Oil rises as KSA signals OPEC deal extension

Supply-related issues, including US sanctions, have ‘put a floor’ under oil prices, according to analysts. (Supplied)
Updated 08 June 2019
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Oil rises as KSA signals OPEC deal extension

  • Oil prices jumped after Saudi Energy Minister Khalid Al-Falih told a conference in St. Petersburg, Russia, that $60 a barrel was too low to encourage investment in the industry
  • Khalid Al-Falih said he did not want to boost Saudi production to make up for a lower oil price and that a return to the price-crash environment of 2014-15 was unacceptable

LONDON: Oil prices rose on Friday, climbing further from five-month lows hit this week amid signs that OPEC and other producers could extend their output reduction deal.
Brent crude futures were up 60 cents at $62.27 a barrel in afternoon trading. US West Texas Intermediate (WTI) crude futures gained 59 cents to $53.18.
Oil prices jumped after Saudi Energy Minister Khalid Al-Falih told a conference in St. Petersburg, Russia, that $60 a barrel was too low to encourage investment in the industry. Crude later pared gains.
Al-Falih said he did not want to boost Saudi production to make up for a lower oil price and that a return to the price-crash environment of 2014-15 was unacceptable.
A deal by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to reduce output by 1.2 million barrels per day (bpd) runs out at the end of this month.
“On the OPEC side, a rollover is almost in the bag. The question is to calibrate with non-OPEC,” Al-Falih said.
“I don’t think there will be a need to deepen the cut ... I’m hoping it will be an easy decision and that we’ll roll over, but if it’s not, we will be flexible in terms of our position.”
Supply has also been limited by US sanctions on oil exports from Iran and Venezuela.
“Supply-related issues basically put a floor under oil prices. This floor is in line with the technical support zone of $58-60 a barrel in Brent oil prices,” said Hans van Cleef at ABN Amro bank.
However, demand sentiment remains weak amid fresh signs of a stalling global economy and an intensifying trade war between the US and China.
The US has also threatened to put tariffs on goods from its major trading partner Mexico.
Mexican and US officials held a second day of talks on Thursday, fueling optimism a deal could be close, although it was unclear whether Mexican pledges to curb migration were enough to persuade Washington to postpone tariffs.
“The weak economic data and widening trade conflict have made for a gloomier demand outlook. In response, we have revised our third-quarter forecast for Brent down to $66 (previously $73),” Commerzbank said in a note.
Brent is heading for a third week of declines, down more than 3 percent.
On Wednesday, Brent and WTI hit their lowest price since mid-January at $59.45 and $50.60, respectively, after US crude output reached a record high and stockpiles climbed.


New designer’s ranges help lift sales at Burberry

A window of a Burberry store in central London, UK. The brand said new products accounted for about half the wares in its shops by the end of June. (Reuters)
Updated 17 July 2019
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New designer’s ranges help lift sales at Burberry

  • Fashion label more than a year into an overhaul to take it more upmarket

LONDON: British luxury brand Burberry reported a pick-up in first quarter sales after it began shifting more new designs by creative chief Riccardo Tisci into its stores as part of a turnaround plan.

The fashion label is more than a year into a high stakes overhaul by CEO Marco Gobbetti aimed at taking Burberry more upmarket  and reviving its image, including with edgier takes by Tisci on some of its classic products such as the trench coat.
The brand said new products had accounted for around half the wares on offer in its shops by the end of June, more than some analysts had expected.
This helped to lift same store sales by 4 percent — following lacklustre growth of 1 percent in the previous three months and topping market expectations of around 2 percent — and its gamble on a new designer appeared to be paying off for now.
“The consumer response was very promising, delivering strong growth in our new collections,” Gobbetti said in a statement.
Burberry has in recent quarters lagged the performance of luxury industry leaders like LVMH’s Louis Vuitton or Kering’s Gucci, which benefited from thriving demand in China in spite of US trade tensions.

FASTFACT

Thomas Burberry was just 21 years old when he established the company of the same name in 1856.

Those firms are due to post sales for the April to June quarter next week.
The pace of Burberry’s revenue growth within China and more broadly across Asia also improved slightly, despite slowing Chinese economic growth.
Its revamp has included rolling out a new logo-style print, or monogram, it hopes will catch on as it works on extending its reach in high-margin handbags; and it is redesigning stores as well as making a big marketing push with social media campaigns.
The company maintained its forecast for broadly stable revenue and operating margin at constant exchange rates for the 2020 financial year. Revenue and operating profit are not expected to pick up in a more meaningful way until 2021.