European stocks dip, oil prices rise

LONDON — European stocks slid Monday as a positive lead from Asia on Chinese stimulus measures petered out, while oil prices continued their march higher.

Equities trading in the United States was closed for a public holiday.

"European markets have struggled for gains today in the absence of the US, as the initial boost of a China stimulus inspired rally from Asia markets has started to fade, even though basic resources have outperformed," said market analyst Michael Hewson at CMC Markets.

Data showing a jump in new home sales in China brightened sentiment in Asian trading as a sign that recent government measures to boost the struggling property sector were helping.

Investors are hoping for still more measures to stimulate the world's second largest economy after a number of announcements last week, including reducing mortgage down payments and tax incentives.

"While these individual easing measures may not appear substantial, their collective implementation clearly signals policymakers' intentions to stabilize the property market, spur economic growth, and boost overall sentiment," said SPI Asset Management's Stephen Innes.

"Further targeted measures are anticipated to be incrementally introduced until policymakers are content with the achieved results."

However, observers say that traders are yearning for the government to unveil a big-bang stimulus similar to the $550 billion seen in 2008 during the global financial crisis.

News that battered developer Country Garden had won approval from creditors to extend a deadline for a key bond repayment, narrowly avoiding a potential default, provided some much-needed relief from worries over China's property sector.

Meanwhile, oil prices pushed to or near to their highest levels this year on the prospect that Saudi Arabia and Russia will extend their production caps.

"The continued risk of a tighter market is helping to drive markets higher, raising the prospect that if Chinese demand does pick up in the second half of the year, prices could jump through $90 a barrel thus posing further upside risk to sticky inflation," said Hewson.

The main international contract, Brent crude, briefly hit $89 per barrel.

"That there is still plenty of momentum so close to $90 a barrel may suggest we could see a strong push to break above which would represent a big shift in the market dynamic in quite a short period of time," said Craig Erlam at OANDA trading platform.

Agence France-Presse

Gas supply shock would cut value of Europe's economy, ECB says

FRANKFURT - A negative shock from any gas supply disruption would eat into the value of goods and services produced in the euro zone, the European Central Bank said on Tuesday, worsening the impact of high energy prices on the bloc's growth.

Record energy prices in response to concern a Russian attack on Ukraine will lead to disruption of fuel exports to Europe have dented euro zone growth. Russia denies any plan to invade.

In an Economic Bulletin article on Tuesday, the ECB said it expected high energy prices would reduce euro zone economic output by around 0.2 percent this year, compared with baseline levels of GDP, with the biggest impact in the first quarter.

Over 90 percent of the gas used in the euro zone is imported, the ECB said, meaning negative economic impacts would be aggravated if the bloc loses some of its gas supply.

"The direct and indirect impact of a hypothetical 10 percent gas rationing shock on the corporate sector is estimated to reduce euro area gross value added by about 0.7 percent," the bank said.

The actual fall could even be greater as the modeling does not consider the effect of energy price changes, the ECB said.

Austria and Slovakia would take the biggest hit, the ECB said, while among industrial sectors, basic metals would likely suffer the most.

(Reporting by Balazs Koranyi; editing by Barbara Lewis)

-reuters-

Asia shares mostly lower amid rising coronavirus cases, Washington turmoil

NEW YORK - Asian stocks were mostly lower on Tuesday, tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season.

Political uncertainty dominated trading as House Democrats introduced a resolution to impeach U.S. President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol last week.

Several big tech giants, including Twitter Inc, Amazon.com Inc , Alphabet Inc, Facebook Inc and Apple Inc, have taken actions against Trump and his network of supporters, as concerns mounted over the risk of continued violence.

Twitter’s stock tumbled 6.4 percent on Monday after the micro-blogging site permanently suspended Trump’s account last Friday.

Investors also kept an eye on the continued spread of the coronavirus globally as cases surpassed 90 million on Monday, according to a Reuters tally.

“The weakness was led by tech and I think the banning of Trump’s account by Twitter and Amazon stepping up against Parler all brought a renewed focus on increased regulation and reining in on tech,” said Thomas Hayes, chairman of Great Hill Capital in New York.

Japan’s Nikkei slipped 0.48 percent, South Korea’s KOSPI fell 0.91 percent and Hong Kong’s Hang Seng index futures lost 0.54 percent.

Defying the broader selloff, Australia’s S&P/ASX 200 rose 0.24 percent.

On Wall Street, the Dow Jones Industrial Average fell 0.29 percent, the S&P 500 lost 0.66 percent and the Nasdaq Composite dropped 1.25 percent.

Investors are expecting guidance on the extent to which executives see a rebound in 2021 earnings and the economy from results and conference calls from JP Morgan, Citi and Wells Fargo Friday.

Meanwhile, longer-term Treasury yields were at their highest since March before new long-dated supply coming this week and on speculation of more U.S. fiscal stimulus as Democrats will have control of Congress and the White House.

“People are optimistic to see the yield curve steepening and it could help spreads and net interest margins for banks,” Hayes said.

Benchmark 10-year notes last fell 11/32 in price to yield 1.1443 percent, from 1.107 percent late on Friday.

The spread between the two-year and 10-year Treasury yields brushed against 100 basis points to hit its steepest since July 2017.

The climb in yields in turn offered some support to the dollar, which rose to its highest in over two weeks against a basket of currencies.

The U.S. dollar index rose 0.256 percent, with the euro down 0.54 percent to $1.2152. The Japanese yen weakened 0.24 percent versus the greenback at 104.20 per dollar, while Sterling was last trading at $1.3516, down 0.35 percent on the day.

Crude oil prices fell, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns across the globe, as well as the stronger dollar.

U.S. crude recently fell 0.1 percent to $52.19 per barrel and Brent was at $55.61, down 0.68 percent on the day.

Safe-have spot gold dropped 0.2 percent to $1,844.27 an ounce. Silver fell 1.70 percent to $24.94.

-reuters-

Saudi Aramco profits dive 73 percent as virus batters oil demand

RIYADH - Energy giant Saudi Aramco said on Sunday its second-quarter profits plunged a massive 73 percent due to sharply lower oil prices as the coronavirus crisis undercuts global demand. 

