. Most-active May Brent crude
BRNK21,
-0.03%

BRN00,
-0.03%
,
which will become the front-month contract after Friday’s settlement, was up 6 cents, or 0.1%, at $64.42 a barrel.

“There is also a growing view that the oil market is looking increasingly tight over the remainder of the year, with a number of analysts revising higher their price forecasts over the last week, including us,” said Warren Patterson, head of commodities strategy at ING, in a note.

Goldman Sachs on Monday lifted its forecasts, calling for Brent to hit $75 a barrel by the end of the year. ING last week raised its 2021 forecast for the global benchmark, raising its outlook to $65 a barrel versus its previous forecast of $60 a barrel.

In a note dated Monday, analysts at BofA Securities said they have lifted its average Brent crude forecast to $60 this year and that prices may temporarily spike to $70 in the second quarter. In June, the analysts expected an average $50 price for Brent crude in 2021, with a possible spike to $60 in the second quarter.

Meanwhile, “the situation in Texas, which is home to many oil production and processing facilities, is worrying: temperatures below zero and the power and gas supply cuts that this has necessitated have paralyzed virtually all refineries in Texas, which have a daily production of up to 5.1 million barrels and account for more than a quarter of total U.S. refinery capacity,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.

“So far, less than half has gone back into operation, which will likely weigh on supply both within and outside Texas. It will probably take even longer for Texan oil production to return to normal,” he said.

Still, Commerzbank contends optimism is overly upbeat and sees room for prices to turn lower after the brisk run-up.

“For one thing, we are still somewhat skeptical about demand, and for another the production discipline shown by OPEC+ is likely to falter in view of the high prices,” Weinberg said. “We also see a good chance of Iranian oil exports returning to the market if agreement can be reached with the U.S. and sanctions are lifted.”

Back on Nymex prices for petroleum products moved lower. March gasoline
RBH21,
-0.07%

fell 0.3% to $1.8362 a gallon and March heating oil
HOH21,
-0.22%

shed 0.4% to $1.8516 a gallon.

The Energy Information Administration will issue its weekly data on U.S. petroleum supplies on Wednesday. On average, analysts polled by S&P Global Platts forecast a decline of 4.8 million barrels in crude stockpiles for the week ended Feb. 19. They also expect supply declines of 2.8 million barrels for gasoline and 3.5 million barrels for distillates.

March natural gas
NGH21,
-3.01%
,
which expires at the end of Wednesday’s session, traded at $2.865 per million British thermal units, down 3%.



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Lasoco xaaladda EAST AFRICAN COUNTRIES ugu danbaysay ee Xanuunka CORONAVIRUS .