Brent crude drops below US$35 before US releases stockpile data

Brent crude dropped below US$35 a barrel to an 11-year low before weekly US government data forecast to show fuel supplies rose in the world's biggest consuming nation. 

PHOTO: REUTERS

JAN 6, 20167:21 PM

[LONDON] Brent crude dropped below US$35 a barrel to an 11-year low before weekly US government data forecast to show fuel supplies rose in the world's biggest consuming nation.

Futures retreated as much as 4.4 per cent in London, extending Tuesday's 2.2 per cent slide. US oil inventories probably increased by 500,000 barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday.

The industry-funded American Petroleum Institute was said to report that fuel supplies including gasoline rose, while crude-oil stockpiles fell by 5.6 million barrels.

Oil prices have shrugged off rising tension between Iran and Saudi Arabia as supplies continue to outstrip demand. Analysts from Citigroup Inc to UBS Group AG predict crude may approach US$30 in the coming months, while US inventories remain more than 130 million barrels above the five-year average. European equities slid Wednesday following a slump in Asian stocks after China weakened the yuan.

"Oil is following equities lower because of a risk aversion," Giovanni Staunovo, an analyst at UBS in Zurich, said by e-mail. "Concerns about economic data have weighed on oil prices."

OIL STOCKPILES

Brent for February settlement fell as much as US$1.59 to US$34.83 a barrel on the London-based ICE Futures Europe exchange, the lowest intraday price since July 2004. It was at US$35.08 as of 10.41 am local time. Total volume traded was about twice the 100-day average.

West Texas Intermediate for February delivery lost as much as US$1.17 to US$34.80 a barrel on the New York Mercantile Exchange, before trading at US$34.98. The contract lost 79 cents to US$35.97 on Tuesday, the lowest close since Dec 21. Prices fell 30 per cent last year.

Crude inventories at Cushing, Oklahoma, the delivery point for WTI futures and the biggest US oil-storage hub, increased by 1.37 million barrels last week, the API reported Tuesday, according to Twitter postings and a person familiar with the numbers.

Nationwide gasoline supplies rose by 7.1 million barrels and distillates by 5.6 million barrels.

The Stoxx Europe 600 Index fell 1.2 per cent Wednesday while the MSCI Asia Pacific Index slipped 0.9 per cent. The Bloomberg-JPMorgan Asia Dollar Index dropped to the lowest since 2009 as China's central bank weakened the yuan's reference rate for the seventh day in a row, heightening the risk of a currency war.

Oil's collapse may increase borrowing costs for producers as revenue falls. Oil-rich Alaska had its credit rating cut by Standard & Poor's as low prices left the state with a growing gap in its budget. 

Moody's Investors Service said Tuesday that metals and energy producer Freeport-McMoRan Inc's debt is under review for possible downgrade.

BLOOMBERG

      

Oil hits 11-year low, Saudi-Iran row cuts chances of output restrain

Oil hits 11-year low, Saudi-Iran row cuts chances of output restraint

Oil prices hit their lowest in over 11 years on Wednesday, as the row between Saudi Arabia and Iran was seen making any cooperation between major exporters to cut output even more unlikely. 

PHOTO: REUTERS

JAN 6, 20168:08 PM

[LONDON] Oil prices hit their lowest in over 11 years on Wednesday, as the row between Saudi Arabia and Iran was seen making any cooperation between major exporters to cut output even more unlikely.

Evidence of slowing economic growth in China and India has fuelled fears that even strong demand elsewhere may not be enough to mop up the excess crude that has resulted from near-record production over the last year.

The furore over Saudi Arabia's execution of a Shi'ite cleric has stripped nearly 8 per cent off the price of oil in the last three trading days alone and has killed speculation that OPEC members might agree on production cuts to lift prices. "There are rising stockpiles and the tension between Iran and Saudi Arabia make any deal on production unlikely," said Michael Hewson, head of strategy at CMC Markets.

Benchmark Brent crude futures were at $35.07 a barrel at 1120 GMT, down $1.35 on the day, and at their lowest since early July 2004, having staged their largest one-day drop in per centage terms in nearly five weeks.