The behemoth, recently dethroned by Apple as the world's most valuable listed company, posted a net profit of $6.6 billion for the three months to June 30 compared to $24.7 billion for the same period of 2019.

The results are in line with analysts' expectations but stand in contrast to the losses reported by its rival energy giants, which are reeling from a drop in oil demand since the start of the novel coronavirus pandemic.


"Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results," Aramco's chief executive Amin Nasser said in a statement.

"Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce and unrivalled financial and operational strength."

Aramco's net profit for the first half of the year also slumped by 50.5 percent to $23.2 billion, compared to $46.9 billion in the same period last year.

The results underscore a downbeat oil market as pandemic-driven economic shutdowns crush the global demand for crude.

Five other leading oil firms -- BP, Chevron, ExxonMobil, Royal Dutch Shell and Total -- recently reported combined losses of $53 billion for the second quarter.

By contrast, Aramco's results reflected its "financial resilience", Nasser said, as the company presses ahead with a plan to pay $75 billion in dividends this year.

Nasser also voiced optimism over what he called a "partial recovery in the energy market" amid an easing of virus restrictions in some countries.

But amid low crude prices, Aramco is looking at cutting its 2021 budget by between eight and 10 percent from this year's already reduced levels, the Energy Intelligence group reported last month.

Aramco has said it expects capital expenditure to be at the "lower end of the $25 billion to $30 billion range" this year.

That is significantly lower than its expenditure of $32.8 billion in 2019, according to Energy Intelligence.

"Cutbacks have already caused Aramco to delay plans to expand production from its offshore fields," Energy Intelligence said in a report.

"The offshore program was a core element of a push to raise the company's oil production capacity."

The company has also slashed hundreds of jobs as it seeks to reduce costs, Bloomberg News reported in June.

Saudi Arabia, the world's biggest crude oil exporter, has been hit hard by the double whammy of low prices and sharp cuts in production.

A sharp drop in oil income is expected to hinder Crown Prince Mohammed bin Salman's ambitious plans to overhaul the kingdom's energy-reliant economy.

Oil prices dropped to a two-decade low below $20 a barrel in April and May as the coronavirus dampened demand, before recovering to around $44 a barrel after the OPEC+ producers agreed to record output cuts.

Following the move, Saudi oil production dropped to 7.5 million barrels per day in June, compared to last year's average of 10 million bpd.

Aramco's profits were also impacted by the losses posted by the Saudi Basic Industries Co. (SABIC), the petrochemicals giant it acquired for $69 billion in a deal completed this year.

The energy giant is bracing for a possible further wave of coronavirus infections that could impact a tentative global economic recovery and erode the demand for crude worldwide, analysts say.

Aramco was listed on the Saudi bourse in December following the world's biggest IPO, generating $29.4 billion for 1.7 percent of its shares.

US technology firm Apple last week replaced it as the world's most valuable company after its capitalisation grew to $1.9 trillion, compared to $1.76 trillion for Aramco.

Nasser said Aramco would distribute $18.75 billion in dividends for the second quarter to keep its listing promise of distributing at least $75 billion in annual dividends for five years.

"We are committed to delivering sustainable dividends through market cycles, as we have demonstrated this quarter," Nasser said in a media call, according to Bloomberg News.

"Our intention is to pay $75 billion, subject to board approval, of course, and market conditions."

Agence France-Presse

Oil and European shares rise as lockdowns ease, gold jumps

LONDON - European stock markets rose on Monday and oil prices climbed to their highest in as much as two months as a loosening of coronavirus shutdowns boosted market sentiment, even though the deadly outbreak has yet to be fully contained.

Warm weather enticed much of the world to emerge from coronavirus lockdowns as centers of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months.

However, the weekend also saw anti-lockdown protesters in countries such as the United States, Germany, England and Poland arguing government restrictions demolish personal liberties and are wrecking economies.

The pan-European STOXX 600 was up 2% at 1020 GMT, with heavyweight bourses in Britain, Germany and France all comfortably in positive territory, recovering some of last week's losses.

"The resilience of stock markets relative to the awful economic data that we’ve been seeing over the past fortnight speaks to an optimism that... as economies come out of lockdown we can expect to see improvements as we head into the second half of the year," said Michael Hewson, chief market analyst at CMC Markets.

Governments must balance the economic incentive to re-open businesses with the risk of triggering a deadly second wave of the virus, which has killed more than 312,000 people and spread to at least 210 countries since December.

Deutsche Bank strategist Jim Reid said, "It does feel like we’re in the middle of a phoney war at the moment with all of us waiting to see how efficiently the various economies are able to re-open given all the social distancing that will be required."

There were still lots of obstacles to a rapid recovery, with Federal Reserve Chairman Jerome Powell saying in an interview on Sunday that a U.S. economic recovery may stretch deep into 2021.

The most important data for the U.S. economy now are the "medical metrics" around the coronavirus pandemic, he said.

Health ministers from around the world, including China and the U.S., are expected to call for an independent evaluation of the World Health Organization's handling of the COVID-19 pandemic during a WHO meeting on Monday.

Already rocky U.S.-China relations also saw tensions increase over the weekend, as the United States raised threats over telecoms equipment giant Huawei Technologies and China's treatment of journalists in Hong Kong.

U.S. lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China, including tax breaks, new rules, and carefully structured subsidies.

Japan's preliminary GDP data showed that the world's third biggest economy contracted an annualised 3.4% in the first quarter, slipping into a recession for the first time in more than five years.

But hopes of a worldwide economic recovery saw oil prices climb by more than $1 a barrel on Monday, supported by output cuts.

Brent crude reached as much as $34.35 a barrel on Monday, its highest since April 9, and was last up 5.3% at $34.22 . U.S. West Texas Intermediate crude was up 7.1% at $31.51 a barrel - a two-month high.

In commodity markets, the flood of liquidity from central banks, combined with record-low interest rates and poor economic data from the U.S., lifted gold to a seven-year peak. The metal was last up 1.3% at $1,763 an ounce, with silver and palladium also boosted.

The MSCI world equity index, which tracks shares in 49 countries, was up around 0.4% while MSCI's main European Index was up 2%.

Government bond yields edged higher across the euro area, while France's bonds saw some underperformance after its ratings outlook was lowered by Fitch Ratings.

