Oil drops as Iran signals support for OPEC production rise

Commercial US crude inventories dropped by 5.9 million barrels in the week to June 15, to 426.53 million barrels, the Energy Information Administration said. (Reuters)
Updated 21 June 2018
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Oil drops as Iran signals support for OPEC production rise

  • Prices were prevented from dropping further by robust US fuel demand seen in record refinery runs, strong travel data and a large decline in crude inventories
  • Beyond the short-term, Barclays said there were headwinds for oil prices

SINGAPORE: Oil prices fell on Thursday as Iran signaled it could be won over to a small rise in OPEC crude output, potentially paving the way for the producer cartel to agree a supply increase during a meeting on Friday.
However, prices were prevented from dropping further by robust US fuel demand seen in record refinery runs, strong travel data and a large decline in crude inventories.
Brent crude futures were at $74.33 per barrel at 0426 GMT, down 41 cents, or 0.55 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $65.50 a barrel, down 21 cents, or 0.3 percent.
Iran, a major supplier within the producer cartel of the Organization of the Petroleum Exporting Countries (OPEC), signaled on Wednesday it could agree on a small increase in the group’s output during a meeting to be held at OPEC’s headquarters in Vienna on June 22 together with non-OPEC member but top producer Russia.
“There appears to be an air of confidence that this deal will move through,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.
“We expect OPEC and Russia to gradually add supplies back to the market by next year, mostly offsetting the almost 1 million barrels per day (bpd) supply disruption in Venezuela,” Barclays bank said.
Tehran had previously resisted pressure by OPEC’s de-facto leader Saudi Arabia to raise output.
Even with Iran appearing to fall in line, analysts do not expect a harmonious OPEC meeting.
“Our expectations are for a tense, discordant and highly geopolitical OPEC+ meeting,” said Japan’s Mitsubishi UFJ Financial Group in a note to clients.
OPEC, together with other key producers including Russia, started withholding output in 2017 to prop up prices, but a tightening market in 2018 led to calls by major consumers for more supplies.
In a sign of strong demand, US refineries processed a seasonal record of 17.7 million bpd of crude oil last week, according to data from the Energy Information Administration (EIA) said on Wednesday.
This comes as a record 46.9 million Americans are expected to travel during the upcoming July 4 holiday, according to the American Automobile Association on Thursday, which is seen as a leading indicator for US fuel demand.
Amid healthy consumption, commercial US crude inventories dropped by 5.9 million barrels in the week to June 15, to 426.53 million barrels, the EIA said.
US crude oil production was flat week-on-week, remaining at a record 10.9 million bpd.
Beyond the short-term, Barclays said there were headwinds for oil prices.
“Deleveraging in China and a weakening in the narrative around synchronous global economic growth are likely to add headwinds for all commodities,” it said.


Microsoft beats Wall Street targets on cloud services revenue

A Microsoft logo is seen in Los Angeles, California US, in this November 7, 2017 photo. (REUTERS)
Updated 20 July 2018
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Microsoft beats Wall Street targets on cloud services revenue

  • Revenue for the company’s LinkedIn business and job network grew 37 percent from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61 percent increase
  • Net income rose to $8.87 billion, or $1.14 per share, from $8.07 billion, or $1.03 per share, in the year-ago fourth quarter

NEW YORK: Microsoft Corp. on Thursday posted quarterly profit and revenue that beat analysts’ estimates, as more businesses signed up for its Azure cloud computing services and Office 365 productivity suite.
The company’s flagship Azure cloud product recorded revenue growth of 89 percent in the fourth quarter ended June 30. Its shares rose nearly 4 percent in after-hours trading.
Much of Microsoft’s recent growth has been fueled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.
“The combination of the cloud, which is a megatrend that’s going to last for years to come, and the execution, this is company that knows how to sell and be innovative — it’s hard to argue with anything here,” said Tom Taulli, InvestorPlace.com analyst.
Microsoft shares have risen 180 percent since Satya Nadella took over as chief executive in 2014, refocusing the company on cloud computing rather than PC software. Its market cap edged above $800 billion for the first time earlier this month.
Azure has a 16 percent share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Amazon.com Inc’s Amazon Web Services, according to April estimates by research firm Canalys.
Revenue at Microsoft’s productivity and business processes unit, which includes Office 365, rose 13.1 percent to $9.67 billion, topping analysts’ average expectation of $9.65 billion, according to Thomson Reuters I/B/E/S.
“This was another gem of a quarter from Microsoft as Nadella’s cloud vision is coming to fruit on the heels of massive Azure growth and secular tailwinds,” said Daniel Ives at research firm GBH Insights.
Revenue for the company’s LinkedIn business and job network grew 37 percent from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61 percent increase.
The combination of those two services highlights Microsoft’s rise as an alternative to Salesforce.com Inc, which dominates the customer relationship management market, said Johnny Won, founder of Hyperstop, a tech consultancy firm.
“It seems like this is actually a formidable threat to Salesforce,” Won said.
Overall, the Redmond, Washington-based software maker’s revenue rose 17.5 percent to $30.09 billion, above expectations of $29.21 billion.
Net income rose to $8.87 billion, or $1.14 per share, from $8.07 billion, or $1.03 per share, in the year-ago fourth quarter. https://bit.ly/2uOF9W1
Excluding certain items, Microsoft earned $1.13 per share, while analysts had expected $1.08.