Oil treads water as US crude inventories fall, but trade tensions weigh

US commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to August 31, the lowest since February 2015. (Reuters)
Updated 07 September 2018
0

Oil treads water as US crude inventories fall, but trade tensions weigh

  • US commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to August 31
  • ‘US production growth will now significantly decelerate until 4Q19’

SINGAPORE: Oil prices held steady stable on Friday, as the market balanced a fall in US crude inventories to the lowest levels since 2015, with Sino-American trade tensions and economic weakness from emerging markets.
US West Texas Intermediate (WTI) crude futures were at $67.78 per barrel at 0448 GMT, up just 1 cent from their last settlement.
International Brent crude futures dipped 8 cents to $76.42 a barrel.
“Oil inventory data released last night showed a larger-than-expected draw in crude inventories,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
US commercial crude oil inventories fell by 4.3 million barrels to 401.49 million barrels in the week to Aug. 31, the lowest since February 2015, US Energy Information Administration (EIA) data showed on Thursday.
Despite that, analysts said prices were curbed by a rise in refined product stocks and a relatively weak US peak fuel consumption season this summer, known as the driving season.
Gasoline stocks rose by 1.8 million barrels, while distillate stockpiles, which include diesel and heating oil, climbed by 3.1 million barrels, the EIA data showed.
“US gasoline inventories are now above the top of the 5-year range,” said US investment bank Jefferies in a note on Friday.
“The US summer driving season has proven to be a lackluster one in terms of gasoline demand,” said O’Loughlin of Rivkin Securities.
Ongoing emerging market weakness as well as potential new US import tariffs on Chinese goods were also weighing on oil market sentiment.
“Emerging markets, which tend to have a higher energy intensity of GDP, are an obvious concern,” said Jefferies.
Asian shares slipped to a 14-month trough on Friday as investors feared a new round of Sino-US tariffs, while currencies from Indonesia to India also remained under pressure.
On the supply side, US crude oil production last week remained at a record 11 million barrels per day (bpd), a level it has largely been at since July.
After rising by almost a third in the last two years, Jefferies said: “US production growth will now significantly decelerate until 4Q19.”
Outside the United States, US sanctions against major oil producer Iran, which from November will target oil exports, are fueling expectations of a tighter market toward the end of the year.
“The main driver of oil prices, in our view, remains the re-imposition of US ... sanctions against consumers of Iranian oil,” said Standard Chartered this week.
“There is still considerable uncertainty over the strategies of China and India, Iran’s main customers.”
Washington has indicated it may offer temporary sanctions waivers to allied countries that are unable to immediately cease imports from Iran.


Food apps fuel India’s hungry gig economy

Updated 18 min 58 sec ago
0

Food apps fuel India’s hungry gig economy

  • A surge in the popularity of food-ordering apps, such as Uber Eats and Swiggy, provides a welcome source of income for many
  • The app-based food delivery industry is worth an estimated $7 billion to Asia’s third-largest economy, according to market research firm Statista

MUMBAI: Suraj Nachre works long hours and often misses meals, but he treasures his job as a driver for a food delivery startup — working in a booming industry that highlights India’s expanding apps-based gig economy.
The 26-year-old is one of hundreds of thousands of young Indians who, armed with their smartphones and motorcycles, courier dinners to offices and homes ordered at the swipe of a finger.
A surge in the popularity of food-ordering apps, such as Uber Eats and Swiggy, provides a welcome source of income for many as India’s unemployment rate sits at a reported 45-year high.
But they also shine a spotlight on the prevalence of short-term contracts in the economy, raising questions about workers’ rights and conditions and the long-term viability of the jobs.
“(These delivery workers) are treated as independent contractors, so labor laws governing employees are not applicable and they lack job security,” Gautam Ghosh, a human resources consultant, said.
“While jobs created by food delivery apps are crucial, they may not exist in 10 years, so for most youngsters they are a stopgap arrangement,” he added.
India’s army of food delivery drivers became a talking point on social media late last year when a rider for the Zomato platform was filmed sampling a customer’s order. The video, apparently shot on a mobile phone, showed the man taking bites from several food parcels before wrapping them again. It sparked anger online and he was promptly sacked.
Many Internet users rallied to his defense, however. They insisted that the two-minute clip showed he was hungry and desperate, and said Zomato had acted harshly in dismissing him.
“It is a challenging job,” said Nachre, expressing sympathy for the unnamed delivery man who was working in the southern city of Madurai before being fired.
“We work 12 hours straight in soaring heat and heavy rains. Sometimes I don’t even have time to eat,” he said.
Nachre drives for the Scootsy platform. He leaves home at 9 a.m. and does not return until after
1 a.m. Navigating Mumbai’s traffic-choked roads makes work stressful, he said.
“We’re always in a rush to deliver and customers keep calling us. We know we have to be on our toes all the time or customers might complain and we may lose our jobs,” he said.
India’s food delivery apps, backed by major international investment, are offering new avenues of employment for Indian youngsters who lack higher education but possess a driving license.
Their importance to the likes of Nachre was highlighted recently when a leaked government report said India’s unemployment rate was 6.1 percent in 2017-18, the highest since the 1970s.
“This job is lucrative,” said Nachre, who has no post-school qualifications and earns a minimum of 18,000 rupees ($253) a month.
In his previous job running errands at an office, he made only 8,000 rupees.
The app-based food delivery industry is worth an estimated $7 billion to Asia’s third-largest economy, according to market research firm Statista, and is expanding rapidly.
Swiggy announced at the end of last year that it had received $1 billion in funding from foreign backers, including South Africa’s Naspers and China’s Tencent.
That put the valuation of the five-year-old company, based in Bangalore, at more than $3 billion.
Zomato, Swiggy’s nearest challenger for market dominance, is being aggressively backed by Alibaba’s Ant Financial. The Chinese giant recently pumped in $210 million, valuing the Delhi-based startup at $2 billion.
The food delivery platforms are soaring as India’s growing middle classes take advantage of better smartphone connectivity and cheap data plans that are fueling a gig economy centered on technology.
Informal, casual labor has long been the bedrock of India’s economy, but now Indians can access a host of services on their phones, ranging from hiring a rickshaw to booking a plumber or yoga teacher.
FlexingIt, a global consulting agency, estimates the country’s gig economy has the potential to grow up to $30 billion by 2025.