Oil prices steady as investors weigh demand concerns

The OPEC, Russia and other oil producers agreed in December to reduce supply by 1.2 million barrels per day from the start of this year. (AFP)
Updated 21 October 2019

Oil prices steady as investors weigh demand concerns

  • ‘Weakness in oil price reflected a bearish view of the global energy demand’
  • Economic headwinds are curbing bullish sentiment and fueling oil demand concerns

SINGAPORE: Oil prices largely held steady on Monday, recouping some early losses as investors took stock of global economic pressures that could impact oil demand.
Global benchmark Brent crude oil futures were down 1 cent to $59.41 a barrel by 0648 GMT.
US West Texas Intermediate crude oil futures were off 2 cents at $53.76 a barrel.
Signs of still ample global oil supply combined with concerns about economic growth in China, the world’s largest oil importer, pressured prices lower for a second session earlier on Monday.
“Weakness in oil price reflected a bearish view of the global energy demand, as the slowdown in manufacturing and trades seemed not to be ending anytime soon,” said Margaret Yang, market analyst at CMC Markets.
Russia, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output as the country prepared for winter.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other oil producers, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million barrels per day (bpd) from the start of this year.
Additionally, talks between OPEC members Kuwait and Saudi Arabia to restart oil production from joint fields in the Neutral Zone between the two countries, with capacity of 500,000 barrels per day could mean more supply returning to the market.
Kuwait’s deputy foreign minister on Saturday said negotiations were “very positive” after Kuwaiti media, citing unidentified sources, said the two Gulf oil producers had agreed to resume crude output from the oilfields.
But any increase in Neutral Zone production from will be compensated by a supply cut from other Saudi Arabian and Kuwaiti fields as both countries are committed to their targets under the OPEC+ output reduction agreement.
While market participants believe OPEC+ could decide to extend production cuts in an upcoming December meeting, economic headwinds are curbing bullish sentiment and fueling oil demand concerns.
China’s economic growth slowed to 6 percent year-on-year in the third quarter, its weakest in 27-1/2 years and short of expectations due to soft factory production and continuing trade tensions.
“OPEC-led supply curtailment policies though lending support has struggled to boost oil prices as markets fixate over persistent demand-side concerns,” Phillip Futures analyst Benjamin Lu said.
Still, a 9.4 percent year on year increase in China’s refinery throughput for September signaled that petroleum demand remained robust.


UBS fined $51 million by Hong Kong regulator for overcharging clients

Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: Swiss bank UBS was fined HK$400 million ($51.09 million) by Hong Kong’s securities regulator for overcharging up to 5,000 clients for nearly a decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said in a statement that an investigation found UBS had overcharged clients on ‘post-trade spread increases’ and charges in excess of standard disclosures and rates between 2008 and 2017.
THE SFC said the investigation exposed ‘serious systemic internal control failures’ at the bank. UBS had failed to disclose conflicts of interests and had overcharged some clients in ‘opaque’ trades, it said.
The overcharging affected 5000 Hong Kong managed client accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the SFC said.
The regulator said the over-charging occurred in the bank’s wealth management division on bond and structured notes transactions.
UBS was found to have increased the spread charged after the execution of a trade without the clients’ knowledge, it said.
In the statement, the SFC said UBS was also found to have falsified some account statements which were issued to financial intermediaries who were authorized to trade for the clients to “conceal the overcharges.”
UBS said the issues were ‘self-reported’ to the SFC and the results found were against the bank’s standard practice.
“The relevant conduct predominantly relates to limit orders of certain debt securities and structured note transactions, which account for a very small percentage of the bank’s order processing system,” the bank said in a statement.
SFC chief executive Ashley Alder said while each “overcharge represented a fraction of each trade” the bank’s “misconduct involved decisions and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
In March, the SFC banned UBS from leading initial public offerings in Hong Kong for a year after it found the bank, and some of its rivals, had failed to carry out sufficient due diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined HK$224 million, Merrill Lynch HK$128 million and Standard Chartered (StanChart) HK$59.7 million, all for failures when sponsoring, or leading, public market floats.