Oil stable as Iran sanctions loom, but trade wars weigh

Oil has been buoyed by tumbling Venezuelan output and declining shipments from Iran ahead of the imposition of US sanctions on Tehran in November. (Reuters)
Updated 31 August 2018
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Oil stable as Iran sanctions loom, but trade wars weigh

NEW YORK: Oil prices slipped on Friday, pressured by renewed concerns that a global trade war could dent energy demand, although impending US sanctions on Iran and falling Venezuelan output limited the decline.
Benchmark Brent crude oil fell 42 cents to $77.35 a barrel by 1:35 p.m. EDT (1735 GMT). US crude slipped 36 cents to $69.89.
For the month, global benchmark Brent was set to jump 4.3 percent and US crude 1.6 percent. Oil has been buoyed by tumbling Venezuelan output and declining shipments from Iran ahead of the imposition of US sanctions on Tehran in November.
On Friday, however, oil “appears to be following equities lower amidst renewed US/Chinese tariff concerns that could easily escalate in slowing global economic growth and, hence, world oil demand,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
The MSCI Emerging Markets index fell for a second day as a report that US President Donald Trump was preparing to step up a trade war with Beijing dampened risk appetite and erased some gains from a rally this week. In the previous session, concerns about Argentina’s currency weakening had weighed on the outlook for emerging markets.
Trump threatened on Thursday to withdraw from the World Trade Organization and impose tariffs on $200 billion of Chinese imports.
The US rig count, an indicator of future production, rose for the first time in 3 weeks, energy services firm Baker Hughes reported.
US crude production in June hit 10.674 million barrels per day, the highest monthly total on record, the Energy Information Administration (EIA) said in a monthly report on Friday.
Crude exports rose nearly 200,000 bpd in the month, hitting a new record of 2.2 million bpd, more than twice the level seen last June, the EIA said in a separate monthly report on Friday.
US crude’s discount to Brent, which has widened by nearly a third in the past month, has encouraged an increase in US exports, Bob Yawger, director of energy futures at Mizuho.
Production from the Organization of the Petroleum Exporting Countries increased by 220,000 bpd in August, according to a Reuters survey.
Oil analysts polled by Reuters cut their price forecasts for 2018 in August, for the first time in almost a year, on growing concerns about global trade. A Reuters survey of 45 economists and analysts forecast Brent would average $72.71 in 2018, 16 cents below the $72.87 projected in July but above the $71.96 average so far this year.
The 2019 price was forecast to average $72.58.


Xi urges financial risk prevention while seeking stable growth

Updated 3 min 39 sec ago
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Xi urges financial risk prevention while seeking stable growth

  • China’s economy is growing at its slowest pace in almost 30 years
  • Preventing and resolving financial risks, especially systemic financial risks, is a fundamental task

BEIJING: China should seek stable development of its economy while not forgetting to fend off risks to its financial system, Chinese President Xi Jinping said, state news agency Xinhua reported on Saturday.
China’s economy is growing at its slowest pace in almost 30 years, spurring policymakers to bolster growth by easing credit conditions and cutting taxes.
“It is necessary to focus on preventing risks on the basis of steady growth, while strengthening the countercyclical adjustment of fiscal policy and monetary policy and ensuring that the economy operates in a reasonable range,” Xi said.
Preventing and resolving financial risks, especially systemic financial risks, is a fundamental task, the agency cited Xi as telling a study session for senior Communist Party officials on Friday.
On Wednesday, Premier Li Keqiang reiterated that China would not resort to “flood-like” stimulus such as it unleashed in past downturns.
But after a spate of weak data, investors are asking if Beijing needs to speed or boost support to reduce the risk of a sharper slowdown.
Until now, China has refrained from cutting benchmark interest rates to spur the slowing economy, which would ease financing costs but risk adding to a mountain of debt.
To free up more funds for lending to small and private businesses, the central bank has cut the reserves that banks need to set aside five times in the past year.
Last month, Chinese banks made the most new loans on record, a total of 3.23 trillion yuan ($481 billion). A central bank official said previously that no credit floodgate had been opened, and the lending jump showed recent easing steps were working.
China’s financial sector must serve the real economy, Xi said, but stable growth and risk prevention must be balanced.