What to Watch
Stronger Dollar Puts the Brakes on Oil’s Climb
Crude prices retreated somewhat Monday morning, amid a stronger U.S. dollar and profit-taking, after geopolitical risks to supply had driven prices above three-year highs last week.
Brent crude, the global benchmark, was down 0.22%, at $73.90 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.44% at $68.10 a barrel.
“We are seeing some renewed dollar strength…which is really the main driver,” said Ole Hansen, head of commodity strategy at Saxo Bank. The geopolitical risk to supply that has buoyed prices in recent days has mostly now been priced in, “allowing some profit-taking to occur,” Mr. Hansen added.
Dollar-denominated commodities like oil tend to have an inverse relationship with the U.S. currency. The Wall Street Journal Dollar Index, which measures the greenback against a basket of 16 of its peers, was up 0.41% Monday morning.
U.S. Crude Moves Toward $70
West Texas Intermediate futures, the U.S. crude oil benchmark, have been rising ever closer to $70 a barrel. That level has been sustainable for the U.S. economy so far, but could pose a risk if prices continue to climb, report The Wall Street Journal’s Stephanie Yang and Alison Sider.
Subsea 7 in Hostile Bid for U.S. Rival
Offshore oil firm Subsea 7 of Luxembourg said Monday it had made a $2 billion unsolicited offer for McDermott International, Inc., in a move that could break up the U.S. group’s agreed deal with Chicago Bridge & Iron Company, Reuters reports.
“Looks like OPEC is at it again…Oil prices are artificially Very High! No good and will not be accepted!”
U.S. President Donald Trump
OPEC, Russia Back Continued Cuts
The Organization of the Petroleum Exporting Countries and major producers outside the cartel, including Russia, said Friday they wouldcontinue to hold back crude output through the end of this year, while suggesting the coordinated effort could continue into next year, The Wall Street Journal’s Benoit Faucon and Summer Said report.
The gathering triggered a critical tweet from President Donald Trump, who took OPEC to task for creating “artificially high” oil prices.
The price of Brent crude has climbed more than 10% since the Syrian regime’s alleged chemical weapons attack at the start of the month, according to analysts at brokerage PVM Oil Associates Ltd.
Tuesday: The American Petroleum Institute, an industry group, releases weekly data on U.S. petroleum inventories.
Wednesday: The U.S. Energy Information Administration puts out its weekly oil stocks data.
Friday: Baker Hughes Inc. releases weekly data on the number of active oil rigs in the U.S.
Wall Street Journal reporter John Wu on China and the rising crude price environment. Higher oil prices are leading to more capital-allocation choices–capital spending, dividends, acquisitions–for China’s three majors, says Goldman Sachs. While the trio is boosting gas-field spending, the investment bank sees Sinopec having an 8.4% dividend yield this year and Cnooc clocking in at 5% and PetroChina at 3.5%.