Skip to main content

Oil prices were mixed on Monday, pulling back from an early rally after data suggested U.S. crude inventories might build, weighing on the market.

Traders said weekly data from Bloomberg suggested U.S. oil inventories are rising, contradicting an earlier report from energy information provider Genscape, which forecast declining inventories.

The data put a damper on a bullish mood that had driven trading early in the session.

Story continues below advertisement

“This has been a Monday morning special that the Bloomberg or Genscape numbers can kill a rally,” said Bob Yawger, director of futures at Mizuho in New York.

U.S. crude futures settled down 21 cents at $67.54 a barrel. Brent crude oil rose 54 cents to $77.37 a barrel after touching a session high of $77.92 a barrel.

Earlier in the session, crude had strengthened as growth of U.S. drilling braked and investors anticipated lower supply once new U.S. sanctions against Iran’s crude exports kick in from November.

“The low rig count set the stage for us to move higher,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “At the end of the day you also have storms that could impact inventories for some time to come.”

U.S. drillers cut two oil rigs last week, reducing the total count to 860, Baker Hughes said on Friday.

Growth of the number of rigs drilling for oil in the United States has stalled since May, reflecting increases in well productivity but also bottlenecks and infrastructure constraints.

“A higher oil price scenario is built on lower exports from Iran due to U.S. sanctions, capped U.S. shale output growth, instability in production in countries like Libya and Venezuela and no material negative impact from a U.S./China trade war on oil demand in the next 6-9 months,” said Harry Tchilinguirian, oil strategist at French bank BNP Paribas.

Story continues below advertisement

“We see Brent trading above $80 under (that) scenario,” he told Reuters Global Oil Forum.

Outside the United States, Iranian crude oil exports are declining ahead of a November deadline for the implementation of new U.S. sanctions.

Although many importers of Iranian oil have said they oppose sanctions, few seem prepared to defy Washington. “Governments can talk tough,” said Energy consultancy FGE. “They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to ... say they won’t risk it,” FGE said. “U.S. financial penalties and the loss of shipping insurance scare everyone.”

While Washington is exerting pressure on countries to cut imports from Iran, it is also urging other producers to raise output to hold down prices.

U.S. Energy Secretary Rick Perry will meet his counterparts from Saudi Arabia and Russia on Monday and Thursday respectively as the Trump administration encourages the world’s biggest producers and exporters to keep output up.

Investors are concerned about the impact on oil demand of the trade dispute between the United States and other large economies, as well as the weakness of emerging markets.

Story continues below advertisement

“Trade wars, and especially rising interest rates, can spell trouble for the emerging markets that drive (oil) demand growth,” FGE said.

Despite this, the consultancy said the likelihood of much weaker oil prices was fairly low as the Organization of the Petroleum Exporting Countries would probably adjust output to stabilize prices.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter