Oil Prices Sink As US Considers Tapping Reserves, Stocks Struggle

Traders work on the floor of the New York Stock Exchange on March 30, 2022, in New York City. GETTY IMAGES NORTH AMERICA / Getty Images via AFP

 

Oil prices tumbled Thursday on reports that the United States is considering tapping its reserves to combat a supply crisis sparked by the Ukraine war.

However, equities struggled to build on the week’s rally after Russia poured cold water on hopes that ceasefire talks were progressing, leaving the prospect of a protracted war in eastern Europe.

The conflict has already sent shockwaves through the world economy, with growth forecasts this year being lowered across the board. On Thursday, the European development bank EBRD said gross domestic product in Russia and Ukraine would contract 10 percent and 20 percent respectively this year.

READ ALSO: 10-Hour Blackouts, Hospitals Stop Surgery As Sri Lanka Crisis Worsens

WTI tumbled more than five percent at one point while Brent dropped more than four percent as reports said President Joe Biden was looking at releasing a million barrels a day for several months — totalling up to 180 million — as he tries to temper a surge in the market to more than $100.

Concerns about demand in China owing to a lockdown in Shanghai were adding to downward pressure.

The White House this month put an embargo on oil from Russia as part of a series of wide-ranging sanctions against the country for its invasion.

However, that sent prices soaring further and put added upward pressure on world inflation, which was already at multi-decade highs.

Officials said the president would make a statement Thursday on plans to cut energy costs “and lower gas prices at the pump for American families”.

Warren Patterson, at ING Groep NV, said: “Suggestions that we could see up to 180 million barrels released over several months is significant and would help to ease some of the tightness in the market.”

It would be the biggest ever release by the United States, he said.

The news comes as the International Energy Agency urges other countries to further tap their reserves.

A coordinated release earlier this year, before the war, did little to temper a rally in prices, which were being boosted by the global economic reopening and expectations for a pick-up in demand.

OPEC and other major producers including Russia are preparing for their monthly meeting later in the day where they are expected to refrain from lifting output by more than previously planned, despite the growing energy crisis.

While the drop in oil prices will be welcomed on trading floors, Asian equity markets fell after three days of healthy gains and following comments from Russian officials playing down progress in talks with Ukraine over the ceasefire.

Adding to selling pressure was data showing signs of a further slowdown in China’s manufacturing sector caused by Covid lockdowns around the country.

Tokyo, Hong Kong, Shanghai, Sydney, Mumbai, Singapore, Taipei and Bangkok retreated, though Seoul, Manila, Wellington and Jakarta edged higher.

London, Paris and Frankfurt were up in early trade.

Traders on Wednesday jumped on news that Moscow had pledged after negotiations in Istanbul to “radically” reduce its attacks.

Both sides initially said the gathering Tuesday had been productive but on Wednesday Kremlin spokesman Dmitry Peskov said: “We cannot state that there was anything too promising.”

Turkey said Thursday the foreign ministers of Ukraine and Russia could meet within two weeks.

Investors are awaiting the release Friday of US jobs data for an idea about the impact of soaring inflation and the war on the world’s top economy.

The reading could also be of particular importance regarding the Federal Reserve’s plans for monetary policy as it pivots to a more aggressive approach in a bid to staunch the surge in prices, which many fear will hammer growth.

AFP

Oil Prices Plunge On China Lockdowns, Stock Markets Slide

A worker holds a nozzle after filling petrol in a motorbike at a Lanka IOC fuel station in Colombo on March 11, 2022, Ishara S. KODIKARA / AFP

 

Oil prices plunged more than eight per cent Tuesday on lower demand expectations with nearly 30 million people under Covid lockdown in key consumer China.

Crude futures slumped under $100 per barrel just a week after benchmark contract Brent North Sea soared to a 14-year high close to $140 following Russia’s invasion of Ukraine.

“The downside correction in oil prices is sure a relief when it comes to the inflation expectations, but the new lockdown measures will continue worsening the supply chain crisis and add on the inflation worries,” noted Swissquote Bank senior analyst Ipek Ozkardeskaya.

Equity markets also slumped Tuesday, with tech firms leading the collapse following the Covid shutdown of China’s tech hub Shenzhen.

“The (stock market) negativity has spread beyond China’s borders with chipmakers in Europe taking a hit,” noted Victoria Scholar, head of investment at Interactive Investor.

Global stock markets have been in a spiral since Russian troops marched into Ukraine, leading international powers to impose crippling sanctions on the country and numerous companies to pull out.

The UK government on Tuesday imposed an additional 35-per cent import tariff on a swathe of Russian goods, including vodka, and banned exports of luxury products.

“We want to cause maximum harm to (Russian President Vladimir) Putin’s war machine while minimising the impact on UK businesses,” the Department for International Trade said.

A series of powerful explosions Tuesday rocked the residential districts of Kyiv, killing two people, just hours before talks between Ukraine and Russia were set to resume.

