Crude holds gains in Asia despite weak Caixin PMI reading - Sean Seshadri

Crude prices held gain in Asia on Thursday despite a weaker than expected reading in a private manufacturing PMI that showed a drop into contraction in May.

On the New York Mercantile Exchange crude futures for July delivery rose 0.95% to settle at $48.78 a barrel, while on London's Intercontinental Exchange, Brent last gained 0.22% at $51.19 a barrel.

China's Caixin manufacturing PMI for May came in at 49.6, marking an 11-month low and slipping into contraction as it missed a level of 50.1 seen.

"China's manufacturing sector has come under greater pressure in May and the economy is clearly on a downward trajectory," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the Caixin survey.

Demand faltered in May as total new orders fell to 50.3 - the lowest level in 11 months - from the previous month's 51.0. The rate of expansion in new export orders also weakened significantly, showing only marginal growth.

Overnight, China reported official manufacturing PMI for May at 51.2, compared with a level of 51.0 seen, and steady with 51.2 in April. The non-manufacturing PMI came in at 54.5, up from a level last at 54.0 in April. A figure above 50 denotes expansion.

U.S. crude oil inventories dropped 8.670 million barrels at the end of last week, the American Petroleum Institute said on Wednesday, far more than expected as gasoline supplies eased 1.726 million barrels and distillates fell 124,000 barrels.

Forecasts saw a crude oil inventory fall of 2.517 million barrels and a drop of 1.091 million barrels for gasoline stocks and a fall of 755,000 barrels for distillates.

Supplies at the Cushing, Oklahoma, oil hub dipped by 753,000 barrels.

The API estimates will be followed on Thursday with official data from the Energy Information Administration. The two sets of figures often diverge.

Overnight, crude futures settled more than 2% lower on Wednesday, as investors shrugged of a renewed pledge from Saudi Arabia and Russia to reduce the glut in supply.

Oil prices fell as investors ignored Saudi and Russian Energy ministers’ comments on reducing global inventories, as concerns grew that oil producers that are not part of the global pact to reduce supply would continue to ramp-up production, undermining Opec and its allies’ efforts to curb the glut in supply.

At a meeting with his Russian counterpart Alexander Novak, Saudi Energy Minister Khalid al-Falih said on Wednesday “more needed to be done to draw inventories towards the five-year average”.

Novak added that a new framework “for continued steady cooperation between OPEC and non-OPEC” was necessary even after the expiration of the Vienna agreements.

OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March last week, but stuck to production cuts of 1.8 million bpd agreed in November last year, against expectations that the oil cartel was set to announce deeper production cuts.

Goldman Sachs (NYSE:GS) earlier this week downgraded its forecasts for oil prices this year, targeting an average of $55.29 per barrel for Brent, down from its previous forecast of $56.76 a barrel while lowering its expectations WTI to $52.92 per barrel from $54.80.

Crude reverses early gains in Asia with NKorea missile test noted - Sean Seshadri

 U.S. crude gave up early gains in Asia on Monday and fell following the 9th ballistic missile test by North Korea this year ahead of a day with China, the U.S. and U.S. on public holidays.

U.S. West Texas Intermediate crude's July contract fell 0.36% to $49.62 a barrel. Elsewhere, on the ICE Futures Exchange in London, Brent oil for July eased 0.32% at $52.34 a barrel.

Last week, oil futures settled higher on Friday, rebounding from the prior session's near 5%-drop as traders continued to digest the latest extension of production cuts from OPEC and some non-OPEC members.

Oil prices tumbled on Thursday as the extension of output curbs by OPEC and other producing countries disappointed investors who had hoped for larger cuts, leading to the biggest daily percentage slide in crude prices since early March.

At Thursday's meeting in Vienna, the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend supply cuts of 1.8 million barrels per day until the end of the first quarter of 2018.

While OPEC's move had been widely expected, some oil market investors had hoped producers would agree to longer or deeper cuts to drain a global glut of crude supplies.

The cartel next meets in November.

So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, and a relentless increase in U.S. shale oil output.

Data from energy services company Baker Hughes showed on Friday that U.S. drillers last week added rigs for the 19th week in a row, the second-longest such streak on record, implying that further gains in domestic production are ahead.

The U.S. rig count rose by 2 to 722, extending an 11-month drilling recovery to the highest level since April 2015.

Crude prices gain slightly in Asia, U.S. rig count eyed - Sean Seshadri

Crude prices rose slightly in early Asia on Friday with weekly rig countfigures expected to set the near-term tone ahead of next week's meeting of OPEC and allied producers on production cuts.

