Oil Prices Rise on Optimism Over Solid US Fuel Demand

FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
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Oil Prices Rise on Optimism Over Solid US Fuel Demand

FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo
FILE PHOTO: A pump jack drills oil crude from the Yates Oilfield in West Texas’s Permian Basin, as a 1.5MW GE wind turbine from the Desert Sky Wind Farm is seen in the distance, near Iraan, Texas, US, March 17, 2023. REUTERS/Bing Guan/File Photo

Oil prices edged up on Thursday, extending the previous day's rally, driven by optimism over US fuel demand following an unexpected drop in crude and gasoline inventories, while reports that OPEC+ may delay a planned output increase offered support.
Brent crude futures gained 11 cents, or 0.15%, to $72.66 a barrel by 0805 GMT. US West Texas Intermediate crude futures climbed 13 cents, or 0.19%, to $68.74 per barrel.
Both contracts rose more than 2% on Wednesday, after falling more than 6% earlier in the week on the reduced risk of a wider Middle East conflict. US gasoline stockpiles fell unexpectedly in the week ending Oct. 25 to a two-year low on strengthened demand, the Energy Information Administration said, while crude inventories also posted a surprise drawdown as imports slipped. Nine analysts polled by Reuters had expected an increase in gasoline and crude inventories.
"The surprise decline in US gasoline stockpiles provided a buying opportunity as demand appeared stronger than anticipated," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
"Expectations of a potential delay in the OPEC+ production increase were also supportive... If they do delay, WTI could recover to the $70 level," he said. Reuters reported OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies such as Russia, could delay a planned oil production increase in December by a month or more because of concern over soft oil demand and rising supply. The group is scheduled to raise output by 180,000 barrels per day (bpd) in December. It had already delayed the increase from October because of falling prices.
A decision to postpone the increase could come as early as next week, two OPEC+ sources told Reuters.
OPEC+ is scheduled to meet on Dec. 1 to decide its next policy steps.
Manufacturing activity in China, the world's biggest oil importer, expanded in October for the first time in six months, suggesting that stimulus measures are having an effect. Markets are awaiting the results of the US presidential election on Nov. 5 as well as further details of China's economic stimulus. Reuters reported that China could approve the issuance of over 10 trillion yuan ($1.4 trillion) in debt over the next few years on the last day of its Nov. 4-8 parliamentary meeting. In the Middle East, Lebanon's prime minister expressed hope on Wednesday that a ceasefire deal with Israel would be announced within days as Israel's public broadcaster published what it said was a draft agreement providing for an initial 60-day truce. The push for a ceasefire for Lebanon is taking place alongside a similar diplomatic drive to end hostilities in Gaza.
But the market impact is likely to be muted.
"Most of the Middle East geopolitical risk was stripped out of the oil price after Israel's response to Iran over the weekend," IG market analyst Tony Sycamore said.
Iran said that Israeli strikes on Saturday, in retaliation for Iran's Oct. 1 attack on Israel, caused only limited damage.



TotalEnergies Q3 Income Hits Three-year Low

(FILES) This photograph taken on October 5, 2022, shows a logo of Total Energies at a gas station in Genech, northern France. (Photo by Sameer Al-DOUMY / AFP)
(FILES) This photograph taken on October 5, 2022, shows a logo of Total Energies at a gas station in Genech, northern France. (Photo by Sameer Al-DOUMY / AFP)
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TotalEnergies Q3 Income Hits Three-year Low

(FILES) This photograph taken on October 5, 2022, shows a logo of Total Energies at a gas station in Genech, northern France. (Photo by Sameer Al-DOUMY / AFP)
(FILES) This photograph taken on October 5, 2022, shows a logo of Total Energies at a gas station in Genech, northern France. (Photo by Sameer Al-DOUMY / AFP)

French oil major TotalEnergies reported third-quarter adjusted net income at a three-year low of $4.1 billion on Thursday, slightly missing expectations as refining margins and upstream outages dragged down earnings.
Adjusted net income was down 37% from a year earlier and 12.7% lower from the previous quarter's $4.7 billion. The result just missed analyst expectations of $4.2 billion, Reuters reported.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 23.6% year on year to $10 billion.
Earlier this month, TotalEnergies warned its financial results would take a hit as its margin for converting crude oil into refined fuels tumbled 65%.
Global refining margins have dropped sharply in recent months in the face of weaker economies and the start-up of several new refineries in Asia and Africa, while oil prices fell 17% in the quarter - the largest quarterly decline in a year - on worries about the global oil demand outlook.
TotalEnergies shares were down 1.5% in early trading. RBC analyst Biraj Borkhataria said Total reported "weaker cash generation relative to expectations", and that while "divisional estimates were broadly in line with consensus ... estimates have been falling following the recent trading update."
The company confirmed $2 billion in share buybacks for the fourth quarter and decided a third interim dividend of 0.79 euros per share for 2024.
In addition to a 83% drop in quarterly refining and chemicals division profits year-on-year, Total's integrated LNG division also made 21% less than the third quarter last year, with the company citing low gas market volatility as a hamper on trading profits. Integrated power, which includes renewables, was down 4% from a year ago.
TotalEnergies took a $1.1 billion impairment related to the August bankruptcy filing of US subsidiary SunPower, and its exit of several South African offshore blocks.
Quarterly hydrocarbon production of 2.4 million barrels of oil-equivalent per day was at the low end of guidance given at half year due to security-related disruptions in Libya and an outage at the Ichthys LNG plant in Australia.