Oil surges after OPEC indicates it will maintain output cuts

OPEC, Russia and other non-member producers agreed to reduce output by 1.2 million barrels per day from January 1 for six months. (AFP)
Updated 20 May 2019
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Oil surges after OPEC indicates it will maintain output cuts

  • There is consensus among OPEC and allied oil producers to drive down crude inventories ‘gently’
  • Another bullish signal was a second week of declines in US drilling operations

TOKYO: Oil rose to multi-week highs on Monday after OPEC indicated it will likely maintain production cuts that have helped support prices this year, while tensions continued to escalate in the Middle East.
Brent crude was up by 96 cents, or 1.3 percent, at $73.17 a barrel by 0227 GMT, having earlier touched $73.40, the highest since April 26.
US West Texas Intermediate crude was 82 cents, 1.3 percent, higher at $63.58 a barrel. The US benchmark reached $63.81 earlier, the highest since May 1.
Saudi Energy Minister Khalid Al-Falih said on Sunday there was consensus among the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to drive down crude inventories “gently” but he would remain responsive to the needs of a “fragile market.”
United Arab Emirates (UAE) Energy Minister Suhail Al-Mazrouei earlier told reporters that producers were capable of filling any market gap and that relaxing supply cuts was not “the right decision.”
Meanwhile, US President Donald Trump threatened Tehran on Sunday, tweeting that a conflict would be the “official end” of Iran, while Saudi Arabia said it was ready to respond with “all strength” and that it was up to Iran to avoid war.
The rhetoric follows last week’s attacks on Saudi oil assets and the firing of a rocket on Sunday into Baghdad’s heavily fortified “Green Zone” that exploded near the US embassy.
“Al-Falih and the UAE both put paid to suggestions of increasing production over the weekend and then President Trump essentially telling Iran to bring it on, was a perfect short-term storm for oil prices,” Greg McKenna, strategist at McKenna Macro, told Reuters by email.
OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months to prevent inventories from increasing and weakening prices.
“This second half, our preference is to maintain production management to keep inventories on their way declining gradually, softly but certainly declining toward normal levels,” Al-Falih told a news conference after OPEC and other producers met.
Russian Energy Minister Alexander Novak earlier said an easing of cuts had been discussed and the supply situation would be clearer in a month, including from countries under sanctions.
Another bullish signal was a second week of declines in US drilling operations, with energy companies cutting oil rigs to the lowest since March 2018.
The rig count, an early indicator of future output, fell by 3 to 802, General Electric Co’s Baker Hughes energy services unit said on Friday.


Singapore luxury apartment sales surge to 11-year high

Updated 20 September 2019

Singapore luxury apartment sales surge to 11-year high

  • Sales of such apartments also exceeded the numbers racked up for each full year from 2011 to 2018, the consultants’ analysis of transaction data shows

SINGAPORE: Sales of Singapore apartments worth at least S$10 million ($7.3 million) have hit an 11-year high, fueled by increased demand from Chinese millionaires seeking safe-haven assets, say property consultants OrangeTee & Tie.

Investors have long viewed Singapore as an island of stability that attracts the super-rich from its less developed Southeast Asian neighbors, as well as multimillionaires from mainland China.

In the first eight months of 2019, 68 condominium units in the wealthy Asian city-state were sold for S$10 million and more, the highest tally since the corresponding period of 2008.

Sales of such apartments also exceeded the numbers racked up for each full year from 2011 to 2018, the consultants’ analysis of transaction data shows.

Some buyers may have sought an alternative to rival financial hub Hong Kong, hit by protests, while others may have shifted funds from China after its yuan currency was devalued in a trade war with the US, an OrangeTee expert said.

“This may explain why we have observed more foreign buyers, especially mainland Chinese, coming into Singapore lately,” said Christine Sun, its head of research and consultancy.

Mainland Chinese are the biggest group of foreign buyers of Singapore luxury homes.

In Singapore’s prime districts, Chinese citizens bought 76 apartments worth more than S$5 million from January to August, versus 75 purchases by Singaporeans, data until Sept. 19 show.

Expensive apartments in premium neighborhoods are mainly bought by foreigners, because at such high prices Singaporeans have the option to buy landed property, such as bungalows and mansions.

Singapore does not allow foreigners to buy landed homes, except for those on the resort island of Sentosa.

“We do see that even though the stamp duties have increased .... we are still seeing people putting big money on these apartments, predominantly it is more for stability than anything else,” said Boon Hoe Leong, chief operating officer of high-end realtor List Sotheby’s International Realty.

He was referring to measures Singapore adopted last year to cool its real estate market, such as hiking additional stamp duties for foreign buyers to 20 percent from 15 percent.

“They are parking their money here — they know that the Sing dollar won’t depreciate overnight,” he added.