Oil prices edge up on weak dollar ahead of U.S. inventory data

NEW YORK (Reuters) - Oil prices rose on Tuesday, supported by a weaker dollar but U.S. crude’s gains were limited by expectations for a weekly rise in U.S. crude stockpiles.

Brent crude LCOc1 futures rose 25 cents to settle at $65.79 a barrel, a 0.4 percent gain. Brent reached a low of $65.30 a barrel and a six-day high of $66.16 a barrel during the session.

West Texas Intermediate (WTI) crude CLc1 futures rose 3 cents to settle at $62.60 a barrel. WTI notched its own six-day high at $63.28 a barrel.

Oil prices fell in post-settlement trade after data from the American Petroleum Institute showed U.S. crude inventories rose by 5.7 million barrels last week, a bigger-than-expected rise.

Oil drew support as the U.S. dollar fell to its lowest in more than a week against a basket of currencies on news from South Korea that North Korea was willing to hold talks with the United States on denuclearization, and would suspend nuclear tests during any discussions.

South Korea also said it would hold a summit with North Korea for the first time in more than a decade.

The news led investors to sell the U.S. dollar and instead buy riskier assets such as commodities.

The dollar index last was down by half a percent. A weaker greenback makes dollar-denominated commodities cheaper for holders of other currencies.

“If you reduce geopolitical risk in the world, it might be a better place to do business and that could be bullish,” said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. oil prices were under pressure from expectations that weekly crude inventory data from the U.S. government, due on Wednesday, would show a second straight rise.

Analysts polled by Reuters ahead of the data on average expect U.S. crude stocks rose by 2.7 million barrels in the week ended March 2.

Inventories are rising during the seasonal maintenance period for refineries, when shutdowns mean they need less crude.

A surge in U.S. crude production to more than 10 million barrels per day (bpd) has helped the country overtake top exporter Saudi Arabia.

Output hit a record 10.057 million bpd in November, according to the U.S. Department of Energy.

The U.S. Energy Information Administration said in a monthly report it expected fourth-quarter U.S. crude output to reach an average of 11.17 million bpd, up from its forecast a month ago of 11.04 million bpd.


The continued growth of U.S. shale has been a theme at the CERAWeek conference in Houston this week, said John Kilduff, partner at investment manager Again Capital in New York.

Brent had dipped closer to $65 in earlier trading, pressured by the International Energy Agency’s (IEA) warning on Monday that U.S. oil output was set to surge over the coming five years.

The prospect of the Organization of the Petroleum Exporting Countries and non-member producers, including Russia, maintaining crude output cuts in the face of a boom in U.S. shale production helped lift Brent back above $65 a barrel this week.

April U.S. gasoline futures RBc1 rose as much as 0.50 percent to hit $1.9443 a gallon, the highest since Jan. 30, before retreating.

Additional reporting by Amanda Cooper in London and Jane Chung in Seoul; Editing by David Gregorio, Andrea Ricci and Richard Chang



Husky, Stung by Canada Oil Crash, Gets Relief From U.S. Tax Cuts

The decline in cash flow from heavy Canadian crude was partially offset as the refineries in Ohio and Wisconsin benefited from the cheaper grade, Robert Peabody, chief executive officer, said in a conference call Thursday. As earnings shifted from Canada to the U.S. refineries, the reduction in company’s tax burden in the U.S. helped boost income, he said.

Husky, which produces oil in Alberta and Saskatchewan and operates refineries in the U.S. and Canada, reported fourth quarter free-cash flow rose 8.5 percent versus a year earlier. Heavy Western Canadian Select’s discount to U.S. benchmark West Texas Intermediate grew to more than $30 a barrel last month from about $15 in mid November. The discount traded just under $25 a barrel on Thursday versus an average of about $13 a barrel all of last year.



UPDATE 3-Canadian Natural Resources slows heavy oil output over steep price discount

March 1 (Reuters) - Oil and gas producer Canadian Natural Resources Ltd said on Thursday it will slow its output of heavy crude due to a steep price discount tied to tight transportation capacity from the landlocked Alberta province.

