Oil rises more than 1% as US recession fears recede

US retail sales rose 0.7 percent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases. (Reuters)
Updated 16 August 2019
0

Oil rises more than 1% as US recession fears recede

  • US retail sales rose 0.7 percent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases
  • The price of Brent is still up nearly 10 percent this year

TOKYO: Crude oil prices rose more than 1 percent on Friday following two days of declines, buoyed after data showing an increase in retail sales in the United States helped dampen concerns about a recession in the world’s biggest economy.
Brent crude was up 68 cents, or 1.2 percent, at $58.91 a barrel at 0650 GMT, after falling 2.1 percent on Thursday and 3 percent the previous day.
US crude was up 63 cents, or 1.2 percent, at $55.10 a barrel, having dropped 1.4 percent the previous session and 3.3 percent on Wednesday.
US retail sales rose 0.7 percent in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, according to data that came a day after a key part of the US Treasury yield curve inverted for the first time since June 2007, prompting a sell-off in stocks and crude oil.
An inverted Treasury yield curve is historically a reliable predictor of looming recessions.
“The rebound has a corrective look about it on thin volumes, rather than a beachhead for an impending rebound,” said Jeffrey Halley, senior market analyst at OANDA. “Overall, US data continues to be a bright spot in a dark economic universe.”
Gains are likely to be capped after a week of data releases including a surprise drop in industrial output growth in China to a more than 17-year low, along with a fall in exports that sent Germany’s economy into reverse in the second quarter.
“The broader story around global economic growth has been a weak one, or a weakening one and expectations (are for) further weakening,” Phin Ziebell, senior economist at National Australia Bank, said by phone.
The price of Brent is still up nearly 10 percent this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices.
“At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?” Zeibell said, pointing to the broader economic outlook.
A Saudi official on Aug. 8 indicated more steps may be coming, saying: “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year.”
But the efforts of OPEC+ have been outweighed by worries about the global economy amid the US-China trade dispute and uncertainty over Brexit, as well as rising US stockpiles of crude and higher output of US shale oil.


Huawei in public test as it unveils sanction-hit phone

Updated 19 September 2019

Huawei in public test as it unveils sanction-hit phone

  • Hit by US sanctions, Huawei's Mate 30 will not be allowed to use Google’s Play Store
  • Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
BERLIN: Chinese tech giant Huawei launches its latest high-end smartphone in Munich on Thursday, the first that could be void of popular Google apps because of US sanctions.
Observers are asking whether a phone without the Silicon Valley software that users have come to depend on can succeed, or whether Huawei will have found a way for buyers to install popular apps despite the constraints.
The company has maintained a veil of secrecy over its plans, set to be dropped at a 1200 GMT press conference revealing the Mate 30 and Mate 30 Pro models.
Huawei, targeted directly by the United States as part of a broader trade conflict with Beijing, was added to a “blacklist” in Washington in May.
Since then, it has been illegal for American firms to do business with the Chinese firm, suspected of espionage by President Donald Trump and his administration.
As a result, the new Mate will run on a freely available version of Android, the world’s most-used phone operating system that is owned by the search engine heavyweight.
While Mate 30 owners will experience little difference in the use of the system, the lack of Google’s Play Store — which provides access to hundreds of thousands of third-party apps and games as well as films, books and music — could hobble them.
Household-name services like WhatsApp, Instagram and Google Maps will be unavailable.
The tech press reports that this yawning gap in functionality has left some sellers reluctant to stock the new phones, fearing a wave of rapid-fire returns from dissatisfied customers.
Huawei president Richard Yu said at Berlin’s IFA electronics fair this month that his engineers found a “very simple” way to install the hottest apps without going via the Play Store.
Huawei could offer its own app store in a preliminary version, setting itself up as a competitor to the dominant Apple and Google offerings, observers speculate.
Over the longer term, the company could build out a similar “ecosystem” of devices, apps and services as the Silicon Valley companies that would bind users more closely to it.
The world’s second-largest smartphone maker after Samsung, Huawei earlier this month presented its proprietary operating system HarmonyOS, a potential replacement for Android.
The Mate 30 will not yet have HarmonyOS installed.
But it could make for a new round in the decades-old “OS wars” between Microsoft’s Windows and Apple’s Mac OS, then Android versus Apple’s iOS.
Meanwhile, Eric Xu, current holder of Huawei’s rotating chief executive chair, has urged Europe to foster an alternative to Google and Apple.
That could provide an opening for Huawei to build up Europe’s market of 500 million well-off consumers as a stronghold against American rivals.
“If Europe had its own ecosystem for smart devices, Huawei would use it... that would resolve the problem of European digital dependency” on the United States, Xu told German business daily Handelsblatt.
He added that his company would be prepared to invest in developing such joint European-Chinese projects.