Oil prices fall on weak China factory data, rise in US crude stocks

US crude oil production has risen by a fifth since mid-2016 to more than 10 million bpd. (Reuters)
Updated 28 February 2018
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Oil prices fall on weak China factory data, rise in US crude stocks

TOKYO: Oil prices fell for a second day on Wednesday as weak Chinese factory data triggered concerns of an economic slowdown that could lower oil demand and, in the US, industry data showed an increase in crude stockpiles amid its soaring output.
US West Texas Intermediate crude was down 41 cents, or 0.65 percent, at $62.60 a barrel by 0342 GMT, after falling 90 cents the previous session.
Brent crude was down 40 cents, or 0.6 percent, at $66.23 a barrel. On Tuesday, the contract fell 87 cents to close at $66.63.
Traders said oil prices declined on concerns a slowdown in global economic growth after China reported on Wednesday that factory growth in February slowed to the lowest since July 2016.
China is the world’s second-biggest economy and the biggest importer of oil. Crude oil demand is highly correlated to economic growth.
While the week-long Lunar New Year holiday this month disrupted business activity, traders also pointed to tougher pollution rules that curtailed factory output.
In the US, the world’s biggest oil consumer, rising crude stockpiles weighed on oil prices.
Data from the American Petroleum Institute showed on Tuesday that crude inventories rose by 933,000 barrels in the week to Feb. 23, to 421.2 million.
Refinery crude runs dropped by 209,000 barrels per day (bpd), API data showed, implying a drop in demand for feedstock crude. Gasoline stocks rose by 1.9 million barrels.
Official data from the US Energy Information Administration (EIA) is due out later on Wednesday.
Soaring US production has pressured oil futures at a time when members of the Organization of the Petroleum Exporting Countries (OPEC) and Russia have reduced output to support prices.
“Climbing US production continues to weigh on the market as traders fear that the OPEC output cuts will be nullified by the rising US output,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
US crude oil production has risen by a fifth since mid-2016 to more than 10 million bpd.
On Tuesday, International Energy Agency Executive Director Fatih Birol said the US will likely overtake Russia as the world’s biggest oil producer by 2019.
It already overtook Saudi Arabia, the world’s top crude exporter, late last year.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”