CNRL, one of Canada’s largest heavy oil and gas producers, is delaying the completion and production ramp-up of some wells that produce heavy oil, President Tim McKay said on a conference call with analysts.

“Although oil is moving, the (price) differentials are behaving as if the oil can’t move,” McKay said.

The company is also considering reducing its heavy oil drilling program in the second half, and switching to more light oil drilling, McKay said.

In an interview, McKay said he expects the cumulative effect of slowing heavy output from new wells and advancing the timing of planned outages at some production sites will be“quite minor” for overall production.

“We look at the differentials all the time and our ability to start and stop our drilling program, based on what’s going on with the commodities,” he said.

Earlier on Thursday, CNRL’s fourth-quarter profit beat estimates, boosted by higher oil production and higher prices.

The company’s Toronto-listed shares were up 65 Canadian cents, or 1.6 percent, to C$40.40.

Alberta oil producers have struggled to move crude to U.S. refineries due to strained pipeline and rail capacity, leading to a bigger-than-usual discount on Canadian heavy crude, called Western Canada Select (WCS), compared to U.S. benchmark West Texas Intermediate (WTI) light oil.

Heavy crude must be diluted to move through pipelines, adding cost.

CNRL’s heavy oil output was 1 percent higher during the fourth quarter than the preceding quarter. The company expanded its Horizon oil sands site last year.

WCS heavy crude was trading on Thursday at $24.70 per barrel below WTI, according to Shorcan Energy Brokers data.

The Alberta government on Wednesday estimated that the higher-than-usual differential was costing heavy oil producers C$30 million to C$40 million in revenue per day.


Overall daily production during the quarter rose 19 percent to 1 million barrels of oil equivalent per day (boe/d).

The company’s net income fell to C$396 million ($308.17 million), or 32 Canadian cents per share, in the fourth quarter, from C$566 million, or 51 Canadian cents per share, a year earlier.

Excluding items, the company earned 46 Canadian cents per share, beating analysts’ average estimate of 36 Canadian cents, according to Thomson Reuters I/B/E/S. ($1 = C$1.29) (Reporting by Rod Nickel in Winnipeg, Manitoba, Karan Nagarkatti and Anirban Paul in Bengaluru; editing by Shounak Dasgupta, Will Dunham and David Gregorio)



Oil falls for third day as higher inventories, dollar weigh

LONDON (Reuters) – Oil fell for a third day on Thursday, dropping toward $64 a barrel as rising U.S. inventories, record output and a stronger dollar outweighed high OPEC compliance with its supply-cutting deal.

A U.S. government report on Wednesday showed a larger-than-expected increase in U.S. crude inventories and a rise in gasoline stocks. U.S. crude output reached a record in November, although it slipped in the last month of 2017.

Brent crude, the global benchmark, was down 51 cents at $64.22 a barrel at 1420 GMT. U.S. crude fell 36 cents to $61.28.

U.S. crude output hit an all-time high of 10.057 million barrels per day (bpd) in November before falling slightly in December, the government said, but weekly data showed another record and further gains are expected.

“Weekly figures suggest the upward trend will resume in January and February and the old records are likely to be smashed,” said Tamas Varga of oil broker PVM.

The rise in U.S. output in recent weeks has been overshadowing supply curbs by other producers, led by the Organization of the Petroleum Exporting Countries and Russia.

OPEC officials will meet U.S. shale executives at a U.S. energy conference on Monday, a gathering that underlines the influence of American output in keeping a lid on global prices.

“The standoff ‘shale versus sheikh’ continues to frame the oil market, with the former again gaining the upper hand,” said Norbert Ruecker, head of macro and commodity research at Julius Baer. “We see more downside for oil.”

Oil also fell due to a stronger dollar, which makes commodities denominated in the U.S. currency more expensive for holders of other currencies. The dollar index hit a six-week high on Thursday.

OPEC’s cut, which began a year ago, has nonetheless helped to boost prices from levels below $30 seen in January 2016. Producers are sticking to the deal and an involuntary drop in Venezuelan output has further boosted compliance.

A Reuters survey on Wednesday found OPEC production fell in February to a 10-month low.

