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  • Oil Prices Surge Beyond $70 After Saudi Attack

    Oil Prices Surge Beyond $70 After Saudi Attack

    Oil prices, which have been rising strongly on rebounding demand, broke Monday past $70 per barrel for the first time since January 2020 after an attack on energy facilities in Saudi Arabia.

    Meanwhile, stock market numbers were mixed as investors weighed worries over high inflation against the reopening of virus-hit economies.

    After Asian indices closed mostly lower, with sharp losses in Hong Kong and Shanghai, Europe pushed higher approaching the mid-way point.

    Wall Street had surged Friday following news that the US economy created 379,000 jobs in February, reaffirming the view that it is on track for a strong recovery.

    The report came just ahead of senators passing Joe Biden’s $1.9 trillion rescue plan, setting it up for the US president’s signature by the end of the week.

    ‘Runaway inflation’

    Brent at one point peaked at $71.38 — the highest level since January 2020 — before falling back under $70 per barrel.

    The strike on the Aramco facilities — including one of the world’s biggest oil ports — by Yemen’s Huthi rebels Sunday followed the bombing of the country’s capital Sanaa by a Saudi-led military coalition.

    The rising hostilities underscore a dangerous intensification of Yemen’s conflict between the coalition-backed Yemeni government and the Iran-backed Huthis, despite a renewed US push to end the war in the crude-rich region.

    While surging oil prices were boosting share price across the heavyweight energy sector, they “will only add to the key concern which is dogging (stock) markets — namely the risk of runaway inflation and a resulting increase in interest rates”, noted AJ Bell investment director Russ Mould.

    A surge to inflation could force the Federal Reserve and other central banks to wind back the ultra-loose monetary policies that have been a key driver of a year-long equity market rally, according to analysts.

    In another sign that the world economy is getting back on track, China at the weekend released data showing a better-than-expected jump in exports in January and February, suggesting global trade is revving up again after being hammered by the coronavirus pandemic.

    Inflation fears are mounting as benchmark US 10-year Treasury bond yields continue to rise.

    Yields rise as bond prices fall, and investors have been rushing out of them as inflation would eat into their returns over time, sparking the selloff in world markets.

    Investors will be keeping tabs on the European Central Bank’s policy meeting Thursday, hoping officials will stress their commitment to keeping borrowing costs low, while the Fed is due to gather next week.

    Key figures around 1115 GMT

    Brent North Sea crude: UP 0.2 percent at $69.48 per barrel

    West Texas Intermediate: UP 0.2 percent at $66.23 per barrel

    London – FTSE 100: UP 0.1 percent at 6,638.80 points

    Frankfurt – DAX 30: UP 1.3 percent at 14,097.72

    Paris – CAC 40: UP 0.8 percent at 5,831.03

    EURO STOXX 50: UP 1.0 percent at 3,707.39

    Tokyo – Nikkei 225: DOWN 0.4 percent at 28,743.25 (close)

    Hong Kong – Hang Seng: DOWN 1.9 percent at 28,540.83 (close)

    Shanghai – Composite: DOWN 2.3 percent at 3,421.41 (close)

    New York – Dow: UP 1.9 percent at 31,496.30 (close Friday)

    Euro/dollar: DOWN at $1.1875 from $1.1919 at 2145 GMT

    Pound/dollar: FLAT at $1.3841

    Euro/pound: DOWN at 85.81 pence from 86.08 pence

    Dollar/yen: UP at 108.51 yen from 108.36 yen

  • Oil prices steady as clouds gather over fuel demand, looser supply curbs

    Oil prices steady as clouds gather over fuel demand, looser supply curbs

    Oil prices were unchanged on Friday, with trading marked by growing uncertainty about global recovery in fuel demand as new COVID-19 cases surge in several countries just as major producers get set to loosen production curbs.

    U.S. West Texas Intermediate (WTI) crude futures rose one cent to $40.76 a barrel at 0204 GMT, while Brent crude futures were steady at $43.37 a barrel.

    Both were still on track to end the week up slightly.

    On Thursday, the U.S. reported at least 75,000 new COVID-19 cases, a new daily record.

    Spain and Australia reported their steepest daily jumps in more than two months, cases continued to soar in India and Brazil stepped up lockdown measures.

    The two benchmark contracts fell one per cent on Thursday after the Organisation of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) imposed earlier this year by some two million bpd from August.

    But actual output additions will be closer to 1.1 million bpd, as countries like Iraq – which overproduced compared with their commitments to cut supply in May through July – agreed to bigger reductions in August and September.

    Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said the market took some heart with the agreement for some to compensate for previous non-compliance with commitments at a time when there is uncertainty over demand growth.

    “They’re taking those precautions.

    “That gives the market confidence that OPEC+ is looking quite closely at those conditions to make sure they don’t push the market in the wrong direction,’’ he said.

    Analysts expect the market to remain in the $40-45 a barrel range, with the looming return of some U.S. supply and uncertainty over fuel demand as new lockdowns may be needed to curb the resurgence of COVID-19 cases.

    “The problem with the market right now is prices have got to a level where we’re concerned U.S. supply is going to come back,’’ Dhar said. (Reuters/NAN)

  • Oil prices fall for fifth day to lowest in a year

    Oil prices fall for fifth day to lowest in a year

    Oil prices fell over 2% on Thursday, plunging for a fifth day to their lowest since January 2019 as a rise in new coronavirus cases outside China fueled fears of a pandemic that could slow the global economy and dent demand for crude.

    Brent crude LCOc1 was down $1.15, or 2.2%, at $52.28 a barrel at 1150 GMT. West Texas Intermediate (WTI) futures CLc1 fell by $1.04 cents, or 2.1%, to $47.69 a barrel.

    For the first time since the start of the coronavirus outbreak erupted in China, the number of new coronavirus infections outside the country exceeded new Chinese cases.

    The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero”, due to the outbreak.

    U.S. President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low”, but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

    “The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

    “The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly U.S. oil report was able to lend price support.”

    Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

    U.S. crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

    The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

    “Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. “Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

    OPEC+ plans to meet in Vienna on March 5-6.