Oil rises on US-China trade talks, supply cuts

US crude oil production stayed at a record 11.7 million barrels per day in the last week of 2018. (Reuters)
Updated 07 January 2019

Oil rises on US-China trade talks, supply cuts

  • The US and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other’s goods
  • ‘The US supply glut remains a bearish concern’

SINGAPORE: Oil prices rose by more than 1 percent on Monday, lifted by optimism that talks could soon resolve the trade war between the United States and China, while supply cuts by major producers also supported the market.
Brent crude futures were at $57.75 per barrel at 0404 GMT, up 69 cents, or 1.2 percent, from their last close.
US West Texas Intermediate (WTI) crude oil futures were at $48.67 per barrel, up 71 cents, or 1.5 percent.
Financial markets were riding a relief rally on Monday on expectations that face-to-face trade negotiations between delegates from Washington and Beijing, due to start on Monday, would lead to an easing in tensions between the two biggest economies in the world.
The United States and Beijing have been locked in an escalating trade spat since early 2018, raising import tariffs on each other’s goods. The dispute has weighed on economic growth.
Goldman Sachs said in a note on Monday it had downgraded its average Brent crude oil forecast for 2019 from $70 per barrel to $62.50 a barrel because of “the strongest macro headwinds since 2015.”
J.P. Morgan, another US bank, said in a note late last week that “the 3 percent global growth pace we have been anticipating for the next two quarters looks increasingly challenging.
The bank also said that “bond and commodity markets appear to be pricing in on average close to a 60 percent chance of a US recession over the coming year compared to a 40 percent chance by our economists and 27 percent chance by the consensus.”
Despite the likelihood of a slowdown, crude future prices were being supported by supply cuts started late last year by a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC Russia.
OPEC oil supply fell in December by 460,000 barrels per day (bpd), to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia.
Potentially undermining OPEC’s efforts is swelling US oil supply.
US crude oil production stayed at a record 11.7 million bpd in the last week of 2018, according to weekly data by the Energy Information Administration (EIA) released on Friday.
That makes the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.
Record output is also swelling US fuel stockpiles.
Crude oil inventories rose by 7,000 barrels in the week ending Dec. 28, to 441.42 million barrels.
Distillate and gasoline stocks, however, rose by a whopping 9.5 million and 6.9 million barrels, to 119.9 million and 240 million barrels respectively, the EIA data showed.
“The US supply glut remains a bearish concern,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.


Electric luxury vehicles, SUVs ‘more likely to cause accidents’

Updated 41 min 58 sec ago

Electric luxury vehicles, SUVs ‘more likely to cause accidents’

  • As EV sales rise, French insurer AXA warns that drivers are struggling to adapt to cars’ rapid acceleration

LONDON: Electric luxury cars and sport utility vehicles (SUVs) may be 40 percent more likely to cause accidents than their standard engine counterparts, possibly because drivers are still getting used to their quick acceleration, French insurer AXA said.

The numbers, based on initial trends from claims data and not statistically significant, also suggest small and micro electric cars are slightly less likely to cause accidents than their combustion engine counterparts, AXA said at a crash test demonstration on Thursday.

AXA regularly carries out crash tests for vehicles. This year’s tests, which took place at a disused airport, focused on electric cars.

Overall accident rates for electric vehicles are about the same as for regular cars, according to liability insurance claims data for “7,000 year risks” — on 1,000 autos on the road for seven years — said Bettina Zahnd, head of accident research and prevention at AXA Switzerland.

“We saw that in the micro and small-car classes slightly fewer accidents are caused by electric autos. If you look at the luxury and SUV classes, however, we see 40 percent more accidents with electric vehicles,” Zahnd said.

“We, of course, have thought about what causes this and acceleration is certainly a topic.”

Electric cars accelerate not only quickly, but also equally strongly no matter how high the revolutions per minute, which means drivers can find themselves going faster than they intended.

FASTFACT

Accident rates among luxury and SUV electric vehicles are 40 percent higher than for their combustion engine counterparts.

Half of electric car drivers in a survey this year by AXA had to adjust their driving to reflect the new acceleration and braking characteristics.

“Maximum acceleration is available immediately, while it takes a moment for internal combustion engines with even strong horsepower to reach maximum acceleration. That places new demands on drivers,” Zahnd said.

Sales of electric cars are on the rise as charging infrastructure improves and prices come down.

Electric vehicles accounted for less than 1 percent of cars on the road in Switzerland and Germany last year, but made up 1.8 percent of Swiss new car sales, or 6.6 percent including hybrids, AXA said.

Accidents with electric cars are just about as dangerous for people inside as with standard vehicles, AXA said. The cars are subject to the same tests and have the same passive safety features such as airbags and seatbelts.

But another AXA survey showed most people do not know how to react if they come across an electric vehicle crash scene.

While most factors are the same — securing the scene, alerting rescue teams and providing first aid — it said helpers should also try to ensure the electric motor is turned off. This is particularly important because unlike an internal combustion engine the motor makes no noise. In serious crashes, electric autos’ high-voltage power plants automatically shut down, AXA noted, but damaged batteries can catch fire up to 48 hours after a crash, making it more difficult to deal with the aftermath of
an accident.

For one head-on crash test on Thursday, AXA teams removed an electric car’s batteries to reduce the risk of them catching fire, which could create intense heat and toxic fumes.

Zahnd said that studies in Europe had not replicated US findings that silent electric vehicles are as much as two-thirds more likely to cause accidents with pedestrians or cyclists.

She said the jury was still out on how crash data would affect the cost of insuring electric versus standard vehicles, noting this always reflected factors around both driver and car.

“If I look around Switzerland, there are lots of insurers that even give discounts for electric autos because one would like to promote electric cars,” she said.