Oil prices rise but still set for third weekly drop on oversupply, US-China trade dispute

Prices have been dragged down by concerns about oversupply as some production returned after outages. (Reuters)
Updated 20 July 2018
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Oil prices rise but still set for third weekly drop on oversupply, US-China trade dispute

TOKYO: Crude prices rose on Friday but were set to drop for the week as concerns about oversupply and lower demand due to a possible economic slowdown caused by the trade conflict between the United States and China, the world’s two biggest oil users.
Brent oil rose 7 cents to $72.65 a barrel by 0354 GMT, after rising to $73.04 earlier in the day.
US West Texas Intermediate (WTI) was up 14 cents at $69.60 a barrel, after reaching a high of $70.03 earlier.
However, both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to drop 3.6 percent and WTI to fall by 2 percent.
Prices have been dragged down by concerns about oversupply as some production returned after outages, while trade tensions between the US and China stoked fears of damage to their economies and commodities demand.
Saudi Arabia had moved on Thursday to allay fears of oversupply, which had supported prices.
But concerns about US and China are coming to fore again as China’s currency falls, said Stephen Innes, head of trading APAC at OANDA brokerage.
“Risk sentiment is wobbling, which I believe is attributed to PBOC pushing the RMB complex lower via the fix,” Innes said. “Markets are now nervous, not only about a trade war, but also a currency war.”
The People’s Bank of China (PBOC) on Friday lowered its mid-point for the yuan for the seventh straight trading day to the lowest in a year.
With China showing little signs of arresting its currency’s depreciation, the yuan promptly retreated to a near 13-month low.
Lower oil demand in the United States and China caused by an economic slowdown from their trade war would have oversized impacts on the market.
The US accounted for 20.2 percent of global oil demand in 2017 while China consumed 13 percent of the world’s oil last year, according to the BP Statistical Review of Energy.
There was some support for prices based on comments from Saudi Arabia, the world’s biggest oil exporter, that it would cut crude shipments.
The country expects exports to drop by roughly 100,000 barrels per day in August as it works to ensure it does not push oil into the market beyond customers’ needs, the kingdom’s Organization of the Petroleum Exporting Countries Governor Adeeb Al-Aama said.
“Despite the international oil markets being well balanced in the third quarter, there will still be substantial stock draws due to robust demand and seasonality factors in the second half,” Al-Aama said in a statement.
He also said concerns that Saudi Arabia and its partners are moving to substantially oversupply the market are “without basis.”


Filipino remittances from the Middle East down 15.3% in 2018

Updated 7 min 21 sec ago
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Filipino remittances from the Middle East down 15.3% in 2018

  • Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion previously
  • Personal remittances are a major driver of domestic consumption

DUBAI: Money sent home by overseas Filipino workers (OFWs) in the Middle East went down 15.3 percent to $6.62 billion in 2018 from $7.81 billion a year earlier, latest government data shows.
Lower crude prices, which affected most OFW host countries in the region, the job nationalization schemes of Gulf states and a deployment ban last year of household service workers to Kuwait were the primary reasons for the decline, a reversal from the 3.4 percent remittance growth recorded in 2017.
A government study has noted that Saudi Arabia was the leading country of destination for OFWs, with more than a quarter of Filipinos being deployed there at any given time, together with the United Arab Emirates (15.3 percent), Kuwait (6.7 percent) and Qatar (5.5 percent).
Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion a year before; down 19.9 percent to $2.03 billion in the UAE from $2.54 billion in 2017; 14.5 percent lower in Kuwait to $689.61 million from $806.48 million and 9.2 percent down in Qatar to $1 billion in 2018, from $1.1 billion a year earlier.
The Philippine government issued a deployment ban for Kuwait early last year, and lasted for five months, after a string of reported deaths and abuses on Filipino workers in the Gulf state.
OFW remittances from Oman, which implemented a job nationalization program like that of Saudi Arabia and the UAE, dove 33.8 percent to $228.74 million in 2018 from $345.41 million a year before. In Bahrain, cash sent by Filipinos rose 2.2 percent to $234.14 million last year from $229.02 million previously.
Meanwhile, overall OFW remittances grew 3 percent year-on-year to $32.2 billion, the highest annual level to date.
“The growth in personal remittances during the year was driven by remittance inflows from land-based OFs with work contracts of one year or more and remittances from both sea-based and land-based OFs with work contracts of less than one year,” the Philippine central monetary authority said.
Personal remittances are a major driver of domestic consumption and in 2018 accounted for 9.7 percent of the Philippines’ gross domestic product.