US crude futures were down 88 cents at $35.09 a barrel after already slipping 79 cents the previous day.

Oil has slumped from above $115 in June 2014 as shale oil from the United States has flooded the market, while falling prices have prompted some producers to pump even harder to compensate for lower revenues and to keep market share.

Adding to this oversupply, Iranian oil exports are widely expected to increase in 2016 as Western sanctions against Tehran for its alleged nuclear weapons programme are likely to be lifted. "Shale production and increasing capacity from countries like Russia who need to protect revenue combined with expectations of further Iranian supply mean actual production as well as expectations of future production are rising," Hewson said.

Still, a senior Iranian oil official said the country could moderate oil export increases once the sanctions are lifted to avoid putting prices under further pressure.

Also feeding into broad market weakness, a survey showed that China's services sector expanded at its slowest pace in 17 months in December, following on from weak factory data on Monday which also knocked markets globally.

The People's Bank of China set a weaker midpoint for the yuan, prompting concerns that the economy of the world's largest energy consumer could be in worse shape than believed.

In the United States, concerns over mounting oil stock levels persisted, with crude inventories likely to have risen by 439,000 barrels last week, according to a Reuters poll of eight analysts.

The US Energy Information Administration (EIA) will publish its closely watched weekly data at 1530 GMT.

REUTERS

    
 

Gold advances in longest rally since October on haven demand

Gold climbed for a third day as North Korea's first nuclear test in almost three years spurred demand for haven assets amid concern China's slowdown is deepening. 

PHOTO: REUTERS

JAN 6, 20165:17 PM

[SINGAPORE] Gold climbed for a third day as North Korea's first nuclear test in almost three years spurred demand for haven assets amid concern China's slowdown is deepening.

Bullion for immediate delivery gained as much as 0.5 per cent to US$1,083.42 an ounce and was at US$1,082.14 by 4 pm in Singapore, according to Bloomberg generic pricing. The three-day rally was the longest run of gains since Oct 14.

North Korea said it successfully tested its first hydrogen bomb, the fourth time it has detonated a nuclear device and a move that reignites tensions with neighborus. The move aided bullion's gains, said Madhavi Mehta, an analyst at Mumbai-based Kotak Commodity Services Ltd. A private Chinese services gauge slumped to the second-lowest reading since the series began a decade ago and close to a level signaling contraction.

"Largely supporting price is safe haven buying amid concerns about China," Mr Mehta said in an e-mail. "Chinese services data released today disappointed."

Gold rallied on Monday amid a global equity rout triggered by a selloff in China's stocks and mounting tension between Saudi Arabia and Iran. The focus will move back to the US as investors await Federal Reserve minutes and jobs data later Wednesday, said Mr Mehta.

The Fed is scheduled to release minutes from its December meeting, at which policy makers boosted borrowing costs for the first time since 2006. The central bank's policy makers said the pace of tightening would be gradual and depend on firming labor and inflation data.

Spot silver was little changed, while platinum lost 0.3 per cent and palladium retreated 0.5 per cent.

BLOOMBERG

    
 

Saudi cuts crude price to Europe, hikes it for Asia

Saudi Arabia has cut the February price of its export oil to Europe as the Opec heavyweight continues to fight for market share amid a huge glut on the market. 

PHOTO: REUTERS

JAN 6, 20167:53 PM

[RIYADH] Saudi Arabia has cut the February price of its export oil to Europe as the Opec heavyweight continues to fight for market share amid a huge glut on the market.

The Saudi move comes as arch-rival Iran, a fellow Opec member, prepares to resume oil exports to Europe when sanctions are lifted following its nuclear deal with world powers last year.

It also comes amid a mounting crisis between Riyadh and Tehran, which has seen Saudi Arabia cut diplomatic ties with Iran after weekend attacks on its missions in the Islamic republic.

The kingdom also slightly cut the price of some export grades to the United States and Middle East, but raised the prices of all export grades to Asia.