Europe's biggest budget airline, Ryanair, reported a 13% rise in profit for the year to March 31, but cut its annual passenger traffic target by a further 20% and said it had "no visibility" on customer demand once it reopens much of its network on July 1. Ryanair shares were last up 10.4%.

The dollar fell slightly against a basket of six major currencies in early London trading before recovering somewhat, last down less than 0.1% since New York's close.

The Norwegian crown was lifted by the rising oil prices, up around 0.8% versus the euro.

Sterling fell below $1.21 - its lowest since March 26 - late on Sunday after the Bank of England's chief economist said the bank is looking more urgently at options such as negative interest rates.

It was last up 0.25% on the day at $1.2130, as a lack of progress in Brexit negotiations continue to weigh on the pound.

(Reporting by Elizabeth Howcroft; Editing by Toby Chopra and Peter Graff)

-reuters-

Asia equities set to plunge after US crude collapses for second day

WASHINGTON/NEW YORK -- Asian share markets were set to tumble on Wednesday as the floor fell out from under US crude prices, exposing the deep damage the coronavirus pandemic has had on global economic demand.

Skittish investors sought the safety of government debt and even dumped safe-haven gold as Brent oil futures plunged for a second day, fueled by a swelling global crude glut.

Australian S&P/ASX 200 futures lost 2.1 percent in early trading while Japan's Nikkei futures rose 0.21 percent.

The collapse in US crude prices has given fresh urgency to bearish voices who say it sounds alarm bells for global growth and are bracing for a catastrophic collapse in asset prices as the COVID-19 pandemic wrecks the world economy.

Earlier his week, the May US WTI futures contract crashed into negative pricing for the first time in history. In addition to massive oversupply concerns, analysts say the plunge also highlights the technical constraints the market faces in responding to shocks.

"The negative price for May WTI futures was probably an anomaly, but it also was a symptom of bigger underlying issues that the industry must address," said Arij van Berkel, who leads the energy research team at Lux Research in Amsterdam.

"Even though the oil industry theoretically has a diversified product portfolio, the current situation shows that its ability to switch between markets is extremely limited."

The Nikkei 225 index closed down 1.15 percent at 19,669.12​​​ on Tuesday. The futures contract is down 2.64 percent from that close.

Hong Kong's Hang Seng index futures lost 1.31 percent.

On Wall Street, the Dow Jones Industrial Average fell 2.67% to 23,018.88, the S&P 500 lost 3.07% to 2,736.56 and the Nasdaq Composite dropped 3.48% to 8,263.23.

The pan-European STOXX 600 index lost 3.39% and MSCI's gauge of stocks across the globe shed 3.01%.

As the difficulties of restarting the U.S. economy sank in, U.S. Treasury yields tumbled, with the five-year note hitting a new record low on rising prices for bonds: one of the safest assets.

The U.S. dollar rose to a two-week high against a basket of currencies, as investors fled riskier assets for the world's most liquid currency while putting pressure on oil-linked currencies such as the Norwegian crown and the Canadian dollar.

Investors face a worldwide supply glut that is expected to overwhelm demand for months or even years and current production cuts to offset that excess are nowhere near sufficient.

US crude recently rose 124.08 percent to $10.01 per barrel while Brent oil futures prices plunged again on Tuesday to $19.82, down 22.49 percent on the day, as panic extended to a second day.

Both Saudi Arabia and Russia said on Tuesday they were ready to take extra measures to stabilize oil markets along with other producers, but they have not taken action yet.

Investors have become increasingly wary of the economic damage from sweeping lockdowns that have brought US business activity to a halt and sparked millions of layoffs.

Governors of about half a dozen US states, including Georgia and South Carolina, are pushing ahead with plans to begin a partial restart of their economies despite warnings that loosening restrictions prematurely could lead to a fresh surge of infections.

Meanwhile, the US Senate on Tuesday unanimously approved $484 billion in additional coronavirus relief for the US economy and hospitals treating patients sickened by the pandemic, sending the measure to the House of Representatives for final passage later this week.

-reuters-

Oil plunges again as virus ravages energy markets

SINGAPORE - Brent crude plunged more than 12 percent to below $17 a barrel Wednesday while US oil erased early gains and fell, as the coronavirus strangles demand and ravages energy markets, while storage facilities approach full capacity. 

In another day of volatile trading, US benchmark WTI surged in early Asian deals while Brent also edged up on news that top producers had held talks -- only for prices to suddenly change course.

Brent dropped 12.31 percent to $16.98 a barrel, extending heavy losses from a day earlier. 

WTI for June delivery, which had rebounded about 20 percent at the open, was down around five percent at $11 a barrel in the afternoon.

On Monday, WTI for May delivery collapsed to an unprecedented low of minus $40.32 as traders scrambled to sell it before the contract expired Tuesday, but could find few buyers with storage capacity fast filling up. 

The negative prices meant that traders were forced to pay to have the crude taken off their hands.

Analysts said the morning bounce was driven by news that members of exporting group OPEC, as well as some allies in the OPEC+ grouping, held a teleconference Tuesday -- but grim reality soon returned to the markets. 

Prices have plunged as lockdowns and travel restrictions introduced worldwide to stem the spread of the virus hammer demand, and observers believe there is little way out for oil except bringing an end to the pandemic. 

"The overtly bearish sentiment may well keep prices suppressed in the near-term until we find the light at the end of the tunnel with progressive resumption of halted economic activities across the globe," said Jingyi Pan, a market strategist with IG.

US crude has been particularly hard-hit because of storage problems, as WTI is delivered at a single, inland point, although the sell-off has now spread to Brent. 

The crisis was worsened by a price war between Saudi Arabia and Russia. They drew a line under the dispute earlier this month and, along with other top producers, agreed to slash output by almost 10 million barrels a day to shore up virus-hit markets. 

But that has had little effect, with prices continuing to plummet, as analysts predict it will not make up for the massive hit to demand. 

Agence France-Presse

Oil, equities slip as OPEC+ cut fails to lift confidence

TOKYO -- Oil prices and US stock futures dipped in early Monday trade as a landmark agreement by OPEC and its allies to slash output by a record amount failed to give investors any cause for lasting optimism about the economic outlook.

