Goldman lowers Brent forecast

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Updated 25 April 2013
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Goldman lowers Brent forecast

NEW YORK: Goldman Sachs lowered its 2013 Brent price forecast to $ 105.00 from $ 110.00, as a possible slowdown in Chinese demand, weaker-than-expected European demand, and higher European refinery activity were seen weighing on crude oil.
Goldman also lowered its three-month Brent forecast to $ 100.00 per barrel from $ 110.00 it said in a note.
Goldman said its Chinese economists saw near-term headwinds to real growth improvement continuing, along with an increased risk that Chinese oil demand growth will remain relatively weak in the near-term.
It also shifted its near-term outlook on commodity returns to Neutral from Overweight, citing deepening concerns around global growth.
Goldman left its assumption on the WTI-Brent spread unchanged, with its 12-month outlook for WTI crude at $ 97.00 per barrel.
Brent crude rose above $ 101 a barrel yesterday as stockpiles of gasoline declined in top consumer the US, but gains were checked by the prospect of slower growth and fuel demand in major economies.
The North Sea benchmark had been trending higher in earlier trade, tracking European equities on a view that central banks could intensify efforts to revive a flagging global recovery.
And the possibility of stronger demand for US gasoline emerged after data from the Energy Information Administration (EIA) showed stocks of the motor fuel slumped last week.

“The report is supportive to prices due to the large decline in gasoline inventories,” said John Kilduff of Again Capital LLC in New York.
“Being the seasonal leader of the complex, the decline will have an outsized effect on price action.
Brent futures were up 71 cents at $ 101.02 a barrel by 1458 GMT, while US oil gained 97 cents to $ 90.15.
Oil’s gains were kept in check by gloomy economic data in big consumers.
Growth in Chinese factories slowed to a crawl as export demand dwindled, while Germany, the euro zone’s largest economy, saw business activity decline for the first time in five months.
The prospect of a slowing global economy dampening oil demand growth has already shaved $ 10 off the price of Brent since the start of April. And uncertainty over global growth may result in commodities facing increased volatility.
“We continue to view recent weakness in the data flow as consolidation, rather than the start of a 2012-style capitulation, but remain watchful of the loss of momentum in the manufacturing sector from these key countries,” analysts from ANZ bank said in a note.
In the US, crude stocks fell last week as imports dropped while refined fuel inventories were mixed, data from industry group the American Petroleum Institute (API) showed late on Tuesday.
API’s data showed that crude inventories fell by 845,000 barrels in the week to April 19, compared with analysts’ expectations for an increase of 1.5 million barrels.


Sri Lanka calls for global coalition to tackle rising dollar

Updated 23 October 2018
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Sri Lanka calls for global coalition to tackle rising dollar

  • The island’s currency bottomed out at a record-low 174.12 rupees to the dollar
  • The rupee has shed more than 12 percent of its value this year and Sri Lanka fears it could slide further

COLOMBO: Sri Lanka on Tuesday called for a “coalition of the willing” to help stabilize free-falling emerging market currencies around the globe, as the beleaguered rupee slumped to fresh lows.
The island’s currency bottomed out at a record-low 174.12 rupees to the dollar, resisting a slew of measures by policymakers to arrest its steady decline.
The rupee has shed more than 12 percent of its value this year and Sri Lanka fears it could slide further as US sanctions squeeze Iran, the island’s chief source of oil.
A stronger dollar has made it difficult for emerging markets to repay debts and battered global currencies from Turkey to India and Argentina.
Finance Minister Mangala Samaraweera invited those nations experiencing currency crises to visit Colombo and hash out a strategy.
“The rise of the dollar is having a serious impact on our currencies. We are not the only one affected,” he told reporters in the Sri Lankan capital.
“I want to build a coalition of the willing to deal with this problem. I don’t see the global situation improving any time soon.”
Washington pulled out of a landmark 2015 nuclear deal with Iran in May and has been reimposing punishing sanctions on the Islamic republic, targeting in particular its financial system.
Iran not only supplies Sri Lanka with most of its oil, but is one of its chief buyers of the island’s celebrated tea.
Samaraweera has warned that blockading Iran will have ripple on effects on Sri Lanka, which has been unable to stop the rupee from nose diving.
Last month, Colombo curbed its state institutions and public servants from importing cars to reduce the outflow of foreign capital.
Banks were also ordered to restrict lending for purchasing overseas and consumer goods, but the rupee has continued its decline.
In August, the government substantially increased taxes on small cars to discourage imports, but officials said there was still pressure on foreign exchange reserves to finance big-ticket imports.