Brent near one-month low as oil hit by market sell-off

US energy companies added six oil rigs in the week to February 2, bringing the total to 765, energy services company Baker Hughes reported on Friday. (Reuters)
Updated 05 February 2018
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Brent near one-month low as oil hit by market sell-off

TOKYO: Oil prices on Monday extended declines from the end of last week amid a wider market sell-off and a stronger dollar, with Brent crude falling to its lowest in nearly a month.
Other markets dropped as investors were spooked by Friday’s payrolls report from the US, which showed wages growing at their fastest pace in more than 8-1/2 years, fueling inflation expectations.
Brent was down 57 cents, or 0.8 percent, at $68.01 a barrel at 0716 GMT, after falling 1.5 percent on Friday. Brent’s weekly drop was 2.75 percent last week.
US West Texas Intermediate (WTI) crude declined 47 cents to $64.98 a barrel, after dropping 0.5 percent in the previous session. WTI fell by 1 percent during the last week.
“Oil is caught up in this general risk-off move, not helped at the margins by a little bit of strength in the US dollar,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Asian shares were down the most in more than a year on Monday as fears of resurgent inflation battered bonds.
Wall Street dropped last week from record highs as inflation concerns sparked speculation that central banks globally might be forced to tighten policy more aggressively.
The three major US indexes capped their worst weekly losses in two years, after closing at record highs the previous week.
“The size of the move in US equities doesn’t always mean this, but usually after a move like that and particularly when it follows such a long uptrend, there is follow-through selling,” Spooner said.
Rising US oil production has also helped push down oil prices, undermining attempts by the Organization of the Petroleum Exporting Countries to support prices.
Data from the US government last week showed that output climbed above 10 million barrels per day in November for the first time since 1970, as shale drillers expanded operations after gains in oil prices last year.
“Over the course of the next few weeks one of the key things is going to be US production data and whether the increase in shale rigs recently is going to increase,” Spooner said.
US energy companies did add oil rigs for a second week in a row last week, energy services company Baker Hughes Inc. reported on Friday. Drillers added six oil rigs in the week to February 2, bringing the total to 765.
Hedge funds and money manager reduced last week their bullish positions on US crude, cutting their net-long positions from a record after three weeks of increases.
The speculator group cut its combined WTI futures and options positions on New York and London exchanges by 18,365 contracts to 531,235 in the week to January 30, the Commodity Futures Trading Commission reported on Friday.


Palestinians in financial crisis after Israel, US moves

Updated 46 min 46 sec ago
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Palestinians in financial crisis after Israel, US moves

  • A Ramallah-based economics professor said the Palestinian economy more generally, remain totally controlled by and reliant on Israel
  • Israeli-Palestinian peace efforts have been at a standstill since 2014

RAMALLAH, Palestinian Territories: The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.
The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.
The United States has cut more than $500 million in Palestinian aid in the last year, though only a fraction of that went directly to the PA.
The PA has decided to refuse what little US aid remains on offer for fear of civil suits under new legislation passed by Congress.
Israel has also announced it intends to deduct around $10 million a month in taxes it collects for the PA in a dispute over payments to the families of prisoners in Israeli jails.
In response, Abbas has refused to receive any funds at all, labelling the Israeli reductions theft.
That will leave his government with a monthly shortfall of around $190 million for the length of the crisis.
The money makes up more than 50 percent of the PA’s monthly revenues, with other funds coming from local taxes and foreign aid.

While the impact of the cuts is still being assessed, analysts fear it could affect the stability of the occupied West Bank.
“If the economic situation remains so difficult and the PA is unable to pay salaries and provide services, in addition to continuing (Israeli) settlement expansion it will lead to an explosion,” political analyst Jihad Harb said.
Abbas cut off relations with the US administration after President Donald Trump declared the disputed city of Jerusalem Israel’s capital in December 2017.
The right-wing Israeli government, strongly backed by the US, has since sought to squeeze Abbas.
After a deadly anti-Israeli attack last month, Prime Minister Benjamin Netanyahu said he would withhold $138 million (123 million euros) in Palestinian revenues over the course of a year.
Israel collects around $190 million a month in customs duties levied on goods destined for Palestinian markets that transit through its ports, and then transfers the money to the PA.
Israel said the amount it intended to withhold was equal to what is paid by the PA to the families of prisoners, or prisoners themselves, jailed for attacks on Israelis last year.
Many Palestinians view prisoners and those killed while carrying out attacks as heroes of the fight against Israeli occupation.
Israel says the payments encourage further violence.
Abbas recently accused Netanyahu’s government of causing a “crippling economic crisis in the Palestinian Authority.”
The PA also said in January it would refuse all further US government aid for fear of lawsuits under new US legislation targeting alleged support for “terrorism.”

Finance Minister Shukri Bishara announced earlier this month he had been forced to “adopt an emergency budget that includes restricted austerity measures.”
Government employees paid over 2,000 shekels ($555) will receive only half their salaries until further notice.
Prisoner payments would continue in full, Bishara added.
Nasser Abdel Karim, a Ramallah-based economics professor, told AFP the PA, and the Palestinian economy more generally, remain totally controlled by and reliant on Israel.
The PA undertook similar financial measures in 2012 when Israel withheld taxes over Palestinian efforts to gain international recognition at the United Nations.
Abdel Karim said such crises are “repeated and disappear according to the development of the relationship between the Palestinian Authority and Israel or the countries that support (the PA).”
Israel occupied the Gaza Strip and the West Bank, including now annexed east Jerusalem in the Six-Day War of 1967 and Abbas’s government has only limited autonomy in West Bank towns and cities.
“The problem is the lack of cash,” economic journalist Jafar Sadaqa told AFP.
He said that while the PA had faced financial crises before, “this time is different because it comes as a cumulative result of political decisions taken by the United States.”
Abbas appointed longtime ally Mohammad Shtayyeh as prime minister on March 10 to head a new government to oversee the crisis.
Abdel Karim believes the crisis could worsen after an Israeli general election next month “if a more right-wing Israeli government wins.”
Netanyahu’s outgoing government is already regarded as the most right-wing in Israel’s history but on April 9 parties even further to the right have a realistic chance of winning seats in parliament for the first time.
Israeli-Palestinian peace efforts have been at a standstill since 2014, when a drive for a deal by the administration of President Barack Obama collapsed in the face of persistent Israeli settlement expansion in the West Bank.