US S&P 500 mini futures dropped 1.54 percent, erasing a brief gain to a one-month high made right after the start of trading.

Nikkei futures traded in Chicago suggest Tokyo's benchmark is likely to slip about 0.2 percent.

US crude futures dropped to $22.67 per barrel, down 0.4 percent as they quickly erased earlier gains to hit the lowest level since April 2.

Brent futures were down 0.67 percent at $31.27 per barrel, having risen to $33.99.

A group of oil producing countries known as OPEC+, which includes Russia, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May-June, after four days of marathon talks.

A bigger question for investors, however, is whether the novel coronavirus pandemic, which has ravaged global economic growth, will soon peak in the United States and Europe, as had been hoped.

"While panic selling we saw last month has faded, not many investors would want to chase stock prices higher given we are about to see more evidence of economic downturns," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

OPEC+ said in a draft statement seen by Reuters it expected total global oil cuts to amount to more than 20 million bpd, or 20 percent of global supply, effective May 1.

That includes contributions from non-members, steeper voluntary cuts by some OPEC+ members and strategic purchases by the world's largest consumers, sources said.

Still, that falls short of completely offsetting an estimated 30 million bpd drop in worldwide fuel consumption caused by the COVID-19 pandemic.

"In the short term, the WTI may hold above $20 after the deal but it could fall below that level unless all the countries follow up their words with actions," said Tatsufumi Okoshi, senior economist at Nomura Securities.

Also in focus this week, US companies announce their earnings, starting from big banks, and China releases its trade data on Tuesday and closely watched gross domestic product data on Friday.

In foreign exchange markets, risk-sensitive currencies were softer while the safe-haven dollar and the yen found support.

The Australian dollar fell 0.3 percent to $0.6303 while the Mexican peso dropped 0.4 percent to 23.430 per dollar.

The euro stood flat at $1.0934 and the yen gained 0.15 percent to 108.34 to the dollar.

-reuters-

OPEC, Russia meet again to approve biggest ever oil cut

BAKU/DUBAI/LONDON - OPEC, Russia and other oil producing nations were meeting on Sunday in a bid to clinch a deal on the biggest oil cut ever, amounting to 10 percent of global supply, after their initial efforts to support oil prices amid the coronavirus pandemic were blocked by Mexico.

The group, known as OPEC+, was expected to start a video conference at 1600 GMT.

On Thursday, OPEC+ outlined plans to cut output by more than a fifth, or by 10 million barrels per day (bpd), but Mexico balked at the production cuts it was asked to make, delaying the signing of a final deal.

"The ministerial meeting between OPEC and non-OPEC members is a follow-up after the April 9 meeting," the energy ministry of OPEC+ member Azerbaijan said on Sunday.

Measures to curb the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.

OPEC+ also said it wanted producers outside the group, such as the United States, Canada, Brazil and Norway, to cut a further 5% or 5 million bpd.

Canada and Norway signalled willingness to cut and the United States, where legislation makes it hard to act in tandem with cartels such as OPEC, has said its output would fall steeply by itself this year due to low prices.

Mexico President Andres Manuel Lopez Obrador said on Friday that U.S. President Donald Trump had offered to make extra U.S. cuts on his behalf, an unusual offer by a Trump who has long railed against OPEC.

Trump, who had threatened Saudi Arabia with oil tariffs if it did not fix the market's oversupply problem, said Washington would help Mexico by picking up "some of the slack" and being reimbursed later.

He did not say how this would work and OPEC leader Saudi Arabia has so far refused to accept the fix, according to OPEC sources.

Global oil demand is estimated to have fallen by a third as more than 3 billion people are locked down in their homes due to the coronavirus outbreak.

A 15 percent cut in supply might not be enough to arrest the price decline, banks Goldman Sachs and UBS predicted last week, saying Brent prices would fall back to $20 per barrel from $32 at the moment and $70 at the start of the year.

(Reporting by Reuters OPEC Team, Nailia Bagirova in BAKU, Katya Golubkova in MOSCOW and Tamara Vaal in NUR-SULTAN; Writing by Andrey Ostroukh and Dmitry Zhdannikov; Editing by Jason Neely, Alsion Williams and Alex Richardson)

-reuters-

Oil subdued after heavy falls on price war

SINGAPORE — Oil prices were subdued in early Asian trade Thursday following sharp falls overnight, after Saudi Arabia and the UAE escalated a price war by vowing to pump millions more barrels of crude.

Both main contracts fluctuated between small gains and losses. West Texas Intermediate was trading at around $33 a barrel while Brent crude was at about $36 a barrel. 

Crude markets suffered their biggest 1-day drop in a generation on Monday after top exporter Riyadh began a price war following a refusal by Moscow to reduce output to combat the coronavirus impact.

Prices have swung wildly since and fell heavily again Wednesday, mirroring falls on global stock markets, after Saudi Arabia and Gulf partner UAE said they would open the oil taps further.

They said they will together boost production by at least 3.5 million barrels per day (bpd), to 16.3 million bpd, from April.

Investors were also waiting for an address by US President Donald Trump, who is set to explain his plan for tackling the virus outbreak -- which has now been declared a pandemic by global health officials -- and economic assistance. 

The collapse of oil prices came after OPEC kingpin Saudi Arabia had led a push to reduce output further to shore up prices amid slumping demand.

But the move was blocked by Moscow, the world's second-biggest oil producer, prompting Riyadh to slash prices.

Analysts see no end in sight to the turmoil.

"We suspect that Russia and Saudi Arabia may not be interested in a de-escalation for the time being," said investment firm DWS in a note.

Agence France-Presse 

OPEC divided on how to combat coronavirus fallout

VIENNA - Ministers from the OPEC group of oil-producing countries will meet in Vienna Thursday to try to overcome their divisions on how to react to the fall in oil prices in the wake of the novel coronavirus epidemic.

The group already had to contend with abundant supply on global markets weighing on prices but the spread of COVID-19 across the world has sent them plunging.

The European benchmark of Brent sank to under 50 dollars on Sunday, a level not reached since July 2017.

The effects of the virus on global demand -- particularly in worst-hit China -- has blown a hole through the group's attempt to support prices at its last meeting in December by agreeing on production cuts.