For now though, the gains in U.S. supply are prevailing in shaping sentiment in the oil market, other analysts said.

“Despite the expanding output curbs by OPEC and non-OPEC members such as Russia, the market has been focusing more on rising U.S. output since around late January,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.



Oil markets mixed on lower Canadian flows, firmer dollar

SINGAPORE, Feb 20 (Reuters) - Oil markets were split on Tuesday, with U.S. crude pushed up by reduced flows from Canada while international Brent prices eased.

U.S. West Texas Intermediate (WTI) crude futures were at $62.16 a barrel at 0153 GMT, up 48 cents, or 0.8 percent, from their last settlement.

Traders said the higher WTI prices were a result of reduced flows from Canada’s Keystone pipeline, which has been operating below capacity since late last year due to a leak, cutting Canadian supplies into the United States.

Outside North America, Brent crude eased on the back of a dip in Asian stocks and a stronger dollar, which potentially curbs demand as it makes fuel more expensive for countries using other currencies domestically.

Brent crude futures were at $65.23 per barrel, down 44 cents, or 0.7 percent, from their last close.

Despite this, oil markets remain well supported due to supply restraint by the Organization of the Petroleum Exporting Countries (OPEC), which started last year in order to draw down excess global inventories.

OPEC Secretary-General Mohammad Barkindo said on Monday the organisation registered 133 percent compliance with agreed output reduction targets in January.

Barkindo said compliance last year stood at 107 percent.

Global oil demand for 2018 is estimated to grow 1.6 million barrels per day due to an “encouraging environment”, Barkindo added.

“OPEC and Russia continue to support the production cuts that are due to expire at the end of this year, and they assure markets that there will be an orderly ramp up of production once the cuts expire,” said William O‘Loughlin, investment analyst at Australia’s Rivkin Securities.

While most of OPEC, especially its de-facto leader Saudi Arabia, is showing strong support for the production restraint, non-OPEC producer Russia has shown signs it may at some stage gradually start to increase output again.

Saudi Arabia - not least in an attempt to give the planned listing of its state-owned oil giant Saudi Aramco - a boost, is keen for Russia and other producers to keep withholding supplies to prop up prices.

But soaring U.S. production is threatening to erode OPEC’s efforts.

Last week, the amount of U.S. oil rigs drilling for new production rose for a fourth straight week to 798, in an indication that U.S. crude output C-OUT-T-EIA, already at a record 10.27 million bpd, may rise further.

The United States late last year became the world’s second biggest oil producers, only slightly behind Russia and ahead of top exporter Saudi Arabia. (Reporting by Henning Gloystein Editing by Joseph Radford)


Price rally spells fleeting relief for Canadian oil producers

WINNIPEG, Manitoba (Reuters) - Canadian heavy crude rallied to a two-month high relative to U.S. crude this week, offering some relief to oil producers in Alberta struggling with thin margins amid plentiful supply.

The rally was likely to be short-lived, traders and analysts said, because output continues to grow without a corresponding increase in transportation capacity.

Canada’s crude typically trades at a discount to U.S. benchmark West Texas Intermediate (WTI) light oil, reflecting transportation costs to U.S. refineries and additional processing requirements.

The discount expanded since a November leak in TransCanada Corp’s Keystone pipeline, which led to a temporary shutdown and a buildup in supplies.

TransCanada is now operating the line at reduced pressure. Canadian producers have been unable to boost volumes by rail much, as railways are reluctant to take more oil business when they are busy shipping grain.

The bottlenecks come as oil sands production expands with Suncor Energy Inc’s new Fort Hills mine.

Western Canada Select oil traded $20.50 per barrel below WTI on Tuesday, the smallest since Dec. 7, and well off a four-year high of $32 on Jan. 31, according to Shorcan Energy Brokers.

But the correction looks temporary, and the discount has started to expand again, said Tudor Pickering Holt & Co analyst Matt Murphy.

The price rally was connected to monthly apportionments by Enbridge Inc, which operates the biggest Canadian oil pipeline system and rations space when capacity is tight, Murphy said. Oil companies typically request more capacity than they need to ensure they get enough, resulting in some needing to buy additional barrels on the market, he said.

