Oil Price - July 1

[dan_s]

Short covering gets July off to a good start. With demand for transportation fuels spiking creating demand for oil that exceeds supply by over a million barrels per day, this should be a very interesting quarter. WTI sold at $60.27 this morning, but it has pulled back a bit. $59.88 at the time of this post. - Dan

By John Kemp
LONDON, July 1 (Reuters) - Hedge fund managers have started to cover some of the bearish short positions in oil they established since late April, amid hopes for interest rate cuts and a trade truce between China and the United States.

Hedge funds and other money managers increased their net long position in the six major petroleum futures and options contracts by 19 million barrels in the week to June 25.

Last week’s rise was the first after money managers cut their combined net long position by 389 million barrels over the previous eight weeks, a significant turnaround.

Position changes were driven by short-covering. Portfolio managers sold 2 million barrels of former long positions, but they also bought back 21 million barrels of previous shorts.

Hedge fund long positions outnumbered shorts by a ratio of 3.69:1 on June 25, up from just 3.31 two weeks earlier, though still down from a recent high of 8.68 on April 23.

Now watch this video: https://www.foxbusiness.com/energy/opec ... orses-pact

[dan_s]

On June 30 Reuters reported OPEC and its allies look set to extend oil supply cuts next week at least until the end of 2019 as Iraq joined top producers Saudi Arabia and Russia on Sunday in endorsing a policy aimed at propping up the price of crude amid a weakening global economy. Fears about weaker global demand as a result of a U.S.-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries in recent months.

Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend existing output cuts of 1.2 million b/d , or 1.2% of global demand, by six to nine months - until December 2019 or March 2020. Saudi Energy Minister Khalid al-Falih said the deal would most likely be extended by nine months and no deeper reductions were needed. "It’s a rollover and it’s happening,” Falih, whose country is the de facto leader of OPEC, told reporters.

[dan_s]

On June 25 Reuters reported a refined products supply gap on the U.S. East Coast created by a massive fire at a Philadelphia refinery last week will be filled by shipments from the Gulf Coast region and Europe, market sources said. The fire completely destroyed the alkylation unit at Philadelphia Energy Solutions Inc's oil refinery, the largest refinery on the East Coast. Gasoline loadings out of Europe from June 24 to June 30 currently total 535 kilotonnes, a 16.5% increase week-on-week, Kpler data showed. Additionally, the largest U.S. products pipeline, Colonial Pipeline, which connects Gulf Coast refineries with markets across the southeastern and eastern United States, has additional capacity available into its Linden, New Jersey delivery point, the company said in a statement. The Gulf Coast currently has ample supply. Gasoline stockpiles totaled 84.6 million barrels in early June, the highest on record seasonally, according to U.S. Energy Information Administration data.

[dan_s]

Investing.com - U.S. crude prices jumped in early morning trade Monday as Russia confirmed that OPEC and its allies would extend their production cut agreement for nine months, while a truce in the ongoing trade conflict between the U.S. and China helped ease concerns about a slowing global economy.

New York-traded West Texas Intermediate crude futures jumped $1.75, or 3.0%, to $60.22 a barrel by 7:56 AM ET (11:56 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., soared $1.84, or 2.8%, to $66.58.

“A move towards extending the deal, along with constructive talks between Presidents Trump and Xi at the G20 summit which would see the U.S. holding off from imposing new tariffs, has proved constructive for the oil market this morning,” analysts at ING said in an early morning note.

Russian Energy Minister Alexander Novak confirmed on Monday that all members of the agreement between OPEC and non-member allies, known as OPEC+, had unanimously agreed to extend existing output cuts of 1.2 million barrels per day for a full nine months.

Novak said that “everyone supported the general proposal” and that the Joint Ministerial Monitoring Committee, that oversees compliance with the agreement, “recommended specifically this option of further cooperation”, according to a Reuters report.

The announcement comes after Iran gave its approval over the weekend and Saudi and Russian leaders met on the sidelines of the G20 summit.

OPEC has tentatively scheduled a press conference after the meeting of its members at 10:00 AM ET (14:00 GMT).

The full ministerial meeting of OPEC+ remains scheduled to take place on Tuesday.

Also providing support for oil prices, the U.S. and China agreed to restart trade talks after U.S. President Donald Trump pledged to hold off on the implementation of new tariffs and also ease restrictions on tech company Huawei in order to reduce tensions with Beijing.

China meanwhile agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table.

The pause in escalating trade tensions reduces concerns that the dispute between the two countries will negatively impact the global economy and the demand for oil.