The only option for OPEC -- and its allies in the OPEC+ grouping who will be joining meetings on Friday -- would appear to be another round of production cuts.

The success of the summit, which has been called 3 months ahead of the next scheduled meeting, will above all hang on the alliance between Russia and Saudi Arabia, the world's second and third-biggest producers and the most important players in the OPEC and OPEC+ groupings respectively.

"Their objective will be to overcome their differences of opinion so as to be able to speak with one voice from tomorrow," said Carsten Fritsch, analyst at Commerzbank.

DIVISIONS LAID BARE

The splits on the way forward even within OPEC were on display on Wednesday as delegations arrived.

The chairman of Libya's National Oil Corporation Mustafa Sanallah said he was wary of any additional cuts.

"I think there's no need to reduce," Sanallah told AFP, adding: "I think the price is good right now."

However Iran's Oil Minister Bijan Namdar Zanganeh said a cut of "at least... around half a million barrels" was necessary to stabilize the market.

Saudi Arabia is also a supporter of further cuts, with Riyadh even thought to be amenable to a cut in the order of a million barrels per day.

But Russia may be harder to convince on this score, with Russian President Vladimir Putin being quoted on Sunday as saying the current market price was "acceptable" and above the level foreseen in Russian economic planning.

Russia's RIA Novosti agency reported Wednesday that Moscow's delegation was proposing an extension of the existing deal with no fresh cuts.

FOOTSHAKE

Aside from bridging their differences on the effect of the virus on the market, the assembled diplomats are also having to accommodate changes to their routines in Vienna.

Two medical workers were on hand to screen the temperatures of all those entering OPEC headquarters on Wednesday.

OPEC's Secretary General Mohammed Barkindo and Russian Energy Minister Alexander Novak were seen in a video tweeted by the organization attempting a "footshake", gently bumping the sides of their feet together in a more hygienic alternative to a handshake.

The cartel has also taken the extraordinary step of barring access to its headquarters for the media due to the "risk that would come from convening such a vast number of people in one place".

Livestreams of the beginning of meetings will instead be made available to journalists at a press center assembled in a nearby hotel.

In a statement on Tuesday OPEC said it was following UN guidelines for such meetings and planned to "shorten the format of such gatherings, limit the number of participants and cancel any related side-events".

source: news.abs-cbn.com

Gold, oil surge in Asia as US, Iran exchange threats

SYDNEY - Asian share markets looked to be heading into turbulence on Monday as a flare-up of tensions in the Middle East sent gold to its highest in almost 7 years while oil flirted with 4-month peaks.

The United States detected a heightened state of alert by Iran's missile forces, as President Donald Trump warned the US would strike back, "perhaps in a disproportionate manner," if Iran attacked any American person or target.


Iraq's parliament on Sunday recommended all foreign troops be ordered out of the country after the US killing of a top Iranian military commander and an Iraqi militia leader.

Spot gold surged 1.6 percent to $1,575.37 per ounce in jittery trade and reached its highest since April 2013.

Oil prices added to their gains on fears any conflict in the region could disrupt global supplies.

Brent crude futures rose $1.05 to $69.65 a barrel, while US crude climbed 94 cents to $63.99.

"The risk of further escalation has clearly gone up - given the direct attack on Iran, Iran's threat of retaliation and Trump's desire to look tough - posing the threat of higher oil prices," said Shane Oliver, chief economist at AMP Capital.

"Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that."

MSCI's broadest index of Asia-Pacific shares outside Japan was off 0.16 percent though most major indices were yet to open. Futures for Japan's Nikkei pointed to an opening fall of around 500 points.

E-Mini futures for the S&P 500 fell 0.4 percent in very choppy trade.

Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries down at 1.795 percent having fallen 10 basis points on Friday. Treasury futures gained 7 ticks.

In currency markets, the Japanese yen remained the favored safe harbor courtesy of Japan's massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.

Early Monday, the dollar had edged down to a 3-month trough of 107.81 yen, and risked a pullback all the way to 107.00. The euro likewise eased to 120.45 yen having hit a 3-week low.

The dollar was steadier against the other majors, with the euro being little changed at $1.1166. Against a basket of currencies, the dollar was holding at 96.852.

source: news.abs-cbn.com

Oil prices surge after US strike kills Iranian general

HONG KONG - Oil prices soared more than four percent Friday and equities reversed early gains following news that the US had killed a top Iranian general, fanning fresh fears of a conflict in the crude-rich region.

The head of Iran's Quds Force, Qasem Soleimani, was hit in an attack on Baghdad's international airport early Friday, according to Hased, a powerful Iraqi paramilitary force linked to Tehran.

Later, Donald Trump tweeted a picture of the American flag, and the Pentagon said he had ordered Soleimani's killing.

Brent surged 4.4 percent to $69.16 and WTI jumped 4.3 percent to $63.84 as investors grow increasingly worried about a possible flare-up in the tinderbox Middle East.

"This is more than just bloodying Iran's nose," said AxiTrader's Stephen Innes. "This is an aggressive show of force and an outright provocation that could trigger another Middle East war."

The killing of Soleimani is a dramatic escalation of tensions between the US and Iran and comes after a pro-Iran mob this week laid siege to the US embassy in Iraq following deadly American air strikes on the hardline Hashed faction.

The attack on the embassy highlighted new strains in the US-Iraqi relationship, which officials from both countries have described to AFP as the "coldest" in years.

It also comes as tensions between the US and North Korea worsen, with Kim Jong Un declaring a self-imposed moratorium on nuclear and intercontinental ballistic missile tests had ended, with talks with the US going nowhere.

"We are waking up to a less safe world than it was only hours ago, especially if we combine this with simmering tension in the Korean peninsula," Innes added.

The drama sent investors rushing for the hills and safe-haven units rallied with the yen up 0.7 percent against the dollar and gold climbing more than one percent.

High-risk currencies retreated against the greenback, with South Korea's won down 0.6 percent, Australia's dollar down 0.4 percent and the South African rand down more than one percent.

Equities sank into the red, having been enjoying the second day of the year rallying on trade optimism.