The start up of Alberta’s Sturgeon Refinery has also increased heavy oil demand, said a Calgary-based trader, who was not authorized to speak publicly.

Enbridge on Thursday said it was rationing space as much as 51 percent on some Mainline pipelines for March, more than the previous month, reflecting tight capacity.

Little has changed fundamentally, said GMP Energy analyst Michael Dunn.

“Structurally, with Keystone restricted and the growing (heavy oil) output, and inventories being full, there doesn’t seem to be a physical relief valve that’s being blown yet,” Dunn said.

Cenovus Energy sees prices strengthening once TransCanada restores pressure on Keystone and railway volumes increase, said CEO Alex Pourbaix.

“In the short term, we have an acute challenge that is largely to do with what we suspect is a fairly small imbalance in supply and takeaway capacity,” Pourbaix said on a Thursday conference call. Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Susan Thomas


C$ steadies as oil and stocks rally

* Canadian dollar at C$1.2590, or 79.43 U.S. cents * Price of U.S. crude oil rises 1.8 percent * Bond prices mixed across flatter yield curve TORONTO, Feb 12 (Reuters) - The Canadian dollar steadied on Monday against its U.S. counterpart after hitting a six-week low at the end of last week, helped by higher oil and stock prices. At 9:49 a.m. EST (1449 GMT), the Canadian dollar was trading 0.1 percent lower at C$1.2590 to the greenback, or 79.43 U.S. cents. The currency traded in a range of C$1.2556 to C$1.2607. On Friday, it touched its weakest since Dec. 27 at C$1.2690 after domestic data showed the biggest decline in jobs since January 2009. The price of oil, one of Canada's major exports, recovered some of last week's steep losses as global equities steadied after their largest one-week slide in two years. U.S. crude prices were up 1.8 percent at $60.25 a barrel. Commodity-linked currencies, such as the Canadian dollar tend to underperform when stocks fall. The loonie retreated 1.2 percent last week. Still, speculators raised bullish bets on the Canadian dollar for the fifth straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Feb. 6, net long positions had risen to 40,164 contracts from 33,465 a week earlier. Canadian government bond prices were mixed on Monday across a flatter yield curve, with the two-year down 1.5 Canadian cents to yield 1.796 percent and the 10-year rising 1 Canadian cent to yield 2.351 percent. The Canadian Real Estate Association will release its monthly home sales report on Thursday. Canada's manufacturing sales report for December is due on Friday. (Reporting by Fergal Smith; Editing by Nick Zieminski)


Public Offering of Oil & Gas Totals $65 Million for 2017-18 Year

There's a bit of optimism in the energy sector as it was announced that the February public offering of Crown petroleum and natural gas rights generated $3 million. This number pushed the totals for the 2017-18 fiscal year to $65 million surpassing last year's total of $50 million. 

"We're pretty steady over the last four to five years from year to year," explained Paul Mahnic, Executive Director Lands and Mineral Tenure Branch, "which isn't bad. It does get you through the highs and the lows of the price in oil. For us, it does indicate that the industry is still interested in Saskatchewan. It's definitely encouraging. "

He added that the southeast continues to be a focus with 52 leases generating over $2.4 million. 

"From our perspective, it seems that it's likely the Mississippian that is drawing the interest. From year to year, decade to decade the Mississippian Midale Frobisher are always relatively economical for industry. That's a good sign as well, it's not just a boom and bust."

"The fiscal year total is definitely encouraging. You're going to have fluctuation for sale to sale based on industry's budget cycle as well. It may look a little choppy when you look sale to sale but overall it's encouraging."

The next public offering for Crown rights will be on April 10. 

CAD hits near three-week low as stocks, oil slide

* Canadian dollar at C$1.2524, or 79.85 U.S. cents * Loonie touches weakest level since Jan. 17 at C$1.2533 * Oil prices fall nearly 2 percent * Bond prices rally across the yield curve By Fergal Smith TORONTO, Feb 5 (Reuters)

The Canadian dollar dropped to a nearly three-week low against its U.S. counterpart on Monday as a selloff in equity markets continued and oil prices fell, while investors weighed prospects for further Bank of Canada interest rate hikes. At 4 p.m. EST (2100 GMT), the Canadian dollar was trading 0.7 percent lower at C$1.2524 to the greenback, or 79.85 U.S. cents. The currency's strongest level of the session was C$1.2398, while it touched its weakest since Jan. 17 at C$1.2533.