“This double whammy of the ongoing conflict in Ukraine, with the fresh chaos caused by Covid in China, is rattling nerves,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Among the hardest-hit stock markets in recent days has been Hong Kong, which was already under pressure from China’s regulatory crackdown on technology firms as part of the government’s move to tighten its grip on the economy.

News that US authorities were also looking to crack the whip over Chinese firms listed in New York added to the selling pressure.

“In the short term, we think overall Chinese equities will continue to face selling pressure. Longer-term, the strong will survive and likely get stronger, bigger,” predicted Sharif Farha at Safehouse Capital.

Hong Kong’s main stocks index, the Hang Seng, dived more than six per cent at one point Tuesday.

Afternoon selling wiped out a minor bounce from data out of China suggesting its economy started 2022 on a positive note.

– Key figures around 1130 GMT –

West Texas Intermediate: DOWN 8.2 percent at $94.52 per barrel

Brent North Sea crude: DOWN 8.1 percent at $98.27

London – FTSE 100: DOWN 0.9 percent at 7,127.72 points

Frankfurt – DAX: DOWN 1.0 percent at 13,794.75

Paris – CAC 40: DOWN 1.0 percent at 6,305.67

EURO STOXX 50: DOWN 1.0 percent at 3,704.36

Hong Kong – Hang Seng Index: DOWN 5.7 percent at 18,415.08 (close)

Tokyo – Nikkei 225: UP 0.2 percent at 25,346.48 (close)

Shanghai – Composite: DOWN 5.0 percent at 3,063.97 (close)

New York – Dow: FLAT at 32,945.24 (close)

Euro/dollar: UP at $1.0986 from $1.0949 late Monday

Pound/dollar: UP at $1.3056 from $1.3003

Euro/pound: DOWN at 84.15 pence from 84.18 pence

Dollar/yen: DOWN at 118.02 yen from 118.19 yen

-AFP

Oil Prices Near $100 On Ukraine Tensions, Equities Tumble

An oil pumpjack operates in Signal Hill, south of Los Angeles, California on April 21, 2020, a day after oil prices dropped to below zero as the oil industry suffers steep falls in benchmark crudes due to the ongoing global coronavirus pandemic. Frederic J. BROWN / AFP.

 

Oil prices surged close to $100 per barrel Tuesday as major crude producer Russia prepared to send troops into two breakaway regions of Ukraine, sparking Western nations to ready economic sanctions against Moscow.

After heavy falls at the open, European stocks edged into positive territory, as the Kremlin said it remained open to all diplomatic contact over Ukraine.

Asian stock markets had earlier ended their sessions with heavy falls.

Brent North Sea crude oil reached $99.50 per barrel, the highest level in seven years.

At around 1115 GMT, it pulled back to just below $98, still a gain of around 2.5 percent compared with late Monday.

“The intensifying crisis between Russia and Ukraine has raised concerns about the supply disruptions that would ensue as sanctions look set to cripple Russia, the world’s second largest oil exporter and the world’s top natural gas producer,” noted Victoria Scholar, head of investment at Interactive Investor.

German Chancellor Olaf Scholz said he was suspending the Nord Stream 2 pipeline project with Russia in response to Moscow’s recognition of breakaway regions Donetsk and Lugansk.

Ukrainian President Volodymyr Zelensky had demanded an immediate halt to the project, set to pipe Russian natural gas to Germany via the Baltic Sea.

Zelensky said Russia must be punished for its recognition Monday of Ukraine’s two separatist-held regions with “immediate sanctions” that include “the complete stop of Nord Stream 2”.

It comes as the United States, Britain and the European Union prepared to launch economic sanctions on Russia.

“Our response will be in the form of sanctions, whose extent the ministers will decide,” EU foreign policy chief Josep Borrell said.

READ ALSO: Equities Tumble, Oil Rallies On Red-Hot Ukraine Tensions

Russia’s recognition of the breakaway regions of Ukraine will meanwhile “strongly increase” economic uncertainty for the EU, the bloc’s economy commissioner Paolo Gentiloni said.

Russian troops were believed to be deploying into Donetsk and Lugansk in eastern Ukraine, after Russian President Vladimir Putin issued decrees ordering his army to assume “peacekeeping” functions in the separatist territories.

– Oil surge –

The jump in oil prices is compounding worries about inflation around the world, with the US Federal Reserve coming under intense pressure to tighten monetary policy to prevent prices running out of control.

That has in turn battered equity markets in recent months, and the latest developments out of Europe led to another day of hefty selling on Tuesday.

Russia’s MOEX index plunged eight percent at the open, having lost 10 percent Monday.

The ruble though recovered after sharp losses against the dollar.

Haven investment gold climbed past $1,900 an ounce before pulling back.

Away from the Ukraine crisis, German auto giant Volkswagen on Tuesday said it was drawing up plans to list its luxury brand Porsche as it looks to raise the funds for its move to electric vehicles.

In London, HSBC bank announced bumper 2021 profits and plans to repurchase shares worth up to $1 billion as the Asia-focused bank continues its recovery from the coronavirus pandemic and major restructuring.