Hong Kong fell 0.2 percent, while Shanghai shed 0.1 percent. Singapore retreated 0.2 percent, Seoul lost 0.1 percent and Taipei eased 0.3 percent. However, Sydney, Wellington, and Manila held in positive territory.

Markets had all been well up before news of the strike, thanks to ongoing optimism fuelled by the China-US trade agreement, looser central bank monetary policies and easing Brexit worries.

source: news.abs-cbn.com

World stocks rise after Fed keeps rates on hold; oil falls

NEW YORK -- Global equity markets rose on Wednesday after the Federal Reserve indicated interest rates would remain on hold for some time - a positive for risk assets - while oil prices fell after data showed an unexpected increase in US crude inventories.

New projections showed 13 of the US central bank's 17 policymakers foresee no change in rates until at least 2021 as moderate economic growth and low unemployment are expected to continue through next year's presidential election.

That outlook nudged stocks on Wall Street higher as investors await a decision on whether US President Donald Trump would allow his promised new tariffs on almost $160 billion of Chinese goods to go forward on Sunday.

The projection of no rate hikes for the foreseeable future is phenomenal when US monetary policy over the last few decades is considered, said Kristina Hooper, chief global market strategist at Invesco in New York.

"We shouldn't treat that as boring or uneventful; this is actually very important. The bar is very high for any rate hikes," she said.

Hooper said the Fed is the key factor that has been driving the stock market, in addition to US-China trade relations that have been center stage for markets in recent weeks as negotiators try to hammer out a "phase one" deal.

"The Fed decision to sit on its hands and its outlook for 2020 should be positive for the stock market," she said.

MSCI's gauge of stocks across the globe gained 0.41 percent, climbing to within two points of its all-time high of 550.63. The pan-European STOXX 600 index rose 0.22 percent.

On Wall Street, the Dow Jones Industrial Average rose 29.58 points, or 0.11 percent, to 27,911.3. The S&P 500 gained 9.11 points, or 0.29 percent, to 3,141.63 and the Nasdaq Composite added 37.87 points, or 0.44 percent, to 8,654.05.

The 17-month trade war has roiled capital markets and crimped global growth, noticeably in China. Paramount in investors' minds is the looming Dec. 15 US deadline on tariffs, with no immediate clarity on what the decision will be.

After US stocks set new highs two weeks ago and MSCI's global gauge of equity performance neared its all-time peak, stocks have since trended downward as investors await news on the trade front.

"The market's waiting for Godot, waiting on the tariffs," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

Confidence has grown as Sunday approaches that Trump will do something to keep the trade talks on track, which has increased risk-on sentiment in the market, Ghriskey said.

The White House's top economic and trade advisers are expected to meet with Trump in coming days on a decision, a source told Reuters.

Jamie Dimon, chief executive at JPMorgan and chairman of the Business Roundtable, a trade group of top US CEOs, said he expected a phase-one trade deal to be finalized and said not doing so would be "negative" for markets.

Gold rose and extended gains during comments by Fed Chair Jerome Powell, while the US dollar trended lower.

US gold futures settled 0.5 percent higher at $1,475 an ounce.

Investors also await the first European Central Bank meeting with Christine Lagarde as president on Thursday, as well as a general election in Britain that could determine the fate of the country's exit from the European Union.

The dollar index fell 0.3 percent, with the euro up 0.39 percent to $1.1135. The Japanese yen strengthened 0.14 percent versus the greenback at 108.57 per dollar.

The British pound, a high-flier of late, dropped from a seven-month peak after an opinion poll projected a narrower-than-expected victory for the Conservative party in the UK election.

Benchmark 10-year US Treasury notes rose 10/32 in price to yield 1.7983 percent.

In the Middle East, Saudi Aramco shares surged 10 percent above their initial public offering price on their first day of trading. That gave the state-controlled oil company a market value of about $1.88 trillion, making it the world's most valuable listed company.

Oil prices fell after US crude stocks clocked a surprise rise in the most recent week while gasoline and distillate inventories also rose, data from industry group the American Petroleum Institute showed.

Brent futures settled down 62 cents at $63.72 a barrel. West Texas Intermediate crude slipped 48 cents to settle at $58.76 a barrel.

source: news.abs-cbn.com

Chevron slashes asset value by $10-$11 billion on low oil, gas prices

NEW YORK -- Chevron said Tuesday it would slash the value of its assets by $10 billion to $11 billion due to weaker oil and natural gas prices that prompted the company to consider abandoning some projects.

The move hit a number of areas, including gas-related projects in the Appalachian region in the United States, a Canadian liquefied natural gas project and an oil-rich project in the Gulf of Mexico.

The company also said it is weighing "strategic alternatives," including divestment, for some of the assets.

The downgrade reflects a weakening commodity price outlook that last week prompted the Organization of the Petroleum Exporting Countries to deepen output cuts to defend oil prices amid sluggish global economic growth.

Natural gas prices also look vulnerable, due in part to a glut of supply following heavy investment in shale-rich projects like the Marcellus Shale and Utica Shale in Pennsylvania and West Virginia where Chevron operates.

Chevron said it set a $20 billion capital budget for 2020, flat with the level in both 2018 and 2019.

"We are positioning Chevron to win in any environment by ratably investing in the highest-return, lowest-risk projects in our portfolio," Chevron Chief Executive Michael Wirth said in a news release.

"This will be the third consecutive year with organic capital spending held flat at $20 billion, continuing our capital discipline through the cycle. Our emphasis on short cycle investments is expected to deliver improved returns on capital and stronger free cash flow over the long-term."

Key spending priorities in 2020 include continued investment in the Permian Basin in Texas, an expansion at its Tengiz project in Kazakhstan and various sites in the Gulf of Mexico.

Shares of Chevron fell 0.4 percent to $117.46 in after-hours trade.

Agence France-Presse

Russia forecasts oil price at $50

MOSCOW — Russia, one of the world's biggest energy producers, is basing its economic forecasting on an oil price of $50 per barrel, Energy Minister Alexander Novak said Tuesday.

"We believe that in the medium term, oil prices will be around $50," Novak said in an interview with Rossiya 24 state television, adding this was a "conservative scenario".

"Our forecast of (Russia's) socio-economic development is based on this price," he said.

