Oil prices near 2-year high

A roll-over of the deal between OPEC and other producers to cut oil production ‘looks certain,’ said one analyst. (Reuters)
Updated 04 November 2017
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Oil prices near 2-year high

AMSTERDAM: Oil prices rose on Friday, nearing their highest levels in more than two years, with buyers attracted by expectations of an extension to a global pact to cut output that has reduced oversupply.
Global benchmark Brent futures traded up 41 cents at $61.03 a barrel at 1:45 p.m. GMT, approaching levels around $61.70 a barrel last seen in July 2015. Brent has risen around 38 percent since its low in 2017 reached in June.
US West Texas Intermediate (WTI) crude traded at $54.78 a barrel, up 24 cents. WTI is around 30 percent above its 2017 low hit in June.
This week’s US Energy Information Agency (EIA) report on crude inventories and exports showed a large draw in US stocks, showing that market is rebalancing.
“Wednesday’s EIA report was bullish so the longs took profit then but now the uptrend is reasserting itself. Roll-over of the OPEC/non-OPEC deal looks certain and is also supportive,” said Tamas Varga, senior analyst at London brokerage PVM Oil Associates.
The Organization of the Petroleum Exporting Countries meets at the end of November to discuss further action after it agreed nearly a year ago with Russia and other producers to hold back 1.8 million barrels per day (bpd) of oil supply.
Russia said on Thursday the deal, which is due to expire in March, could be extended if necessary but that a decision was not imminent.
While supplies are being withheld, demand is also rising, especially in China, whose roughly 9 million bpd of imports have surpassed those of the US to top the world’s crude importer list.
“China’s oil demand growth appears to be accelerating,” investment bank Jefferies said.
Physical oil prices are also rising. Saudi Aramco, the UAE’s ADNOC and Qatar Petroleum have all raised their crude prices for Asian buyers, with Aramco’s December premium over the average of the Oman and Dubai benchmarks now at the highest in three years.
Traders also eyed risks from ongoing financial troubles of OPEC-members Venezuela and its state oil company PDVSA.
The government and PDVSA owe some $1.6 billion in debt service and delayed interest payments by the end of the year, plus another $9 billion in bond servicing in 2018.
The next hard payment deadline for PDVSA is an $81 million bond payment that was due on Oct. 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a default, investors say.
— REUTERS


Germany sees ‘most difficult part’ in EU-US trade talks ahead

Updated 30 min 8 sec ago
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Germany sees ‘most difficult part’ in EU-US trade talks ahead

  • ‘For some weeks and months now, we’re observing with concern that the US is tightening its trade policies, that tensions are increasing’
  • ‘The impact can already be seen in the world economy, global growth has slowed’

BERLIN: The most difficult part in trade negotiations between Europe and the United States is starting now and talks should focus on reducing tariffs on industrial goods to increase the chances of a deal, German Economy Minister Peter Altmaier said on Tuesday.
A confidential US Commerce Department report sent to President Donald Trump over the weekend is widely expected to clear the way for him to threaten tariffs of up to 25 percent on imported autos and auto parts by designating the imports a national security threat.
“For some weeks and months now, we’re observing with concern that the US is tightening its trade policies, that tensions are increasing,” Altmaier told Deutschlandfunk radio.
“The impact can already be seen in the world economy, global growth has slowed,” Altmaier said.
Asked about the risk of higher US car tariffs, Altmaier said he did not buy the argument that imported cars would threaten the national security of the United States.
Altmaier, a confidant of Chancellor Angela Merkel, said that reducing tariffs on cars and other manufactured goods should be the main focus of the ongoing trade talks.
“We are not yet where we want to be. We might have made one-third of the way and the most difficult part will be now,” Altmaier said.
Altmaier added that he was in favor of reducing import tariffs for cars to the same level in the US and Europe, “ideally to zero percent.”
The trade talks will also be high on the agenda during a meeting of Altmaier with his French counterpart Bruno Le Maire in Berlin later on Tuesday.
Both ministers are expected to narrow differences on how far the negotiation mandate of the European Commission in the talks with the US should go and which areas should be excluded.
France is reluctant to open up its agriculture sector to US imports and Altmaier said he was fine with excluding the issue in the trade talks.
“Agriculture is a very sensitive topic, so we don’t want to talk about this in the current situation,” Altmaier said.
Altmaier and Le Maire are expected to hold a news conference after the talks.
European Commission President Jean-Claude Juncker told a German newspaper that Trump had promised him he would not impose additional import tariffs on European cars for the time being.
If Trump imposed tariffs on European cars, however, the EU would react immediately and not feel obliged to stick to its promise to buy more soybeans and liquefied gas from the United States, Juncker added.