– Key figures around 1115 GMT –

London – FTSE 100: UP 0.4 percent at 7,515.85 points

Frankfurt – DAX: FLAT at 14,731.73

Paris – CAC 40: UP 0.2 percent at 6,799.10

EURO STOXX 50: UP 0.2 percent at 3,993.82

Tokyo – Nikkei 225: DOWN 1.7 percent at 26,449.61 (close)

Hong Kong – Hang Seng Index: DOWN 2.7 percent at 23,520.00 (close)

Shanghai – Composite: DOWN 1.0 percent at 3,457.15 (close)

New York – Dow: Closed for a public holiday

Brent North Sea crude: UP 2.6 percent at $97.90 per barrel

West Texas Intermediate: UP 4.1 percent at $93.90 per barrel

Euro/dollar: UP at $1.1358 from $1.1337 late Monday

Pound/dollar: DOWN at $1.3575 from $1.3609

Euro/pound: UP at 83.68 pence from 83.33 pence

Dollar/yen: UP at 114.91 yen from 114.82 yen

Global Oil Prices Won’t Decline Until 2023, Says World Bank

File photo.

 

The stunning recent runup in global oil prices could threaten economic growth and is unlikely to retreat until 2023, the World Bank said Thursday.

Average crude prices are expected to end the year at $70 a barrel, 70 percent higher than in 2020, according to the latest Commodity Markets Outlook.

That in turn is pushing up other energy prices like natural gas, the report said.

“The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries,” said World Bank chief economist Ayhan Kose.

The increases have been “more pronounced than previously projected” and “may complicate policy choices as countries recover from last year’s global recession.”

READ ALSO: Thailand To Allow Vaccinated Tourists From Over 40 Countries, Says PM

Oil prices in recent weeks have surged above $80 a barrel, the highest point in years, as economies reopen following the pandemic shutdowns and amid shipping bottlenecks.

The World Bank uses an average of Brent, West Texas Intermediate, and Dubai which it said will “remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease.”

The 2022 average is projected to rise to $74 before falling to $65 in 2023, the World Bank said.

But the report warns that “additional price spikes may occur in the near-term amid very low inventories and persistent supply bottlenecks.”

Stocks Stumble, Oil Tumbles As Ship Blocks Suez Canal

A handout picture released by the Suez Canal Authority on March 25, 2021, shows Egyptian tug boats trying to free Taiwan-owned cargo MV Ever Given (Evergreen), a 400-metre- (1,300-foot-)long and 59-metre wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt’s Suez Canal. PHOTO: AFP / Suez CANAL

 

European and US stock markets sank on Thursday, bucking gains in Asia, as investors remain torn between economic optimism and ongoing coronavirus turmoil, while oil prices fell as the Suez Canal remained blocked by a grounded ship.

London, Paris, and Frankfurt stocks each declined by around one percent, as dealers dwelled on worries about rising Covid-19 infections and vaccine struggles across much of Europe.

Oil prices resumed falls as a giant container ship remained stuck in the Suez Canal, blocking one of the world’s busiest shipping routes.

READ ALSO: Prince Harry Joins $1.7bn US Counseling Startup

Crude had rebounded by almost six percent on Wednesday in response the Suez news, after slumping by a similar proportion the previous day on worries about demand given continued Covid-19 lockdowns.

 

– ‘Sluggish vaccine rollout’ –

“Europe is trading broadly lower, extending losses for a second consecutive session as investors keep a close eye on the developing Covid situation,” said OANDA analyst Sophie Griffiths.

“The major economies in Europe such as Germany, France, Italy, and the Netherlands have all taken steps to tighten pandemic restrictions to combat rising Covid cases.

“Simultaneously, the vaccine rollout in the region has been particularly sluggish and marred by problems and chaos,” she added.

After a year-long surge, global equities appear to have run out of steam with expectations of a strong growth rebound stoking fear that prices will soar, forcing central banks to wind in the ultra-low monetary policies that have supported the rally.

And while the stock gains have been boosted by the rollout of inoculations — particularly in Britain and the United States — Europe’s stuttering launch has also been compounded by a jump in new cases that has led to lockdowns and containment measures being reimposed.

Briefing.com analyst Patrick J. O’Hare said, “for a broader market that has run really far, really fast, it looks to be ruminating about how much further things can realistically run.”

The drop in US first-time jobless claims by nearly 100,000 over the past week, along with a drop in continuing claims by 264,000, fit “the bill of an improving economy that requires increased hiring activity and reduced layoff activity”.

 

– ‘Remarkable’ Suez impact –

Oil prices dived more than one percent in a rollercoaster week for the commodity.

“What a single vessel can do to the global oil market is remarkable,” said Rystad Energy analyst Bjornar Tonhaugen.

“The stuck vessel in the Suez Canal created the visual definition of a supply route bottleneck, effectively disrupting one of the world’s busiest routes for all commodities.”

Oil, which struck a 14-month high earlier this month, has also suffered heavy selling in the past couple of weeks on fears about the impact on demand caused by new European lockdowns.

