OPEC, Russia nearing accord on long term oil supply coordination

OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction. (Reuters)
Updated 14 June 2019
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OPEC, Russia nearing accord on long term oil supply coordination

  • OPEC+ due to meet on June 25-26 or in early July to decide whether to extend the output cut
  • OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes

MOSCOW: OPEC and other producers including Russia are in final talks for an agreement, that may be signed in early July, to cooperate on oil supplies on a long-term basis, Japan’s Nikkei reported, citing Russian energy minister Alexander Novak.
Novak also told the Nikkei that discussions with OPEC on moving the date of the meeting to early July from the originally-planned dates of June 25-26 were nearly finalized.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have since January 1 implemented a deal to cut output by 1.2 million barrels per day to support prices.
The alliance, known as “OPEC+,” was due to meet on June 25-26 or in early July to decide whether to extend the pact.
A proposal to create a formal body was abandoned earlier this year after the US Congress started moves to legislate against cartels in the oil industry.
But the Nikkei said the group was trying to make OPEC+ a permanent framework under an accord to be signed at the next meeting.
The report did not say whether Russia is willing to agree to extend the agreement on output reduction.
OPEC on Thursday cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction, building a case for supply restraint through the rest of 2019.
Crude oil prices jumped 4 percent on Thursday after suspected attacks on two oil tankers in the Gulf of Oman sparked tensions between the United States and Iran and raised concerns over the safety of oil shipments through one of the world’s busiest sea lanes.
Prior to this latest scare, some OPEC members had been worried about the recent steep slide in prices, which have tumbled to $62 a barrel from April’s 2019 peak above $75, due to concern over the US-China trade dispute and a global economic slowdown.
OPEC said, in a monthly report published on Thursday, that world oil demand would rise by 1.14 million barrels per day (bpd) this year, 70,000 bpd less than previously expected.


Singapore woes ring trade alarm bells

Singapore has long been viewed as a barometer of the global demand for goods and services. (AFP)
Updated 22 July 2019
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Singapore woes ring trade alarm bells

  • Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture

SINGAPORE: A plunge in exports and the worst growth rates for a decade have fueled concerns about the outlook for Singapore’s economy, with analysts saying the figures offer a warning that Asia is heading for a slowdown as China-US tensions bite.
While it may be one of the smallest countries in the world, the export hub is highly sensitive to external shocks and has long been viewed as a barometer of the global demand for goods and services.
The affluent city-state is highly dependent on trade and has traditionally been one of the first places in Asia to be hit during global downturns — with ripples typically spreading out across the region. The latest signs are not good. In June, exports collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.
That followed a shock 3.4 percent quarter-on-quarter contraction in GDP in the second quarter. Year-on-year growth came in at just 0.1 percent, the slowest pace since 2009 during the global financial crisis.
“Singapore is the canary in the coal mine,” Song Seng Wun, a regional economist with CIMB Private Banking, told AFP. “And what it tells us is that it is a tough environment.”
To warn of danger, miners used to bring caged canaries underground with them as the birds would die in the presence of even a small amount of poisonous gas — signaling to workers that they should make a swift exit.

BACKGROUND

In June, exports in Singapore collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.

While steadily weakening growth in China is partly to blame for a slowdown in exports, analysts say the trade war between the US and China has dramatically worsened the situation.
While Singapore — a transit point for products heading to and from Western markets as well as the Asian base for manufacturers of some hi-tech goods — may be showing the strain most, negative data has emerged throughout the region.
Exports have been slipping across Asia. In India they plummeted 9.7 percent in June, in Indonesia, Southeast Asia’s biggest economy, they dropped 8.9 percent in the same month while in South Korea they slipped 10.7 percent in May.
Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture.
Central banks are moving to spur domestic consumption, with Indonesia and South Korea cutting interest rates Thursday, the latest in Asia to lower borrowing costs.
Singapore’s central bank is seen as likely to ease monetary policy at an October meeting, and some economists are predicting the country could fall into recession next year.
“There are no winners in this trade war. While most of the attention has focused on the trade conflict between China and the US, the damage has not been confined to these two economies,” business consultancy IHS Markit said in a commentary.