Oil dips as IMF lowers global growth outlook; eyes on US hurricane

Nearly 40 percent of daily crude oil production was lost from offshore Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. (Reuters)
Updated 10 October 2018
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Oil dips as IMF lowers global growth outlook; eyes on US hurricane

  • The IMF downgraded its global economic growth forecasts for 2018 and 2019
  • ‘Prices are peaking at the most opportunistic time given waning global growth narrative’
TOKYO: Oil prices edged lower on Wednesday after the IMF lowered its global growth forecasts but prices were supported as Hurricane Michael churned toward Florida, causing the shutdown of nearly 40 percent of Gulf of Mexico crude output.
Brent crude futures were down 21 cents at $84.79 a barrel by 0434 GMT, after a 1.3 percent gain on Tuesday.
US West Texas Intermediate crude was down by 34 cents, or 0.5 percent, at $74.62 a barrel, after rising nearly 1 percent in the previous session.
The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday, raising concerns that demand for oil products may slump as well.
Trade tensions and rising import tariffs were taking a toll on commerce, while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said.
“Prices are peaking at the most opportunistic time given waning global growth narrative,” said Stephen Innes, head of trading APAC at OANDA in Singapore.
In the United States, nearly 40 percent of daily crude oil production was lost from offshore Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.
Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday on the Florida Panhandle.
The country’s largest privately-owned crude terminal, the Louisiana Offshore Oil Port, said late on Tuesday it had halted operations at its marine terminal.
The facility is the only US port able to fully load and unload tankers with a capacity of 2 million barrels of oil.
Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement.
Iran’s crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of US sanctions that take effect on November 4.
Industry and government data on US crude inventories will be delayed by one day this week because of a public holiday on Monday. The American Petroleum Institute is due to release data on Wednesday, while the US Energy Information Administration is due to publish on Thursday.
“There seems to more positive supply chatter in the equation this week, and even although we know its maintenance season the markets are so long positioned that we could see an outsized move on a big build,” Innes said.


Etihad proposes to invest in Jet Airways at 49% discount

Updated 16 January 2019
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Etihad proposes to invest in Jet Airways at 49% discount

  • The 25-year-old Indian airline has been roiled by financial difficulties, racking up a pile of dues to pilots, lessors and vendors
  • Jet will not be able to continue funding operations beyond the next week and Etihad is willing to inject $35 million if some conditions are met

Etihad Airways has offered to pick up shares of debt-laden Indian carrier Jet Airways Ltd. at a 49 percent discount and to immediately release $35 million after certain conditions are met, CNBC-TV18 reported on Wednesday.
Shares of Jet Airways, in which Etihad already owns a 24 percent stake, tumbled as much as 7.5 percent to 271.75 rupees ($3.83) in their biggest intraday drop since early December.
The Abu Dhabi carrier has offered 150 rupees for each Jet share, CNBC-TV18 said, citing a letter from Etihad’s CEO.
Tony Douglas has written to the State Bank of India (SBI) , Jet’s biggest lender, on the restructuring plan for the Indian airline, the report added.
The 25-year-old Indian airline has been roiled by financial difficulties, racking up a pile of dues to pilots, lessors and vendors, at a time when intense pricing competition, a weak rupee and rising fuel costs are weighing on the broader airline sector in the country.
Jet will not be able to continue funding operations beyond the next week and Etihad is willing to inject $35 million if some conditions are met, the CNBC-TV18 report cited Douglas as saying in his letter.
Jet and Etihad representatives are due to meet in Mumbai with lenders, led by SBI, on Wednesday to discuss the restructuring proposal that involves Etihad increasing its stake, a source with knowledge of the matter told Reuters on condition of anonymity.
Etihad wants Jet’s founder and Chairman, 69-year-old Naresh Goyal to step down from the board and his stake to be slashed to 22 percent from 51 percent, according to CNBC-TV18.
Goyal’s penchant for control, according to people who have worked with him, has emerged as a major obstacle as the airline tries to negotiate a rescue deal, Reuters reported last month.
Etihad is also seeking an exemption from the market regulator on preference pricing and open offer guidelines to invest more for the bailout, the report added.
Under India’s capital markets regulations, Etihad is required to make an open offer to shareholders for a majority of the shares once its stake goes past 25 percent, unless it obtains a rare exemption from the market regulator.
India Ministry of Civil Aviation Secretary R N Choubey on Wednesday told reporters that the aviation ministry had not yet received an official request from Jet and Etihad for an exemption from an open offer.
Jet and Etihad were not immediately available for comment.