Oil pares gains as OPEC sees rapid growth in rival supply

Oil rose slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in US output, as well as other producing nations, meant there were limited gains. (REUTERS)
Updated 14 March 2018
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Oil pares gains as OPEC sees rapid growth in rival supply

LONDON: Oil rose slightly higher on Wednesday after strong Chinese factory activity, though concern over the pace of growth in US output, as well as other producing nations, meant there were limited gains.
The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report it expects supply from non-members to grow more quickly than it had previously expected.
And US oil production is set to rise further this year, OPEC also said on Wednesday, but the crude market will continue to rebalance as cartel members and Russia trim their output in a bid to support prices.
The group also reported the first increase in oil inventories across the world’s most industrialized nations in eight months in January, a sign the impact of its coordinated output cuts may be slowly waning, and cut its forecast for demand for its own crude.
Brent crude oil futures were last up 2 cents at $64.66 a barrel by 1410 GMT, while US West Texas Intermediate (WTI) futures were up 11 cents at $60.82 a barrel.
“The OPEC report seems to illustrate that the speed of the market rebalancing is slowing,” Commerzbank strategist Carsten Fritsch said.
“(It suggests) the rebalancing can’t go much further from here and according to the OPEC report, demand for OPEC’S oil must be 33 million barrels per day for the rest of the year to get rid of any remaining oversupply.”
OPEC cut its forecast for demand for its own crude in 2018 by 250,000 bpd to 32.61 million bpd, marking the fourth consecutive decline.
Earlier in the day, oil prices got a boost from a broader investor push into commodities after Chinese data showed the world’s largest importer of raw materials saw industrial production grow more than expected over the first two months of the year.
ING commodities strategist Oliver Nugent said the Chinese industrial output was “reinforcing that bullish narrative” across the commodities market, including oil.
Rising US output, as well as seasonally low demand, mean US crude inventories rose by 1.2 million barrels in the week to March 9 to 428 million barrels, the American Petroleum Institute said on Tuesday.
Seasonal demand patterns for crude and refined products mean the market may only be weeks away from a run of declines.
“We are now only two to four weeks away from when weekly oil inventory data will start to draw again which should be supportive for oil prices,” SEB commodities strategist Bjarne Schieldrop said.
Weekly US crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday.


Saudi-backed SoftBank to ramp up tech investment

Updated 20 June 2018
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Saudi-backed SoftBank to ramp up tech investment

  • SoftBank CEO Masayoshi Son to step up company's "unicorn hunting" investment strategy
  • Saudi Arabia's PIF has contributed $45 billion to SoftBank's Vision Fund

LONDON: Japanese conglomerate SoftBank will double down on its ambitious tech investment strategy, in a move that could create opportunities for further collaboration with Saudi Arabia’s Public Investment Fund (PIF).
SoftBank — which owns Japan’s third-largest telecoms operator — has emerged in recent years as one of the world’s largest tech investors, acquiring stakes in companies including Chinese e-commerce giant Alibaba, and UK chipmaker ARM Holdings.
It last year launched the $100 billion Vision Fund, boosted by a $45 billion investment from PIF. It attracted $93 billion in funds last year, aided by contributions from Abu Dhabi’s Mubadala Investment Company, Apple, Foxconn and others, making it the world’s largest buyout fund.
The Vision Fund has invested in disruptive firms, especially those in the technology space, including Swiss pharmaceuticals startup Roivant, office space company WeWork, and enterprise messaging service Slack.
CEO Masayoshi Son signaled that such dealmaking will become even more of a focus for SoftBank.
“I have spent 97 percent of my time on managing the telecoms business and only 3 percent on investing,” he told investors at the group’s annual meeting on Wednesday, Reuters reported.
Reversing that balance will allow SoftBank to grow faster, he said.
Son’s comments fit with a transformation underway at SoftBank from a domestic telecoms firm to “unicorn hunter” — as Son termed it — focusing on late-stage startups around the world.
Last month, SoftBank invested $2.25 billion in GM Cruise, the carmaker’s autonomous vehicle unit, complementing its shareholdings in China’s Didi Chuxing, the world’s largest ride-sharing app, as well as rivals Uber, Grab and Ola.
The Vision Fund will initially invest $900 million in GM Cruise Holdings, investing the remaining $1.35 billion when GM’s Cruise AVs are ready for commercial deployment. The investment gives the Vision Fund a 19.6 percent stake in GM Cruise.
Saudi Arabia’s PIF has been key to SoftBank’s tech investment strategy with its contribution to the Vision Fund, with the Kingdom also benefiting directly from partnerships with SoftBank.
Son said in November that SoftBank planned to invest as much as $25 billion in the Kingdom in the next three to four years, and aimed to deploy up to $15 billion in Neom, a futuristic city to be built on the Red Sea coast.
PIF and the Vision Fund in March announced a partnership to build the world’s largest solar project in Saudi Arabia, with a capacity of up to 200 gigawatts, in line with the Kingdom’s solar ambitions as set out in Vision 2030.
The agreement will establish an electricity generation company in Saudi Arabia, and will commission two solar plants with a capacity of 3GW and 4.2GW by the end of next year. It envisages localizing a significant portion of the renewable energy value chain in the Saudi economy, including research and development and the manufacturing of solar panels.
SoftBank shareholders on Wednesday approved the appointment of three executive vice presidents — SoftBank unit Sprint Corp’s former chief executive, Marcelo Claure, and former bankers Katsunori Sago and Rajeev Misra.
Bolivian-born billionaire Claure was appointed SoftBank’s chief operating officer in May, tasked with driving cooperation between the group’s portfolio companies. Former Goldman Sachs executive Sago became chief strategy officer on Wednesday and will focus on group investment. Misra runs the Vision Fund.
Son yesterday bemoaned the so-called conglomerate discount weighing on SoftBank’s shares at its investor meeting.
He said when the market value of stakes the firm holds in companies such as Alibaba Group Holding and ARM Holdings are taken into account, SoftBank’s shares should be trading above 14,000 yen ($127), rather than about 8,000 yen currently.