A statement issued by national oil conglomerate Aramco said the price of Arab Light crude for the northwest European market was cut by $0.60 a barrel from January to $4.85 a barrel below the benchmark price.

Prices of other grades were also cut by 40 to 50 cents a barrel, the statement said.

Europe was a traditional market for Iranian oil before international sanctions were slapped on the Islamic republic in 2012 over its nuclear programme.

The price of Arab Light crude for Asia was raised by 60 cents a barrel, but remained 80 cents below the benchmark price, the statement said.

The prices of all grades to Asia were increased by $0.70 to $1 a barrel.

Brent oil prices tumbled Wednesday below $35 for the first time in 11 years, plagued by the abundant oversupply and the row between Iran and Saudi Arabia.

At about 1030 GMT, European benchmark Brent North Sea crude oil for February delivery sank to $34.83 per barrel- the lowest level since July 1, 2004.

AFP

    
 

China may allow car dealers to sell multiple brands

China is considering broadly easing producer-imposed restrictions on auto dealers, potentially allowing a single dealership to sell rival brands, a move that could boost car retailers' competitiveness as the country's economy slows. 

PHOTO: REUTERS

JAN 6, 20165:43 PM

[BEIJING] China is considering broadly easing producer-imposed restrictions on auto dealers, potentially allowing a single dealership to sell rival brands, a move that could boost car retailers' competitiveness as the country's economy slows.

Auto manufacturers could no longer forbid their dealers from selling cars from rival brands, according to the draft rules the Ministry of Commerce posted on its website on Wednesday for public comment.

Under the proposed rules, dealers would have to tell their customers if they haven't obtained permission from manufacturers to sell a certain brand of cars.

The new rules would offer dealers increased protections and flexibility to operate at a time when China's slowing economy has forced many dealers to discount heavily, even to the point of selling new cars at a loss, to stay competitive. "The dealers are the first to cry," a manager for one of Volkswagen AG's China ventures told Reuters last year when sales were declining.

The Chinese economy continues to falter with a private survey showing on Monday that factory activity shrank for a 10th straight month in December.

The draft rules would protect dealers from being dumped by manufacturers, who would be required to authorise dealers for at least five years at first and for three-year periods thereafter.

Manufacturers also wouldn't be able to set fixed sales quotas or limits on dealer inventory, unless both sides agree in the authorisation agreement. Dealers can also sell cars and parts to each other.

The rules also extend additional protections to consumers, forbidding force selling of insurance, selling above marked prices or charging excess fees.

China's auto market is expected to have grown 3 per cent in 2015, with the chief of China's automakers association forecasting 5-7 per cent growth for 2016.

REUTERS

    
 

Samsung Electronics to expand mobile payments to new countries, smartwatches

South Korean technology giant Samsung Electronics Co Ltd said on Wednesday it will launch its mobile payments service in three additional countries, as well as introducing the system on its Gear S2 smartwatches. 

PHOTO: BLOOMBERG

JAN 6, 201610:01 AM

[SEOUL] South Korean technology giant Samsung Electronics Co Ltd said on Wednesday it will launch its mobile payments service in three additional countries, as well as introducing the system on its Gear S2 smartwatches.

Samsung, through an official Twitter account, said Samsung Pay is "coming soon" to Australia, Brazil and Singapore.

The service launched last year in South Korea and the United States with plans to enter other markets including China, Spain and Britain.

Samsung is hoping the payments service will set its phones apart from competing devices, helping the firm protect market share against rivals including Apple Inc and Huawei Technologies Co Ltd and compel users to pay a bit more for the convenience.

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In a separate statement Samsung said its Gear S2 smartwatches will start supporting Samsung Pay in South Korea and the United States in early 2016.

The watches will soon be compatible with Apple devices, the firm said without elaborating.

Samsung has reported a strong response to Samsung Pay in its home country and the United States, though the service does not generate revenue on its own for Samsung. An early advantage for Samsung Pay is its compatibility with magnetic stripe card readers already in wide use among retailers.

In comparison, Apple's competing service - Apple Pay - requires retailers to install new equipment supporting near-field communication technology.

REUTERS