 

– Key figures around 1330 GMT –

London – FTSE 100: DOWN 1.1 percent at 6,636.85 points

Frankfurt – DAX 30: DOWN 1.0 percent at 14,470.41

Paris – CAC 40: DOWN 0.8 percent at 5,902.93

EURO STOXX 50: DOWN 1.0 percent at 3,793.68

New York – Dow: DOWN 0.5 percent at 32,267.97

Tokyo – Nikkei 225: UP 1.1 percent at 28,729.88 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,899.61 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,363.59 (close)

Euro/dollar: DOWN at $1.1808 from $1.1813 at 2200 GMT

Pound/dollar: UP at $1.3726 from $1.3686

Euro/pound: DOWN at 86.07 pence from 86.31 pence

Dollar/yen: UP at 109.06 yen from 108.73 yen

West Texas Intermediate: DOWN 3.3 percent at $59.17 per barrel

Brent North Sea crude: DOWN 2.9 percent at $62.56 per barrel

 

AFP

COVID-19: Oil Prices Fall As Doubts Grow Over Output Cut Deal

 

Oil prices fell sharply Monday after a meeting to discuss output cuts between OPEC and its allies was delayed, dimming hopes of swift action to support coronavirus-ravaged energy markets.

US benchmark West Texas Intermediate plunged eight percent at the open in Asia but clawed back some ground and was trading 5.7 percent lower, at $26.72 a barrel.

International benchmark Brent crude was down 4.3 percent to trade at $32.64 per barrel.

Oil prices have tumbled to levels not seen for years due to the coronavirus pandemic and a price war between Russia and Saudi Arabia, the kingpin of exporting group OPEC.

Business shutdowns, travel restrictions and other measures put in place to contain the virus outbreak have battered demand.

Prices had bounced back from 18-year lows last week after US President Donald Trump said that Riyadh and Moscow would draw a line under their dispute and agree to major output cuts.

READ ALSO: COVID-19: UK Warns Of Tougher Social Distancing Measures

But analysts had been sceptical about a quick resolution, and doubts only grew when the meeting between OPEC and its allies, including Russia, was delayed.

They had been expected to meet via video conference to discuss oil production cuts on Monday but the meeting has been postponed to Thursday, the government of energy-rich Azerbaijan said at the weekend.

Trump surprised investors last week by tweeting: “I expect & hope” Riyadh and Moscow will be cutting back “approximately 10 Million Barrels, and maybe substantially more”.

On Friday, Moscow said it was prepared to discuss a reduction in the volume of about 10 million barrels a day.

But Stephen Innes, chief global markets strategist at AxiCorp, said that “traders remain extremely sceptical a deal will be forthcoming, and if one does occur, it will be woefully insufficient to stem the oil supply gushers.”

AFP

Oil Prices Plunge As Saudi Arabia, Russia Tussle

A currency dealer monitors exchange rates in a trading room at KEB Hana Bank in Seoul on March 9, 2020.
A currency dealer monitors exchange rates in a trading room at KEB Hana Bank in Seoul on March 9, 2020. Jung Yeon-je / AFP

 

Oil prices plunged by almost a third Monday, the biggest drop since the 1991 Gulf War, as top exporter Saudi Arabia launched a price war after Russia blocked a bid to cut output. 

In ferocious trading, both main crude contracts nosedived following Riyadh’s shock move to slash prices after the alliance between oil-exporting group OPEC and its partners fell apart.

At a meeting last week, Saudi Arabia led a push by OPEC ministers to reduce output to counter the impact of the coronavirus outbreak — but it hinged on agreement from the group’s allies, foremost among them Moscow.

However Russia, the world’s second largest oil producer, refused to tighten supply — and Riyadh then drove through the biggest cuts to prices in 20 years on Sunday, unleashing pandemonium on crude markets.

Saudi equities tanked more than nine percent in response with oil titan Aramco losing 10 percent.

The collapse in prices could have far-reaching consequences, observers warned, from battering revenues in energy-dependent countries, to triggering the cancellation of oil exploration projects and even sparking global deflation.

“A 30 percent plunge in crude oil prices is unprecedented and is sending a huge shockwave across financial markets,” said Margaret Yang, an analyst from CMC Markets.

In afternoon Asian trading, West Texas Intermediate was down about 30 percent while Brent crude slipped 26 percent.

The collapse in oil prices added to pressure on equity markets, which were already being hammered by the virus outbreak.

Bourses across Asia fell heavily, with Tokyo closing more than five percent lower and Sydney down over seven percent.

Stock markets in the energy-rich Gulf states nosedived at the start of trading Monday.

Trading was suspended on Kuwait’s Premier index after it fell 9.5 percent, while Dubai Financial Market dropped 9.0 percent and Abu Dhabi Securities Exchange shed 7.1 percent.

‘Punishing Russia’

Energy-linked stocks were among the hardest hit in Asia with Hong Kong-listed CNOOC tumbling 16 percent and PetroChina down 10 percent.

In Singapore, Sembcorp Marine — which works in the energy exploration sector — was down over 10 percent.