The forecast is below the current market price for oil which has been volatile as worries about supply have been counterbalanced by concerns over a slowing world economy.

On Tuesday WTI, the US benchmark, traded at around $52 while its European counterpart, Brent, stood at just over $58.

Russia's budget for the current year was based on an price of around $42 per barrel, the lowest in about a decade, according to Bloomberg.

Export of oil and natural gas are 2 major sources of revenue for Russia which has, however, been trying to diversify the economy.

Russia has been cooperating with OPEC, of which it is not a member, to limit production with a view to engineering an oil price rebound after sharp drops seen in 2014-2015.

In mid-September energy markets briefly soared following attacks on oil infrastructure in Saudi Arabia, but dropped off again amid unease about the global economic outlook.

source: news.abs-cbn.com

Despite Saudi turmoil, new oil shock unlikely

NEW YORK -- The past week's sudden surge in oil prices brought to mind the nightmare of shortages, but it's not too likely motorists will be queueing to fill up around the world, analysts say.

All it took was a September 14 strike on key oil infrastructure in Saudi Arabia to abruptly leave the world's main supplier producing just half its normal amount. That sent the price of Brent crude flying 15 percent higher in a single day.

The price on a barrel of crude has come back down since then and by Friday was trading around $65. 

Given the slowdown in the global economy and the abundance of crude produced worldwide, the prospect of a $100 barrel, for now, doesn't look too likely.

"In essence, the world is far better equipped to handle oil shocks than it was in the '70s," explained Harry Tchilinguirian, the head of commodity research at BNP Paribas.

In 1973, after an embargo by the Organization of the Petroleum Exporting Countries (OPEC) against Israel's allies in the midst of the Yom Kippur War, and in 1979, after the Iranian revolution, crude oil prices soared in just a few months, bringing developed economies to their knees.

Reduced dependence

"Currently, an oil shock would hardly have the same devastating effects" because countries grew accustomed to such events, economists at Commerzbank said in a note.

On top of that, "central banks would not react to a supply shock with massive interest rate hikes to combat rising inflation," they said.

Most importantly, however, economies have reduced their dependence on oil.

Consumption in the United States, for example, rose from 17.3 million barrels per day (mbd) in 1973 to 20.5 mbd in 2018, an increase of only 18 percent even as the country's real gross domestic product jumped 230 percent. 

In Germany, households spent only 2.6 percent of their budget on fuel in 2018.

Many economies have taken strides away from heavy oil consumption, thanks to transport and energy-efficient industries, and alternative sources such as natural gas or renewable energy.

When oil prices held well above $100 a barrel between 2011 and 2014, it did not lead to economic collapse. The world has also now become less dependent on a few huge producers.

The first oil crisis led to the creation in 1974 of the International Energy Agency, which requires OECD countries to keep in reserve the equivalent of at least 90 days of their net imports of crude.

On top of that, oil production has branched far beyond the Middle East, said Tchilinguirian, referring to North Sea oil exploited since the 1980s, deep-sea exploitation off the coast of West Africa and Brazil, and the oil sands of Canada.

The United States, long deeply dependent upon imports, has become a major producer and exporter thanks to shale oil and new technologies.

Such factors help smooth things out in the event of a major disruption like the attack on Saudi facilities.

As such, a country like Saudi Arabia would probably no longer decide to voluntarily suspend its exports "because it could lose its status as a reliable supplier," says Alan Gelder, refined products specialist for Wood Mackenzie.

Even if an oil shock is unlikely, "you can never say there is zero risk," said Andrew Lebow, oil market specialist for Commodity Research Group.

"Especially," he added "if there is a major war that closes the Strait of Hormuz," which a third of all petroleum products shipped by sea pass through.

The effects of a possible oil shock, however, "should not be underestimated," the Commerzbank economists warned. 

"Many economies are currently struggling with problems anyway and the central banks have little room for maneuver (...) to help the affected economies," they said.

source: news.abs-cbn.com

Oil prices soar more than 10 pct after Saudi plant attacks

HONG KONG - Oil prices surged more than 10 percent Monday after attacks on two Saudi Arabian plants that slashed output in the world's top producer by half, with Donald Trump blaming Iran and raising the possibility of a military strike on the country.

West Texas Intermediate jumped 10.68 percent to $60.71 and Brent climbed 11.77 percent to $67.31 in early Asia trading following the blasts at facilities run by state-owned giant Aramco.

The attack by Tehran-backed Huthi rebels in neighboring Yemen, where a Saudi-led coalition is bogged down in a five-year war, effectively shut down 6 percent of the global oil supply.

Brent soared almost 20 percent at one point on Monday, while WTI surged around 15 percent before paring the gains.

Trump said Sunday the US was "locked and loaded" to respond to the attack, while Secretary of State Mike Pompeo said: "The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression."

Tehran denies the accusations but the news has revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.

"Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning," said Jeffrey Halley, senior market analyst at OANDA.

source: news.abs-cbn.com

Oil prices gain as Saudi minister backs output cuts; global stocks

NEW YORK - Global stock markets were mixed on Monday ahead of key US economic data and a European Central Bank meeting, while crude prices gained as the new Saudi oil minister signaled he would defend oil prices.

Major US stock indices finished little changed ahead of key reports on consumer prices and retail sales for August later in the week. 

Investors are in "wait and see" mode, said Art Hogan, chief market strategist at National Securities.

"It's a case of having a 2-week winning streak and not much of a rethink on it," he added.

Recent US data has been mixed, with August jobs growth lagging expectations, but services sector activity growing more quickly than expected, according to reports last week.

European bourses were also mixed, with London falling sharply as the pound rose on official data that showed the British economy grew by 0.3 percent in July, reducing the likelihood of a UK recession this year as Brexit looms large.

"While parliament seems to be falling apart, the economy is holding up reasonably well," noted Paul Dales, chief UK economist at research consultancy Capital Economics.

"July's surprisingly strong rise in GDP suggests that it has not fallen into a recession."

British MPs voted to demand Prime Minister Boris Johnson release confidential documents relating to Britain's EU exit, during a final day of defiance before he suspends their session until just weeks before Brexit.

Elsewhere, the euro wavered as dealers mulled speculation that the European Central Bank could decide this week to loosen monetary policy.

