Oil extends 7% slump from previous day

The surge in US production is contributing to rising global stockpiles. (Reuters)
Updated 14 November 2018
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Oil extends 7% slump from previous day

  • Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown
  • OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019

SINGAPORE: Oil markets slipped again on Wednesday, extending losses from a 7 percent plunge the previous session as surging supply and the specter of faltering demand scared off investors.
US West Texas Intermediate (WTI) crude oil futures were at $55.50 per barrel at 0514 GMT, down 19 cents from their last settlement.
International benchmark Brent crude oil futures were down 22 cents at $65.25 per barrel.
Crude oil has lost over a quarter of its value since early October in what has become one of the biggest declines since prices collapsed in 2014.
The slump in spot prices has turned the entire forward curve for crude oil upside down.
Spot prices in September were significantly higher than those for later delivery, a structure known as backwardation that implies a tight market as it is unattractive to put oil into storage.
By mid-November, the curve had flipped into contango, when crude prices for immediate delivery are cheaper than those for later dispatch. That implies an oversupplied market as it makes it attractive to store oil for later sale.
Oil markets are being pressured from two sides: a surge in supply and increasing concerns about an economic slowdown.
US crude oil output from its seven major shale basins is expected to hit a record of 7.94 million barrels per day (bpd) in December, the US Department of Energy’s Energy Information Administration (EIA) said on Tuesday.
That surge in onshore output has helped overall US crude production hit a record 11.6 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
Most analysts expect US output to climb above 12 million bpd within the first half of 2019.
“This will, in our view, cap any upside above $85 per barrel (for oil prices),” said Jon Andersson, head of commodities at Vontobel Asset Management.
The surge in US production is contributing to rising stockpiles.
US crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million as refineries cut output, data from industry group the American Petroleum Institute showed on Tuesday.
The producer group Organization of the Petroleum Exporting Countries (OPEC) has been watching the jump in supply and price slump with concern.
OPEC has been making increasingly frequent public statements that it would start withholding crude in 2019 to tighten supply and prop up prices.
“OPEC and Russia are under pressure to reduce current production levels, which is a decision that we expect to be taken at the next OPEC meeting on Dec. 6,” said Andersson.
That puts OPEC on a collision course with US President Donald Trump, who publicly supports low oil prices and who has called on OPEC not to cut production.


Barclays payments to Qatar would have been ‘unacceptable’ to market, London court hears

Updated 19 February 2019
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Barclays payments to Qatar would have been ‘unacceptable’ to market, London court hears

  • The UK Serious Fraud Office alleges that four bankers agreed to pay £322 million in secret fees to Qatar
  • It is claimed that Barclays agreed to pay Qatar more than double the standard 1.5 percent investment commission and hid this from other investors

LONDON: Former Barclays Chairman Marcus Agius could not remember if he was told the bank was paying higher fees to Qatar than other investors during an £11.2 billion ($14.6 billion) fundraising in the depths of the 2008 financial crisis, a London court heard on Tuesday.

However he said that paying such commission to one set of underwriters and not the other would have been “unacceptable to the market.” Agius is not accused of any wrongdoing.

He was the first witness to testify in the trial of four former Barclays executives, who include the then CEO John Varley.

“I would have wanted to understand why it would’ve been necessary,” he told the court.

The UK Serious Fraud Office alleges that the four bankers agreed to pay £322 million in secret fees to Qatar.

During the fraud trial — which began in January — the prosecution told the court that the then Qatari Prime Minister Sheikh Hamad bin Jassim demanded a personal fee for investing in Barclays.

It is claimed that Barclays agreed to pay Qatar more than double the standard 1.5 percent investment commission and hid this from other investors by making the payments through what prosecutors alleged were bogus Advisory Services Agreements, or ASAs, Southwark Crown Court heard.

Agius also told the court that he feared resignations from the board in 2008.

“Any one of them might have said, ‘This wasn’t what I signed up for, how do I get out of here?,’” he said.

“I’m clear that in June 2008 we at Barclays did not anticipate how much worse things were going to get. I don’t think we thought it was going to go as badly as it ultimately did.”