Saudi Arabia has cut its price for April delivery by $4-6 a barrel to Asia and $7 to the United States, with Aramco selling its Arabian Light at an unprecedented $10.25 a barrel less than Brent to Europe, Bloomberg said.

Jeffrey Halley, senior market analyst at OANDA, said that “Saudi Arabia seems intent on punishing Russia.

“Oil prices… will likely be capped over the next few months as coronavirus stalls economic growth, and Saudi Arabia opens the pumps and offers huge discounts on its crude grades.”

Singapore’s OCBC Bank said the global economy could be hit by deflation if crude stays around the $30 mark for an extended period, as oil prices play a key role in driving inflation.

This could encourage authorities to loosen monetary policy as they try to stop an uncontrollable deflationary cycle, the bank said.

Yang of CMC Markets said if prices fall to extremely low levels, Russia might ultimately come back to the negotiating table with OPEC and agree on an output cut to shore up markets.

The new developments are reminiscent of the oil price war that erupted in 2014 and sent oil prices crashing to less than $30 a barrel.

The price fall then battered revenues in the Gulf countries, forcing them to resort to austerity measures and borrowing to plug budget deficits.

 

AFP

Oil Prices Tumble Ahead Of OPEC Meeting

Indigenous Firms Plan To Increase Oil Output
File photo

 

Oil prices tumbled Friday on expectations OPEC next week won’t take aggressive action to boost oil prices, while global equities pulled back on trade war worries. 

Both the US and European benchmark contracts for oil fell ahead of the December 5 meeting of the Organization of the Petroleum Exporting Countries in Vienna where analysts expect the cartel to stick with a current production agreement, but not to deepen cuts.

“The market may be disappointed that OPEC is not entertaining additional production cuts,” said Andy Lipow of Lipow Oil Associates, adding that the group is “in a difficult position” given weak demand and higher output in the US and other regions.

Equity markets ended lower following a lacklustre session. US bourses pulled back from records in a holiday-shortened session with low trading volumes.

READ ALSO: NNPC Retail Limited Enters Lubricants Market with Nitro, Rhino Engine Oils

Analysts said stocks were dragged lower by increased US-China trade friction as Beijing threatened unspecified retaliation after President Donald Trump signed into law legislation supporting Hong Kong pro-democracy protesters.

The market feels “a little angst” on US-China trade relations, although the modest drop suggests few fears that a preliminary US-China trade deal will fall apart, said Briefing.com analyst Patrick O’Hare, who added that low trading volume sharpened the decline.

The pullback also came as the holiday shopping season got started in earnest with the “Black Friday” promotions after Thanksgiving.

Walmart rose slightly, but most other leading US retailers fell, including Target and Amazon, as consumers shift ever more of their dollars to e-commerce from traditional stores

Elsewhere, London underperformed its eurozone peers in response to a stronger pound which was boosted by expectations that Britain’s ruling Conservatives will win next month’s general election.

This would likely allow Prime Minister Boris Johnson to push through his Brexit agreement and avoid a no-deal divorce from the European Union.

On the corporate front, shares in Daimler dropped 1.5 percent. on the Frankfurt bourse as the German luxury automaker said it would slash at least 10,000 jobs worldwide in a major cost-cutting drive to help finance the switch to electric cars.

Shares in UK online supermarket Ocado surged after the company announced a deal to provide artificial intelligence (AI) capabilities to Japanese retail giant Aeon.

 Key Figures Around 1900 GMT

New York – Dow: DOWN 0.4 percent at 28,051.41 (close)

New York – S&P 500: DOWN 0.4 percent at 3,140.98 (close)

New York – Nasdaq: DOWN 0.5 percent at 8,665.47 (close)

London – FTSE 100: DOWN 0.9 percent at 7,346.53 (close)

Frankfurt – DAX 30: DOWN 0.1 percent at 13,236.38 (close)

Paris – CAC 40: DOWN 0.1 percent at 5,905.17 (close)

EURO STOXX 50: FLAT at 3,703.58 (close)

Tokyo – Nikkei 225: DOWN 0.5 percent at 23,293.91 (close)

Hong Kong – Hang Seng: DOWN 2.0 percent at 26,346.49 (close)

Shanghai – Composite: DOWN 0.6 percent at 2,871.98 (close)

Euro/dollar: UP at $1.1017 from $1.1009

Pound/dollar: UP at $1.2933 from $1.2912

Euro/pound: DOWN at 85.18 pence from 85.27

Dollar/yen: DOWN at 109.47 yen from 109.51

Brent North Sea crude: DOWN 2.3 percent at $62.43 per barrel

West Texas Intermediate: DOWN 5.1 percent at $55.17 per barrel

AFP

 

 

Oil Prices Drop As Saudi Eyes Non-Military Solution To Iran Crisis

Oil prices fell more than one percent on Monday after Saudi Arabia’s de facto leader said war with Iran would destroy the world economy and hinted instead at a non-military solution.

Washington, Riyadh, Berlin, London and Paris blame Iran for attacks that damaged the Saudi oil sector on September 14 and forced the world’s largest crude exporter to sharply reduce production.

