Crude oil prices fall 1% on fears for global economy

The oil supertanker Grace 1, that was on suspicion of carrying Iranian crude oil to Syria, sits anchored in waters of the British overseas territory of Gibraltar. (Reuters)
Updated 05 July 2019

Crude oil prices fall 1% on fears for global economy

SYDNEY: Crude oil prices fell on Friday as concerns over the outlook for global economic growth outweighed elevated tensions in the Middle East that could disrupt supply routes and send prices higher.
US West Texas Intermediate (WTI) crude futures were down 1.1 percent at $56.72 per barrel by 0310 GMT. There was no settlement price on Thursday because of the Independence Day holiday in the United States.
Front-month Brent crude futures were down 0.1 percent at $63.25 per barrel, after closing down 0.8 percent on Thursday.
Analysts said oil was under pressure because fears over future demand amid trade disputes threatening global economic growth. But losses were checked by commitment to cut production from the world’s largest exporters — including members of the Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russia, a grouping known as OPEC+.
“Global growth remains the main factor holding back crude prices,” said Alfonso Esparza, senior analyst at OANDA. “The OPEC+ deal will keep prices from falling too hard, but there must be an end to trade protectionism to assure the demand for energy products recovers.”
New orders for US factory goods fell for a second straight month in May, government data showed on Wednesday, stoking economic concerns.
The US Energy Information Administration on Wednesday reported a weekly decline of 1.1 million barrels in crude stocks, much smaller than the 5-million-barrel draw reported by the American Petroleum Institute earlier in the week.
That suggests oil demand in the United States, the world’s biggest crude consumer, could be slowing amid signs of a weakening economy.
Countering the downward pressure, ongoing tensions in the Middle East also offered some support.
British Royal Marines seized a giant Iranian oil tanker in Gibraltar on Thursday for trying to take oil to Syria in violation of EU sanctions, a dramatic step that drew Tehran’s fury and could escalate its confrontation with the West.

EU ‘has upper hand in Brexit trade talks with UK’

Updated 20 min ago

EU ‘has upper hand in Brexit trade talks with UK’

PLACE: Irish Prime Minister Leo Varadkar said the EU will have the upper hand in trade talks with the UK as the bloc’s chief negotiator warned of the risk of a disruptive cliff-edge Brexit for business at the end of the year.

Britain leaves the EU on Friday and the two sides will formally begin trade talks in the coming weeks during a “business as usual” transition period that ends in December.

Varadkar, in an interview with the BBC, compared the two sides to soccer teams and suggested that the EU would have the “stronger team” due to its larger population and market. 

He also questioned Prime Minister Boris Johnson’s timetable of striking a deal by the end of the year, the BBC reported.

“The European Union is a union of 27 member states. The UK is only one country. And we have a population and a market of 450 million people,” he told the BBC. 

When asked about Johnson’s aim of getting a deal by the end of 2020, he said: “It will be difficult to do this.”

To get a trade deal, the UK would have to give legal assurances it would not undercut the EU, Varadkar said.

Varadkar met EU chief Brexit negotiator Michel Barnier in Dublin. 

Barnier stressed that the level of access UK products can continue to enjoy will be proportionate to the commitments London makes on EU rules, particularly in relation to state aid.

“It is Britain’s choice,” Barnier told a joint news conference with Varadkar. 

“If we have no agreement, it will not be business as usual and the status quo, we have to face the risk of a cliff edge, in particular for trade.”

Varadkar said there will be have to be some checks on goods going from Britain into Northern Ireland, despite Johnson’s repeated insistence that these will not be needed.

Johnson’s willingness to allow some EU regulations to apply in British-ruled Northern Ireland to prevent the need for a border on the island was the crucial concession he offered last year to obtain a withdrawal deal with the bloc. After agreeing that deal, he called an election and won a strong majority.

Barnier said the EU will “very carefully” watch over the implementation of the agreement’s Northern Ireland protocol. EU officials also expressed concern.

“Trade talks is one thing but there is also the implementation of the Withdrawal Agreement. If the latter doesn’t go well, how could we trust them to meet their obligations under any future FTA (free trade agreement)?” said a senior EU diplomat.

Varadkar himself faces voters in an election on Feb. 8. Polls have shown his Fine Gael party trailing its main rivals, Fianna Fail.