On the New York Mercantile Exchange crude futures for June delivery edged up 0.04% to $49.37 a barrel, while on London's Intercontinental Exchange, Brent was last quoted at $52.49 a barrel.

In figures reported last Friday, oilfield servcies firm Baker Hughes said U.S. drillers added 9 oil rigs to take the total to 712, rigs for the 17th weekly gain in a row and extending an 11-month drilling recovery to the highest level since August 2015, implying that further gains in domestic production are ahead.

Overnight, crude futures settled higher on Thursday, as investors remained optimistic that OPEC would reach an agreement to extend the current supply-cut deal beyond June at its meeting next week.

In what was a choppy day of trade, oil futures recovered from a more than 1% slump, as investors' optimism that OPEC would seek an extension of the current deal to cut global production offset concerns over the rising level of U.S. shale production.

The Energy Information Administration said Wednesday, crude oil inventories fell by 1.75 million barrels last week, which was the sixth-straight week of declining crude stockpiles but the dip in inventories fell short of expectations of a draw of around 2.4 million barrels.

Despite the high level of compliance from OPEC members with the deal to rein in supply, global production remains above the five-year average, as non-OPEC members, who are not part of the supply-cut agreement have ramped up production.

In its monthly report last Thursday, OPEC estimated that non-OPEC production this year would grow by 950,000 barrels per day (bpd).

OPEC and other producers are set to meet on May 25 to decide whether to extend the current supply-cut deal amid growing optimism for a prolonged period of cuts.

Saudi Arabia and Russia agreed earlier this week that production cuts needed to be extended for a period of nine months until March 2018.

The International Energy Agency (IEA) on Wednesday, however, warned that OPEC’s effort to rein in the glut in supply may fail even if the oil group agrees to extend its supply-cut agreement.

Oil edges up after six straight sessions of losses - Sean Seshadri

Oil prices recovered some ground on Tuesday, halting six consecutive sessions of slide, but markets remain under pressure as traders lose confidence that pledged output cuts by major producers will rein in oversupply in a world awash with fuel.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) had added 14 cents, or 0.3 percent, by 0640 GMT (2:40 a.m. ET), but remained below the $50 mark pierced late last week, at $49.37 a barrel.

Brent crude (LCOc1) rose 14 cents, or 0.27 percent, to $51.74 per barrel.

Traders said the gains were a counter-reaction to consecutive price drops in the previous six sessions.

Despite Tuesdays increases, market sentiment has turned bearish, with Brent down 10 percent since late 2016 despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to cut output by 1.8 million barrels per day (bpd) in the first half of 2017 in order to tighten the market.

Given that oil supplies remain at record highs despite the cuts, Stephen Schork of the Schork report said on Tuesday that "OPEC has failed miserably in its endeavor to balance the oil market".

JPMorgan (NYSE:JPM) said in its latest weekly market note to clients that "it is evident that... crude markets are still struggling to clear (oversupply)."

The bank said that it was closing its "August Brent long position at a loss."

Indicating its cautious outlook, JPMorgan said that "crude markets are close to floating storage economics and (this) is a bearish sign for output price developments."

Floating storage is a clear indicator of oversupplied markets. It is pursued when oil for immediate delivery is so much cheaper than that for future dispatch that it becomes profitable for traders to charter tankers to store it for later.

JPMorgan said that in order to reduce the ongoing supply overhang, OPEC "will be forced to renew, and possibly deepen the agreement if they wish to keep prices much above $50 per barrel."

Russia said on Monday that its oil output could climb to the highest rate in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30.

Thomson Reuters Eikon data shows that Russian oil shipments, which exclude its pipeline exports, have already reached record highs of 5 million bpd in April, up 17 percent since December, before the cuts were officially implemented.

While producers may hurt under the renewed slack in crude markets, consumers like refiners benefit as their production margins making fuels such as gasoline improve .

Oil prices fall on expected surge in U.S. shale output - Sean Seshadri

Oil prices fell on Tuesday on news that U.S. shale oil output was expected to post the biggest monthly rise in more than two years, fuelling concerns that U.S. production growth is undermining OPEC-led efforts to rein in oversupply.

The latest U.S. government drilling data showed shale production in May was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd.

Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel at 0803 GMT. They touched an intraday low of $54.98, the weakest level in 11 days.

U.S. West Texas Intermediate (WTI) crude futures traded down 21 cents at $52.44 a barrel, the lowest since April 10.

"EIA (U.S. Energy Information Administration) estimates for a combined 124,000 barrels-per-day growth in U.S. shale production over May have added another bearish element to the market," wrote analysts at JBC Energy, based in Vienna.

