Oil prices push higher as supply worries drive gains

Concerns about oil supplies outweigh fears of a slowing global economy. (Reuters)
Updated 01 April 2019
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Oil prices push higher as supply worries drive gains

  • US sanctions on Iran and Venezuela along with supply cuts by OPEC members and other major producers have supported prices
  • US energy firms last week reduced the number of oil rigs operating to the lowest level in nearly a year

TOKYO: Oil prices rose on Monday, adding to gains in the first quarter when the major benchmarks posted their biggest increases in nearly a decade, as concerns about supplies outweigh fears of a slowing global economy.
Brent crude for June delivery was up by 43 cents, or 0.6 percent, at $68.01 a barrel by 0214 GMT, having risen 27 percent in the first quarter.
US West Texas Intermediate (WTI) futures rose 32 cents, or 0.5 percent, to $60.46 barrel, after posting a rise of 32 percent in the January-March period.
US sanctions on Iran and Venezuela along with supply cuts by members of the Organization of the Petroleum Exporting Countries (OPEC) and other major producers have helped support prices this year, overshadowing concerns about global growth and the US-China trade war.
However, future gains will be limited by potential softness in the global economy as well as the ability of US oil producers to ramp up production when prices spike, said Phin Ziebell, senior economist at National Australia Bank in Sydney.
“It’s tough to see a really big rally from here,” he said.
Still, analysts have turned cautiously optimistic on crude oil prices this year, a Reuters poll showed on Friday.
US production has also steadied, with the US government reporting on Friday that domestic output in the world’s top crude producer edged lower in January to 11.9 million bpd.
US energy firms last week reduced the number of oil rigs operating to the lowest level in nearly a year, cutting the most rigs in a quarter in three years, Baker Hughes energy services firm said.
Sigal Mandelker, US under-secretary of the Treasury for Terrorism and Financial Intelligence, told reporters in Singapore on Friday that the United States had placed further “intense pressure” on Iran.
US officials are keen to ensure see that Malaysia, Singapore and others are fully aware of illicit Iranian oil shipments and the tactics Iran uses to evade sanctions, Mandelker said.
The US has also instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, even if the trades are not prohibited by published US sanctions, three sources familiar with the matter said.
A deal between OPEC and allies such as Russia to cut output by around 1.2 million barrels per day, which officially started in January, has also supported prices.
Hedge funds and other money managers raised their net long US crude futures and options positions to 243,209 in the week to March 26, the US Commodity Futures Trading Commission said.


Huawei unit cuts more than 600 jobs following US sanctions

Updated 24 min 44 sec ago
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Huawei unit cuts more than 600 jobs following US sanctions

  • The layoffs will come at the Chinese company’s US-based research and development arm, Futurewei Technologies, in Texas
  • Futurewei employs more than 750 people

SHANGHAI: Chinese telecom giant Huawei said on Tuesday that more than 600 jobs would be lost at a US unit as a result of “curtailment of business operations” caused by Washington’s sanctions on the firm and 68 of its subsidiaries.
The layoffs will come at the Chinese company’s US-based research and development arm, Futurewei Technologies, which is incorporated in Texas, an email statement from Huawei said.
Futurewei employs more than 750 people, according to Bloomberg’s corporate information database.
“Decisions like this are never easy to make. Eligible employees will be offered severance packages, including both pay and benefits,” the statement said.
The Trump administration has put Huawei on its so-called Entity List, which means US companies need a license to supply it with US technology.
Huawei — a leader in next-generation 5G wireless technology — remains barred from developing 5G networks in the United States, and the Trump administration is trying to convince its allies to do the same.
Washington accuses Huawei of working directly with the Chinese government, a claim the company denies.
After Donald Trump met China’s Xi Jinping on the sidelines of the G20 summit in Osaka last month, the US president said he would ease the punitive measures on Huawei as long as equipment sold to it did not pose any risk to national security.
The Washington Post reported this week that Huawei secretly helped North Korea build and maintain the country’s commercial wireless network.
The Post, citing internal documents it obtained and people familiar with the arrangement, said Huawei has partnered with a Chinese state-owned firm Panda International Information Technology on projects in North Korea over at least eight years.
By doing so Huawei, which has used US technology in its components, may have violated US controls on exports to the isolated regime in Pyongyang.