"A lot of good news is in the cake at this point for CAD," said Mazen Issa, senior FX strategist at TD Securities. "The market, we think, is too optimistic on the ability of the central bank to deliver more tightening."

Bank of Canada Senior Deputy Governor Carolyn Wilkins will speak on Thursday, which could offer the next clues on the outlook for interest rates. The central bank hiked last month for the third time since July. Money markets expect two further rate increases this year.

The U.S. dollar rose against a basket of major currencies as U.S. bond yields rallied on safe-haven demand stemming from a dramatic selloff on Wall Street, where the Dow Jones at one point fell more than 1,500 points. Commodity-linked currencies, such as the Canadian dollar, tend to underperform when stocks fall, because of the signal that it sends on prospects for global economic growth. The price of oil, one of Canada's major exports, fell as rising U.S. output and a weaker physical market added to the pressure from a widespread decline across equities and commodities. U.S. crude oil futures settled nearly 2 percent lower at $64.15 a barrel.

Canada's trade data for December is due on Tuesday and the January employment report is due on Friday. The country is coming off its best year for job growth since 2002 and economists will look to see whether the job market remains strong enough to support further interest rate hikes. Canadian government bond prices were higher across the yield curve, with the two-year up 12.5 Canadian cents to yield 1.789 percent and the 10-year rising 53 Canadian cents to yield 2.294 percent. The 10-year yield touched its highest intraday level since May 2014 at 2.393 percent.

Canada will not proceed with next week's ultra-long bond auction and will not issue ultra-long bonds this quarter because criteria for issuance was not met, the Bank of Canada said. (Reporting by Fergal Smith; Editing by Paul Simao and Grant McCool)


Canadian dollar posts near four-month high as greenback slides, oil climbs

TORONTO (Reuters) - The Canadian dollar strengthened to a nearly four-month high against its U.S. counterpart on Wednesday as the greenback fell broadly and oil prices rose, while investors also weighed talks taking place in Montreal to renegotiate NAFTA.

At 4 p.m. (2100 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent higher at C$1.2331 to the greenback, or 81.10 U.S. cents.

The currency’s weakest level of the session was C$1.2428, while it touched its strongest since Sept. 25 at C$1.2318.

“It is largely reflecting a weaker U.S. dollar move,” said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.


The U.S. dollar .DXY slid to a three-year low against a basket of major peers after the U.S. Treasury secretary said he welcomed weakness in the currency.

“There’s no need for a weaker U.S. dollar on the part of the U.S. economy,” Chandler said. “In some sense, his comments were misinterpreted.”

The price of oil, one of Canada’s major exports, was boosted by a record 10th straight weekly decline in U.S. crude inventories. U.S. crude oil futures CLc1 settled 1.8 percent higher at $65.61 a barrel.

Canada’s chief negotiator in talks to update the North American Free Trade Agreement, Steve Verheul, told Reuters he had “a constructive conversation” with his U.S. counterpart after presenting Canada’s suggested amendments to the sunset clause.

The United States has demanded a sunset clause that would kill NAFTA if it is not renegotiated after five years.

Investors are awaiting domestic data later in the week that could help guide expectations for further Bank of Canada interest rate hikes.

Last week, the central bank raised its benchmark interest rate by 25 basis points to 1.25 percent, its highest since January 2009, after recent data showed stronger inflation and strong job growth.


Canadian retail sales data for November is due on Thursday and the December inflation report is due on Friday.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 2.5 Canadian cents to yield 1.819 percent and the 10-year CA10YT=RR declined 27 Canadian cents to yield 2.263 percent.

The 10-year yield touched its highest intraday level since September 2014 at 2.271 percent.

Reporting by Fergal Smith; Editing by Phil Berlowitz and Peter Cooney


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