US oil price hits 6-1/2-year low
US oil price hits 6-1/2-year low
Oil had already tumbled more than 3 percent on Thursday, driven by a report that stocks at Cushing, Oklahoma, the delivery point for US crude futures, rose more than 1.3 million barrels in the week to Aug. 11.
US crude hit an intraday low of $41.35 a barrel, its lowest since March 4, 2009, before recovering to $42.28 by 1220 GMT, up 5 cents on the day.
Brent crude traded at $49.25, up 3 cents from its previous settlement and some way off its 2015 low of $45.19 reached in January. The front-month September Brent contract expires on Friday.
US crude is much weaker than the North Sea benchmark, partly due to refinery outages sapping US demand. The largest of those refineries — BP's 413,500-barrels-per-day (bpd) facility in Whiting, Indiana, shut two-thirds of its capacity for repairs that could last a month or more.
Robin Bieber, director and technical analyst at London brokerage PVM Oil Associates, said the US crude oil contract, also known as West Texas Intermediate or WTI, had become somewhat dislocated from Brent.
"The contracts are not all on the same technical page and this causes a lack of clarity," Bieber said. "WTI could plunge but the rest hold steady."
Commerzbank analyst Carsten Fritsch said he didn't expect an accelerated drop in prices, but rather "a slow grind lower" as long as the Whiting refinery was out of service.
Petromatrix oil analyst Olivier Jakob said WTI could fall further, but Brent was in a consolidation phase: "WTI is still facing some local issues and it could weaken more. Otherwise Brent will start to stabilize."
Goldman Sachs said a weaker Chinese yuan was putting downward pressure on all commodity markets, signalling a change in global macroeconomic conditions.
"We believe the net commodity market effects are bearish," it said in a note to clients.
Analysts said prices could drop further still unless oil production started to fall, particularly in North America.
"The lowest crude prices in six years might not be enough to put the brakes on the US supply growth. US shale players are actively cutting costs and some players are profitable at less than $30 per barrel," ANZ Bank said.
Indonesia’s Go-Jek close to profits in all segments
- Go-Jek is Indonesia's first billio-dollar startup
- Ride haling app evolves into online payment platform
JAKARTA: Go-Jek, Indonesia’s first billion-dollar startup, is “extremely close” to achieving profitability in all its segments, except transportation, its founder and CEO Nadiem Makarim told Reuters.
Launched in 2011 in Jakarta, Go-Jek — a play on the local word for motorbike taxis — has evolved from a ride-hailing service to a one-stop app allowing clients in Southeast Asia’s largest economy to make online payments and order everything from food, groceries to massages.
“We’re seeing enormous online to offline traction for all of our businesses and are close to being profitable, outside of transportation,” said the 34-year old CEO.
The startup is expected to be fully profitable “probably” within the next few years, Makarim added.
Already a market leader in Indonesia, where it processes more than 100 million transactions for its 20-25 million monthly users, Go-Jek is now looking to expand in Southeast Asia.
Ride hailing services in Southeast Asia are expected to surge to $20.1 billion in gross merchandise value by 2025 from $5.1 billion in 2017, according to a Google-Temasek report.
Go-Jek said in May it would invest $500 million to enter Vietnam, Singapore, Thailand and the Philippines, after Uber struck a deal to sell its Southeast Asian operations to Grab — the bigger player in the region.
Go-Jek is seeing strong funding interest from its backers as it targets an aggressive expansion, Makarim said.
“Since its Aug. 1 launch, the app has already grabbed 15 percent of market share in Ho Chi Minh,” Makarim said. The firm this week opened recruitment for motorcycle drivers in Thailand.
The startup expects anti-monopoly concerns swirling around the Grab-Uber deal, which Singapore said had substantially hurt competition, to help clear a path for its expansion.
“We’re bringing back choice. The Singapore government is particularly eager to bring back competition,” Makarim said, adding that the order of overseas rollouts had not been set.
Go-Jek’s offshore push comes at a time when Singapore-based Grab is stepping up funding to expand in Indonesia and transform itself into a consumer technology company, starting with a partnership with online grocer HappyFresh.
“Mimicking Go-Jek’s strategy is the highest form of flattery,” laughed Makarim.
Grab told Reuters in a statement, “The super app strategy has been around for a while now and no Southeast Asian player can claim to have pioneered it.” The company also said Grab has not lost market share in Ho Chi Minh since August, but declined to provide market share data.
Makarim believes Go-Jek’s understanding of food merchants will give it an edge over Grab, which counts investors such as Chinese ride-hailing firm Didi Chuxing and Japan’s SoftBank Group Corp. among its backers.
Makarim, who sees food delivery as Go-Jek’s core business, said he was not concerned about funding, without giving details.
Go-Jek was reported in June as being in talks to raise $1.5 billion in a new funding round and was valued at about $5 billion in a prior fundraising, sources have told Reuters. The firm had said in March it was considering a domestic IPO.
Makarim noted Go-Jek’s backers were sharing both capital and expertise. The company is collaborating with Alphabet Inc’s Google on platform mobility, Tencent on payments strategy, JD.com on logistics operations, and Meituan Dianping on merchant transactions and deliveries.
Go-Jek has set up a venture capital arm, Go-Ventures, to invest in startups in Southeast Asia “with strategic importance to our business,” the CEO said.