Oil prices rise on trade talk optimism, OPEC cuts

Looming over the OPEC-led cuts, however, is a surge in US oil supply, driven by a steep rise in onshore shale oil drilling and production. (AP)
Updated 08 January 2019
0

Oil prices rise on trade talk optimism, OPEC cuts

  • Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on shaky grounds, and that tensions could flare up again soon

SINGAPORE: Oil prices rose on Tuesday on hopes that US-Chinese talks in Beijing would bring a halt to trade disputes between the world’s biggest economies, while OPEC-led supply cuts tightened markets.
International Brent crude futures were at $57.77 per barrel at 0113 GMT, up 44 cents, or 0.8 percent from their last close.
US West Texas Intermediate (WTI) crude oil futures were at $48.85 per barrel, up 33 cents, or 0.7 percent.
US Commerce Secretary Wilbur Ross said late on Monday that Beijing and Washington could reach a trade deal that “we can live with” as dozens of officials from the world’s two largest economies held talks in a bid to end their trade dispute that has roiled global markets since last year.
Asian stock markets rose as investors hope Washington and Beijing will reach some sort of agreement.
Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on shaky grounds, and that tensions could flare up again soon.
“We remain concerned about the world’s most important bilateral relationship,” political risk consultancy Eurasia Group said in its 2019 outlook.
“The US political establishment believes engagement with Beijing is no longer working, and it’s embracing an openly confrontational approach ... (and) rising nationalist sentiment makes it unlikely that Beijing will ignore US provocations,” Eurasia Group said.
Beyond politics, oil markets are 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 member Russia.
“Crude oil prices have benefited from OPEC production cuts and steadying equities markets,” said Mithun Fernando, investment analyst at Australia’s Rivkin Securities.
Looming over the OPEC-led cuts, however, is a surge in US oil supply, driven by a steep rise in onshore shale oil drilling and production.
As a result, US crude oil production rose by a whopping 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.
With drilling activity still high, most analysts expect US oil production to rise further this year.
Consultancy JBC Energy said it was likely that US crude oil production was already “significantly above 12 million bpd” by early January.


World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 16 January 2019
0

World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.