More barrels could be on their way to market from U.S. shale fields as financial companies are investing billions in production, a Reuters analysis showed.

Members of the Organization of the Petroleum Exporting Countries are cutting oil production by 1.2 million bpd from Jan. 1 for six months, the first reduction in eight years.

The energy minister of OPEC member the United Arab Emirates said on Tuesday he saw healthy oil demand growth this year and believed inventories would fall.

A preliminary Reuters poll showed analysts expected U.S. crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week. [EIA/S]

Analysts said they expected crude oil inventories to have fallen by around 1.5 million barrels last week.

Inventory data is scheduled for release by the American Petroleum Institute at 4:30 p.m. EDT (2030 GMT) on Tuesday, followed by the official EIA report at 10:30 a.m. EDT (1430 GMT) on Wednesday.

U.S. natural gas bounces off 3-week low - Sean Seshadri

U.S. natural gas futures were higher on Tuesday, bouncing off the lowest level in three weeks as traders monitored shifting weather forecasts to assess the outlook for early-spring demand and supply levels.

U.S. natural gas for May delivery tacked on 1.5 cents, or around 0.5%, to $3.178 per million British thermal units by 10:05AM ET (14:05GMT). It fell to $3.114 earlier, the cheapest since March 29.

Prices of the heating fuel slumped 6.4 cents on Monday.

Weather patterns are expected to be rather bearish through the first half of the week due to mostly mild temperatures dominating much of the country beside the far northern U.S., according to forecasters at NatGasWeather.com.

However, a colder weather system will track over the southern and eastern U.S. later in the week through early next week to bring an increase in demand to stronger levels.

Natural gas prices have closely tracked weather forecasts in recent weeks, as traders try to gauge the impact of shifting forecasts on early-spring demand.

The heating season from November through March is the peak demand period for U.S. gas consumption.

Nearly 50% of all U.S. households use gas for heating.

Meanwhile, market participants looked ahead to weekly storage data due on Thursday, which is expected to show a build in a range between 40 and 50 billion cubic feet in the week ended April 14.

That compares with a gain of 10 billion cubic feet in the preceding week, a gain of 7 billion a year earlier and a five-year average rise of 35 billion cubic feet.

Total natural gas in storage currently stands at 2.061 trillion cubic feet, according to the U.S. Energy Information Administration, 20.2% lower than levels at this time a year ago but 12.8% above the five-year average for this time of year.

Gold prices quoted sharply higher into Asia on risk, Trump views - Sean Seshadi

Gold prices were quoted sharply higher heading into the Asian trading day on Thursday on geopolitical risk sentiment and President Donald Trump's remarks on the dollar and interest rates.

Gold for June delivery on the Comex division of the New York Mercantile Exchange were last quoted up 1.11% to $1,288.35 a troy ounce. Silver futures were cited up 1.35% at $18,501 a troy ounce and copper down 2.61% to $2.540 a pound.

Overnight, gold prices traded higher on Wednesday, but eased from a five-month high, despite increased demand for safe-haven gold amid heightened geopolitical jitters.

Risk-off sentiment has boosted to demand for traditional safe-haven assets including gold, as investors sought refuge from the recent market volatility amid increased geopolitical concerns.

U.S. – Russia relations remained in the political spotlight, as U.S. Secretary of State Rex Tillerson was expected in Moscow on Wednesday to meet with his Russian counterpart Sergey Lavrov and discuss a number of sensitive topics including the Korean peninsula, Syria and bilateral relations.

The meeting between Tillerson and Lavrov, came fresh off the heels of comments from Russia President Vladimir Putin on Wednesday, after he said trust had eroded between the United States and Russia.

Despite, an uptick in demand for the yellow metal, market participants expected gold prices to pull back from its current highs, on the back of a more hawkish Federal Reserve and a rise in the dollar.

Geopolitical tension on the Korean Peninsula also provided support. A call on Wednesday between Chinese President Xi Jinping and U.S. President Donald Trump called for a peaceful resolution of concerns with North Korea's nuclear and missile programs.

Trump told the Wall Street Journal on Wednesday, that he thinks the currency (dollar) is getting too strong and hinted that he may reappoint Janet Yellen to chair the Federal Reserve Board when her term ends in 2018, as he added "I do like a low-interest rate policy, I must be honest with you,”

It wasn’t the first time Trump expressed concern over the strength of the dollar, after he previously warned in January, that a soaring greenback has disadvantages for U.S. companies that do a lot of business abroad.