Elsewhere Monday, stock markets diverged as traders tracked the latest twists and turns regarding the US-China trade war. The dollar was mixed against main rivals.

“In terms of geopolitical concerns, common sense is prevailing for now in Saudi Arabia,” noted analyst Naeem Aslam at traders ThinkMarkets, in reference to the comments by Saudi Arabia’s crown prince in an interview with CBS show “60 minutes” broadcast over the weekend.

Mohammed bin Salman said war would be catastrophic for global growth.

‘Unimaginably high’

“Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven’t seen in our lifetimes,” the prince said.

“The region represents about 30 percent of the world’s energy supplies, about 20 percent of global trade passages, about four percent of the world GDP. Imagine all of these three things stop,” he said.

“This means a total collapse of the global economy, and not just Saudi Arabia or the Middle East countries.”

Iran’s oil minister meanwhile on Sunday ordered his country’s energy sector to be on high alert to the threat of “physical and cyber” attacks.

Bijan Namdar Zanganeh said “it is necessary for all companies and installations of the oil industry to be on full alert against physical and cyber threats”, in a statement published on the oil ministry’s Shana website.

Tehran has denied any link to the Saudi strikes, which were claimed by Huthi rebels in Yemen. Iran supports the rebels against a Saudi-led coalition that has been fighting the Huthis since 2015.

“Oil has been amazing everyone over the last couple of weeks, having surged on the back of the attack on the Saudi oil facilities before reversing the entirety of these gains, despite the country temporarily losing half its output,” Craig Erlam, senior market analyst at Oanda trading group, said Monday.

“Traders are clearly not particularly concerned about risk premiums in oil… Instead, the focus again seems to be shifting back to the demand dynamics and the risk of further downgrades as the global economic slowdown takes hold,” he added.

US-China trade war

Elsewhere Monday, investors digested reports in US media that President Donald Trump is mulling severe new restrictions on investment in China.

Shanghai and Tokyo stock markets slumped the day before a week-long patriotic holiday begins in China, despite assurances from the US Treasury that there were no plans to stop Chinese companies from listing on US exchanges.

On Tuesday the Asian giant celebrates 70 years since the founding of communist China, with markets closed from October 1 to 7, while planned pro-democracy protests in Hong Kong threaten to disrupt festivities.

Shanghai closed down 0.9 percent as some investors took profits, with uncertainty fuelled by fears of an escalation in the US-China trade war that has raged for more than a year.

“The Sino-US trade negotiations have been full of twists and turns,” said Zhang Gang, an analyst with Central China Securities.

“You don’t know what remarks Trump would make in the next seven days, or what variables there will be from the US side. So (investors) have set themselves in a low-key, waiting position.”

Key figures around 1100 GMT

Brent North Sea crude: DOWN 1.3 percent at $61.12 per barrel

West Texas Intermediate: DOWN 1.0 percent at $55.34 per barrel

London – FTSE 100: DOWN 0.3 percent at 7,406.37 points

Frankfurt – DAX 30: DOWN 0.1 percent at 12,368.83

Paris – CAC 40: FLAT at 5,639.56

EURO STOXX 50: FLAT at 3,546.40

Hong Kong – Hang Seng: UP 0.5 percent at 26,092.27 (close)

Shanghai – Composite: DOWN 0.9 percent at 2,905.19 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 21,755.84 (close)

London – FTSE 100: UP 0.1 percent at 7,433.79

New York – Dow: DOWN 0.3 percent at 26,820.25 (Friday’s close)

Euro/dollar: DOWN at $1.0920 from $1.0941 at 2030 GMT

Pound/dollar: UP at $1.2302 from $1.2293

Euro/pound: DOWN at 88.80 pence from 89.01 pence

Dollar/yen: DOWN at 107.93 yen from 107.95

AFP

OPEC Eyes Output Cuts As Trump Calls For Boost

 

OPEC members and other oil-producing countries mulled cuts in output Thursday to prop up plunging prices, defying repeated calls by US President Donald Trump that they keep the taps open.

“We’re looking for a sufficient cut to balance the market, equally distributed between countries,” Saudi oil minister Khalid al-Falih told reporters ahead of an OPEC meeting in the Austrian capital.

Oil ministers from 20 or so countries are in Vienna for two days of meetings — first, the 15 members of OPEC, then a wider group including countries outside the cartel — to discuss how to counter the tumble in prices over the past two months.

The price of a barrel of Brent, the European benchmark, fell four percent to below $60 Thursday, hit by the Saudi comments which were taken on the markets to be very cautious and concerns over an economic slowdown.

On Wednesday, Trump took to Twitter to urge producers to keep pumping.

“Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” said Trump, who has repeatedly accused the cartel of keeping prices artificially high.

Saudi minister al-Kalih pointedly said Washington should back off.

“We don’t need permission from anyone to cut,” he said.

The US “is not in a position to tell us what to do,” he added.

At the end of 2016, OPEC’s regular members joined forces with other countries — most notably Russia — to scale back output in a bid to reduce a glut that was weighing on prices.