OIL RALLIES 

Oil prices advanced as newly-installed energy minister Prince Abdulaziz bin Salman, said that oil production cuts would benefit all exporting nations, in an indication he will support further reductions to address an oversupplied market and sagging prices.

In his first comments since being appointed by his father King Salman on Sunday, the minister signaled no major change in approach in Saudi Arabia, the de facto OPEC leader which pumps about a third of the cartel's oil.

"The pillars of our oil policy are pre-determined and will not change," he told Saudi broadcaster Al-Arabiya.

The appointment of Prince Abdulaziz, half-brother to de facto ruler Crown Prince Mohammed bin Salman, marks the first time a royal family member has been put in charge of the all-important energy ministry.

He replaces veteran official Khalid al-Falih as the world's top crude exporter accelerates preparations for a much-anticipated stock listing of state-owned oil giant Aramco, expected to be the world's biggest.

KEY FIGURES AROUND 5 AM TUESDAY 

New York - Dow: UP 0.1 percent at 26,835.51 (close)

New York - S&P 500: FLAT at 2,978.43 (close)

New York - Nasdaq: DOWN 0.2 percent at 8,087.44 (close)

London - FTSE 100: DOWN 0.6 percent at 7,225.81 (close)

Frankfurt - DAX 30: UP 0.3 percent at 12,226.10 (close)

Paris - CAC 40: DOWN 0.3 percent at 5,588.97 (close)

EURO STOXX 50: FLAT at 3,495.02 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 21,318.42 (close)

Hong Kong - Hang Seng: FLAT at 26,681.40 (close)

Shanghai - Composite: UP 0.8 percent at 3,024.74 (close)

Pound/dollar: UP at $1.2342 from $1.2283 at 2100 GMT

Euro/pound: DOWN at 89.45 pence from 89.79 pence

Euro/dollar: UP at $1.1046 from $1.1029

Dollar/yen: UP at 107.23 yen from 106.92 yen

Brent North Sea crude: UP $1.02 at $62.52 per barrel 

West Texas Intermediate: UP $1.33 at $57.85 per barrel 

source: news.abs-cbn.com

Oil majors to mull fresh cuts as trade war hits prices

DUBAI - Top oil producers will consider fresh output cuts at a meeting this week, but analysts are doubtful they will succeed in bolstering crude prices dented by the US-China trade war.

The OPEC petroleum exporters' cartel and key non-OPEC members want to halt a slide in prices that has continued despite previous production cuts and US sanctions that have squeezed supply from Iran and Venezuela.

Analysts say the OPEC+ group's Joint Ministerial Monitoring Committee, which monitors a supply cut deal reached last year, has limited options when it meets in Abu Dhabi on Thursday.

UAE Energy Minister Suheil al-Mazrouei said Sunday the group would do "whatever necessary" to rebalance the crude market, but admitted that the issue was not entirely in the hands of the world's top producers.

Speaking at a press conference in Abu Dhabi ahead of the World Energy Congress, to start Monday, he said the oil market is no longer governed by supply and demand but is being influenced more by US-China trade tensions and geopolitical factors. 

The minister said that although further cuts will be considered at Thursday's meeting, they may not be the best way to boost declining prices.

"Anything that the group sees that will balance the market, we are committed to discuss it and hopefully go and do whatever necessary," he said.

"But I wouldn't suggest to jump to cuts every time that we have an issue on trade tensions."

While cuts could help prices, they could also mean producers lose further market share, analysts say.

"OPEC has traditionally resorted to production cuts in order to shore up the prices," said M. R. Raghu, head of research at Kuwait Financial Centre (Markaz). 

"However, this has come at the cost of reduction in OPEC's global crude market share from a peak of 35 percent in 2012 to 30 percent as of July 2019," he told AFP.

The 24-nation OPEC+ group, dominated by the cartel's kingpin Saudi Arabia and non-OPEC production giant Russia, agreed to reduce output in December 2018.

That came as a faltering global economy and a boom in US shale oil threatened to create a global glut in supply.

Previous supply cuts have mostly succeeded in bolstering prices. 

But this time, the market has continued to slide -- even after OPEC+ agreed in June to extend by nine months an earlier deal slashing output by 1.2 million barrels per day (bpd).

The new factor is the trade dispute between the world's two biggest economies, whose tit-for-tat tariffs have created fears of a global recession that will undermine demand for oil. 

Saudi economist Fadhl al-Bouenain said the oil market has become "highly sensitive to the US-China trade war".

"What is happening to oil prices is outside the control of OPEC and certainly stronger than its capability," Bouenain told AFP.

"Accordingly, I think OPEC+ will not resort to new production cuts" because that would further blunt the group's already shrunken market share, he said.

European benchmark Brent was selling at $61.54 per barrel Friday, in contrast with more than $75 this time last year but up from around $50 at the end of December 2018. 

The deliberations also coincide with stymied production from Iran and Venezuela and slower growth in US output, meaning that supplies are not excessively high.

"US shale output growth does not have the same momentum as in previous cycles, and OPEC production is at a 15-year low, having fallen by 2.7 million barrels per day over the past nine months," Standard Chartered said in a commentary last month.

"We think that the oil policy options for key producers are limited, for the moment," the investment bank said. 

No decisions will be taken at Thursday's meeting, but it should produce recommendations ahead of an OPEC+ ministerial meeting in Vienna in December.

Rapidan Energy Group said the alliance might need to cut output by an additional one million bpd to stabilize the market.

But the problem will be deciding which member countries will shoulder the burden of any new cuts.

Saudi Arabia, which is the de facto leader of OPEC and pumps about a third of the cartel's oil, took on more than its fair share last time around.

It has also undergone a major shake-up in its oil sector, announcing the replacement of energy minister Khalid al-Falih with Prince Abdulaziz bin Salman in the early hours of Sunday morning ahead of a much-anticipated stock listing of state oil giant Aramco.

Bouenain said he believes that Riyadh is likely to resist taking on further cuts, given the impact on the kingdom's revenues.

Raghu said that "without a favorable resolution to the dispute, OPEC's production cuts will not result in a sizeable uptick of oil prices."

source: news.abs-cbn.com