Oil slumps as OPEC, Russia look to raise output amid US surge

Updated 28 May 2018
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Oil slumps as OPEC, Russia look to raise output amid US surge

SINGAPORE: Oil prices slumped on Monday, extending steep declines from Friday, as Saudi Arabia and Russia said they may increase supplies and as US production gains show no signs of abating.
Brent crude futures were at $75.09 per barrel at 0452 GMT, down $1.35, or 1.8 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $66.22 a barrel, down $1.66, or 2.5 percent.
Brent and WTI have fallen by 6.4 percent and 9.1 percent respectively from peaks touched earlier in May.
In China, Shanghai crude oil futures tumbled by 4.8 percent to 457.7 yuan ($71.64) per barrel.
The Organization of the Petroleum Exporting Countries (OPEC), as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to their lowest in more than a decade at less than $30 per barrel.
But prices have soared since the start of the cuts last year, with Brent breaking through $80 per barrel earlier in May, triggering concerns that high prices would crimp economic growth and stoke inflation.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at US bank Morgan Stanley, wrote over the weekend in a note.
To address potential supply shortfalls, Saudi Arabia, de-facto leader of producer group OPEC, as well as top producer Russia said on Friday they were discussing raising oil production by some 1 million bpd.
“Crude oil prices collapsed ... after reports emerged that Saudi Arabia and Russia had agreed to increase crude oil production in the second-half of the year to make up for losses elsewhere under the production cut agreement,” ANZ bank said on Monday.
Meanwhile, surging US crude production also showed no sign of abating as drillers continue to expand their search for new oil fields to exploit.
US energy companies added 15 rigs looking for new oil in the week ended May 25, bringing the rig-count to 859, the highest level since 2015, in a strong indicator that American crude production will continue to rise.
US crude production has already surged by more than 27 percent in the last two years, to 10.73 million barrels per day (bpd), bringing its output ever closer to Russia’s 11 million bpd.
“Oil prices are showing symptoms of a falling knife as investors are jittery on the prospect of increased production from three of the world’s top producers,” Singapore-based brokerage Phillip Futures said on Monday.


In Trump rebuke, US Senate votes to reimpose ban on China’s ZTE

Updated 19 June 2018
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In Trump rebuke, US Senate votes to reimpose ban on China’s ZTE

  • ZTE has been on life support ever since Washington said it had banned US companies from selling crucial hardware and software components to the company for seven years.
  • ZTE's fiberoptic networks depend on US components and its cheap smartphones sold en masse abroad are powered by US chips and the Android operating system.

WASHINGTON: The US Senate defied President Donald Trump by voting Monday to overrule his administration’s deal with Chinese telecom firm ZTE and reimpose a ban on high-tech chip sales to the company.
Senators added an amendment targeting ZTE into a sweeping, must-pass national defense spending bill that cleared the chamber on an 85-10 vote.
The company has been on life support ever since Washington said it had banned US companies from selling crucial hardware and software components to ZTE for seven years, after staffers violated trade sanctions against Iran and North Korea.
It was fined $1.2 billion for those violations, but earlier this month the Trump administration gave ZTE a lifeline by easing sanctions in exchange for a further $1.4 billion penalty on the company.
The Senate measure nullifies that action, proposing an outright ban on the government buying products and services from ZTE and another Chinese telecoms firm, Huawei.
“We’re heartened that both parties made it clear that protecting American jobs and national security must come first when making deals with countries like China, which has a history of having little regard for either,” a bipartisan group of senators said.
The lawmakers, who introduced the amendment, include top Democrat Chuck Schumer and Republican Marco Rubio.
Providing $716 billion in funding for national defense for fiscal year 2019 and giving policy guidance to the Pentagon, the bill is not a done deal.
The House of Representatives passed its own version of the measure, and the two chambers must now hash out a compromise.
“It is vital that our colleagues in the House keep this bipartisan provision in the bill as it heads toward a conference,” Schumer and Rubio said.
ZTE, which employs 80,000 people, said recently that its major operations had “ceased” after the ban, raising the possibility of its collapse.
Its fiberoptic networks depend on US components and its cheap smartphones sold en masse abroad are powered by US chips and the Android operating system.