The coordinated move — which has since been extended — stimulated a long rally in oil prices right up until October 2018.

Over the past two months, however, prices have plunged again.

 Cuts on the cards? 

In order to try and counter this, the so-called OPEC+ — who together account for more than half of the world’s oil output — is discussing renewing the pact or perhaps cutting output still further.

All the signals are that more reductions in output are on the cards, despite the pressure from Trump, who argues that higher energy costs will choke off the economy.

“A million (barrels cut) would be ideal,” the Saudi minister said. “Ideally, everyone should join equally. I think that’s the fair and equitable solution.”

OPEC daily output stood at 32.99 million barrels in October, according to the International Energy Agency.

However, OPEC’s third-biggest producer Iran wants to be exempted from any such measures.

Given the economic sanctions being reimposed by the United States, the Islamic republic ” doesn’t join any agreement for cutting production because of the special situation Iran faces,” oil minister Bijan Namdar Zanganeh said.

Zangeneh said the estimated surplus currently on the market amounted to 1.3-2.4 million barrels per day.

Ideally, “the price would be better to stand at $60-70. That is acceptable for most OPEC countries.”

Trump’s intervention complicates matters.

OPEC kingpin Saudi Arabia, in particular, finds itself in an especially delicate position in the wake of the murder of opposition journalist Jamal Khashoggi.

Trump has continued to support the kingdom despite worldwide outrage over the murder but he is at the same time keeping up the pressure for lower prices.

“The big unknown is how President Trump will react to any production cuts,” said analysts at ING.

Iran’s Zangeneh said it was the first time a US president was trying to tell OPEC what to do.

“They should know that OPEC is not part of their Secretary of Energy.”

Most OPEC members felt the same way, but “some members are going along with US policy,” he said.

Negotiations between OPEC members are fraught, however, as some  feel that Saudi Arabia wields too much clout in setting policy.

Iran has accused Saudi Arabia of being in thrall to the US.

In a surprise move on Monday, Qatar — which has been an OPEC member since 1961 — said it would quit the cartel next month in order to focus on gas production.

Doha accounts for only around two percent of OPEC output but the move caught the headlines given the political overtones.

Qatar minister Saad Sherida Al-Kaabi said he had met a number of other OPEC ministers, but not his Saudi Arabian colleague.

“I don’t think they want to meet me. They are blockading our country,” he told journalists.

Qatar has been isolated by a group of countries led by Saudi Arabia since June 2017, in the worst political fallout between the energy-rich Gulf powers.

AFP

Oil Prices Slump Over Concerns About Excess Supply, Weak Demand

Indigenous Firms Plan To Increase Oil Output

 

Oil prices slumped Friday to lows not seen since last year as concerns over high crude supplies and uncertain economic growth triggered massive selling.

The petroleum slump, which took major oil contracts down to their lowest level since October 2017, comes as oil output remains high in the United States, Russia and Saudi Arabia and as some forecasters have trimmed their outlook for global growth, due in part to the US-China trade fight.

US oil benchmark West Texas Intermediate dropped $4.21 to $50.42 a barrel for January delivery, a decline of 7.7 percent.

In London, Brent oil futures for January delivery, slid 6.1 percent to $58.80 per barrel.

“The truth of the matter remains that rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets,” said Lukman Otunuga, a research analyst at FXTM.

Global stock markets were mixed, with major US indices retreating in part due to worries about lower oil prices and weak global growth.

Bourses in Paris and Frankfurt notched modest gains, while London, Shanghai and London all fell.

Trump effect?

High global oil production compared to demand was the top reason for Friday’s selling, while the outlook for a weakening world economy led investors to conclude that growth would not be strong enough to soak up the surplus.

The retreat comes ahead of a meeting of the Organisation of the Petroleum Exporting Countries in Vienna on December 6.

Some analysts view the organisation as constrained following heavy pressure from US President Donald Trump on Saudi Arabia.

Earlier this week, Trump thanked Saudi Arabia for low prices and decided to essentially overlook the Central Intelligence Agency’s reported conclusion over Crown Prince Mohammed bin Salman’s involvement in the gruesome murder of journalist Jamal Khashoggi, a stance that has outraged White House critics.

“Although most analysts claim that this has to do with supply overhang and increased production from Russia and Saudi Arabia, the bottom line is that the US President keeps pushing for lower prices,” said Fiona Cincotta, senior market analyst at City Index trading group.

“While this is the case it will be difficult to see a return to oil at a higher level unless oil cartel OPEC decides on a major output cut at its next meeting.”

But Andy Lipow of Lipow Oil Associates predicted the “Saudis will decide in their best interest to cut production,” adding that “it will not have an impact on the relationship with Washington because the US already said how this relationship was important and how important was the weapon business with the Saudis.”

Still, Friday’s drop in prices reflects market concern that OPEC production cuts are “not going to be enough to support prices,” Lipow added.

The drop in oil prices reverberated in equity markets, with oil giants Chevron, Royal Dutch Shell and Total all shedding three percent or more on their local bourses.

