Oil prices fall as economic growth worries spread

Oil prices have been getting some support from supply cuts that started in late 2018 by the Organization of the Petroleum Exporting Countries. (Reuters)
Updated 22 January 2019
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Oil prices fall as economic growth worries spread

  • China on Monday reported its lowest economic growth figure since 1990, with GDP rising by 6.6 percent in 2018
  • ‘The effects of OPEC-led cuts ... will undoubtedly place a price floor under crude oil’

SYDNEY/SINGAPORE: Oil prices fell on Tuesday as signs of a spreading global economic slowdown stoked concerns over future fuel demand.
International Brent crude oil futures were at $62.26 per barrel at 0410 GMT, down 48 cents, or 0.8 percent, from their previous close.
US West Texas Intermediate (WTI) crude futures were at $53.44 per barrel, down 0.7 percent, or 36 cents.
China on Monday reported its lowest economic growth figure since 1990, with GDP rising by 6.6 percent in 2018.
“Slowing manufacturing activity in China is likely weighing on demand,” said Singapore-based tanker brokerage Eastport on Tuesday, adding that industrial slowdowns tended to be leading indicators that only gradually fed into lower demand for shipped oil products.
In a sign of spreading economic weakness, South Korea’s export-oriented economy slowed to a six-year low growth rate of 2.7 percent in 2018, official data showed on Tuesday.
This followed the International Monetary Fund on Monday trimming its 2019 global growth forecasts to 3.5 percent, down from 3.7 percent in last October’s outlook.
“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” IMF Managing Director Christine Lagarde told reporters.
Despite the darkening outlook, oil prices have been getting some support from supply cuts that started in late 2018 by the Organization of the Petroleum Exporting Countries (OPEC).
“The effects of OPEC-led cuts ... will undoubtedly place a price floor under crude oil,” said Singapore-based brokerage Phillip Futures on Tuesday.


In nod to debt concerns, China Belt and Road summit to urge sustainable financing

Updated 13 min 26 sec ago
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In nod to debt concerns, China Belt and Road summit to urge sustainable financing

  • The Belt and Road Initiative envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond
  • But the initiative has proved controversial in many Western capitals, particularly Washington

SHANGHAI: World leaders meeting in Beijing this week for a summit on China’s Belt and Road initiative will agree to project financing that respects global debt goals and promotes green growth, according to a draft communique seen by Reuters.
The Belt and Road Initiative is a key policy of President Xi Jinping and envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending.
But it has proved controversial in many Western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and saddle countries with unsustainable debt through nontransparent projects.
The United States has been particularly critical of Italy’s decision to sign up to the plan last month, the first for a G7 nation.
In an apparent nod to these concerns, the communique reiterates promises reached at the last summit in 2017 for sustainable financing — but adds a line on debt, which was not included the last time.
“We support collaboration among national and international financial institutions to provide diversified and sustainable financial supports for projects,” the draft communique reads.
“We encourage local currency financing, mutual establishment of financial institutions, and a greater role of development finance in line with respective national priorities, laws, regulations and international commitments, and the agreed principles by the UNGA on debt sustainability,” it added, referring to the United Nations General Assembly.
The word “green” appears in the draft seven times. It was not mentioned once in the summit communique from two years ago.
“We underline the importance of promoting green development,” the draft reads. “We encourage the development of green finance including the issuance of green bonds as well as development of green technology.”
The Chinese government’s top diplomat, Wang Yi, said on Friday that the Belt and Road project is not a “geopolitical tool” or a debt crisis for participating nations, but Beijing welcomes constructive suggestions on how to address concerns over the initiative.
A total of 37 foreign leaders are due to attend the April 25-27 summit, though the United States is only sending lower-level representatives, reflecting its unease over the scheme.
The number of foreign leaders at the April 25-27 summit is up from 29 last time, mainly from China’s closest allies like Pakistan and Russia but also Italy, Switzerland and Austria.
China has repeatedly said Belt and Road is for the benefit of the whole world, and that it is committed to upholding globally accepted norms in ensuring projects are transparent and win-win for all parties.
“We emphasize the importance of the rule of law and equal opportunities for all,” the draft reads.