Oil prices fall as increased US drilling points to higher output

Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the OPEC to curb supplies and bolster prices. (Reuters)
Updated 19 March 2018
0

Oil prices fall as increased US drilling points to higher output

SINGAPORE: Oil prices fell on Monday as increased drilling in the United States pointed to more output, raising concerns about a return of oversupply.
US West Texas Intermediate (WTI) crude futures were at $62.02 a barrel at 0350 GMT, down 32 cents, or 0.5 percent, from their previous close.
Brent crude futures were at $65.85 per barrel, down 36 cents, or 0.5 percent.
Monday’s price falls in part reversed increases last Friday, which came on concerns over tensions in the Middle East.
On a simple supply versus demand basis, however, oil markets are facing the possibility of a renewed glut after being in a slight deficit for much of last year.
US drillers added four oil rigs in the week to March 16, bringing the total count to 800, the weekly Baker Hughes drilling report said on Friday.
“Surging US production will hamper exponential growth in crude oil prices,” Singapore-based brokerage Phillip Futures said on Monday.
The US rig count, an early indicator of future output, is much higher than a year ago as energy companies have boosted spending.
Thanks to the high drilling activity, US crude oil production has risen by more than a fifth since mid-2016, to 10.38 million barrels per day (bpd), pushing it past top exporter Saudi Arabia.
Only Russia produces more, at around 11 million bpd, although US output is expected to overtake Russia’s later this year as well.
Soaring US output, as well as rising output in Canada and Brazil, is undermining efforts by the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) to curb supplies and bolster prices.
Many analysts expect global oil markets to flip from slight undersupply in 2017 and early this year into oversupply later in 2018.
One risk to supplies, however, is Venezuela.
“Concerns that Venezuelan output is on the verge of collapse continue to swirl around the market,” ANZ bank said.
The International Energy Agency said last week that Venezuela, where an economic crisis has cut oil production by almost half since early 2005 to well below 2 million bpd, was “clearly vulnerable to an accelerated decline,” and that such a disruption could tip global markets into deficit despite soaring US output.
“We remain bearish on the future direction of its (Venezuela’s) oil sector, with production ... averaging 1.535 million bpd, down 379,000 bpd on average over the year,” BMI Research said.


Microsoft soars past $800 billion in value after bumper results

Updated 1 min 40 sec ago
0

Microsoft soars past $800 billion in value after bumper results

LONDON: Shares of Microsoft Corp. were set to open at a record high on Friday, after the company reported another blockbuster quarter, backed by growth in its legacy software business and Azure cloud computing services.
Shares of one of the technology world’s oldest and best-known names rose 4 percent to $108.50 in trading before the bell, potentially adding nearly $32 billion to a market capitalization that was already $802 billion at close on Thursday.
At least six brokerages raised their price targets on the company’s stock after the results.
Helped by a boom in demand for cloud-based software, Microsoft has more than doubled in value since Satya Nadella took over as chief executive in 2014 and refocused the software behemoth on newer businesses.
While Microsoft’s core productivity and business processes unit, which includes the Office 365 software suite, rose 13.1 percent to $9.67 billion, revenue for the Azure cloud service jumped 89 percent.
“Based on the results, they were able to beat on all major metrics that people were focusing on. I don’t see anything that should raise an eyebrow of concern,” said Daniel Morgan, a portfolio manager at Synovus Trust who holds 418,716 Microsoft shares.
Microsoft has been investing heavily to bolster the fast-growing cloud business and catch up with market leader Amazon.com Inc’s Amazon Web Services.
It also competes with Alphabet Inc, IBM and Alibaba.
“Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation,” Nadella said on a conference call on Thursday.
Analysts expect the investments to pay off in the long run and provide rich dividends to shareholders, allowing Microsoft to rival Apple Inc. and Amazon in the race to be the first company worth $1 trillion.
“Our view on MSFT is unchanged: the stock is our favorite large cap name and we expect MSFT to deliver 10-20% annual stock price appreciation for the next several years,” Canaccord Genuity analyst Richard Davis wrote in a client note.
Of the 35 analysts covering the stock, 31 have a “buy” or higher rating, three are on “hold” and only one on “strong sell.”
“Microsoft has successfully come from behind to exceed Amazon’s cloud revenue, and that gap is only increasing in Microsoft’s favor,” Mark Sami, vice president at consultancy firm SPR said.
“I predict that Microsoft’s cloud market share will continue to grow and impress investors.”