Chinese shares also stumbled as Shanghai slumped by more than two percent, with the tech sector hit hard by a Wall Street Journal report that Washington is urging its allies to avoid using equipment from Chinese telecoms giant Huawei.

Worsening trade tensions between the United States and China have shattered confidence on global trading floors.

Key figures around 1930 GMT

Oil – West Texas Intermediate: DOWN $4.21 at $50.42 per barrel

Oil – Brent Crude: DOWN $3.80 at $58.80 per barrel

New York – Dow: DOWN 0.7 percent at 24,285.95 (close)

New York – S&P 500: 0.7 percent at 2,632.56 (close)

New York – Nasdaq: DOWN 0.5 percent at 6,938.98 (close)

London – FTSE 100: DOWN 0.1 percent at 6,952.86 points (close)

Frankfurt – DAX 30: UP 0.5 percent at 11,192.69 (close)

Paris – CAC 40: UP 0.2 percent at 4,946.95 (close)

EURO STOXX 50: UP 0.3 percent at 3,137.21 (close)

Tokyo – Nikkei 225: Closed Friday for holiday

Hong Kong – Hang Seng: DOWN 0.4 percent at 25,927.68 points (close)

Shanghai – Composite: DOWN 2.5 percent at 2,579.48 points (close)

Pound/dollar: DOWN at $1.2805 from $1.2877 at 2200 GMT Thursday

Euro/dollar: DOWN at $1.1331 from $1.1403

Dollar/yen: DOWN at 112.85 yen from 112.95 yen

AFP

Oil Prices Fall As Saudis See Likely Supply Boost

 

Indigenous Firms Plan To Increase Oil Output

 

Global oil prices fell Friday after top producer Saudi Arabia signalled a likely boost in supply as soon as the third quarter, and world stock markets were mixed over the sudden US move to cancel the summit with North Korea.

Saudi oil minister Khaled al-Faleh said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to the RIA Novosti agency.

OPEC and 10 other oil producers agreed at the end of 2016 to cut output by 1.8 million barrels per day to clear a glut that had led to a collapse in prices in 2014.

The deal, which has been extended until the end of 2018, has led to that glut disappearing and prices have recovered from around $30 per barrel to around $80.

The Saudi comments sent oil prices tumbling by over three percent. Brent Crude fell to $76.43 per barrel and WTI Crude to $68.03 around 1545 GMT.

Russia’s oil tsar Alexander Novak said ministers from the OPEC cartel and other members of the production pact would discuss how much to increase production next month.

“If we come to a common opinion that it is necessary” to increase supply it “should probably take place from the third quarter,” Novak said, according to RIA Novosti.

Uncertainties about supplies from Iran and Venezuela have led prices to spike higher in recent weeks, with industry players warning they could jump to $100 per barrel.

In stocks, London and Frankfurt indices finished the week slightly higher, while Paris was essentially flat at the close as investors hesitated amid the confusing series of reports on geopolitics.

In New York, the Dow slipped 0.4 percent in mid-day trading Friday as falling crude prices dragged energy stocks lower and investors continued to digest the US-North Korea situation and US-China trade.

Shortly after the open, President Donald Trump had said the summit with North Korea that he had called off just 24 hours before could go ahead after all as talks with Pyongyang were continuing.

But investors were contending with the possibility that the summit’s cancellation could cause Trump to be more aggressive in trade talks with China.

Asia down on Trump move

Asian markets mostly fell Friday after the news that Trump had abruptly axed next month’s summit with North Korean leader Kim Jong Un.

For its part North Korea declared that it is willing to talk to the United States “at any time”, while China urged both sides to show restraint.

“The focus has been firmly centred upon Donald Trump, with his decision to cancel the June meeting with Kim Jong Un bringing about a return to the risk-off sentiment,” said analyst Joshua Mahony at trading firm IG.

Markets have been jittery this week as the US president had warned in recent days that he could cancel the summit, while also voicing his displeasure at a deal to avert a trade war with China and threatening tariffs on car imports.

Thursday’s summit cancellation took many by surprise — including North and South Korean officials — and fuelled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.

“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and cancelled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.

Key figures around 15:45 GMT

New York – Dow: DOWN 0.4 percent at 24,725.08

London – FTSE 100: UP 0.18 percent at 7,730.28 points (close)

Paris – CAC 40: DOWN 0.1 percent at 5,542.55 (close)

Frankfurt – DAX 30: UP 0.65 percent at 12,938.01 (close)

EURO STOXX 50: DOWN 0.18 percent at 3,515.36

Tokyo – Nikkei 225: UP 0.1 percent at 22,450.79 (close)

Hong Kong – Hang Seng: DOWN 0.6 percent at 30,588.04 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,141.30 (close)

Euro/dollar: DOWN at $1.1662 from $1.1720 at 2100 GMT

Pound/dollar: DOWN at $1.3318 from $1.3381

Dollar/yen: UP at 109.32 yen from 109.26 yen

Oil – Brent North Sea: DOWN $2.36 at $76.43 per barrel

Oil – West Texas Intermediate: DOWN $2.68 at $68.03

AFP