Brent crude oil rises after hitting lowest this century on coronavirus crisis

A worker stands across a pumpjack operating in the desert oil fields of Sakhir in southern Bahrain. (AFP)
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Updated 22 April 2020

Brent crude oil rises after hitting lowest this century on coronavirus crisis

  • International benchmark Brent crude, which fell 24 percent in the previous session, touched $15.98 a barrel on Wednesday

LONDON: Brent crude oil rose on Wednesday after slumping below $16 a barrel to its lowest since 1999, supported by voluntary as well as the prospect of forced production cuts to tackle a glut caused by the coronavirus crisis.
This month, OPEC+ agreed new oil output curbs but global measures to prevent the virus spreading have driven demand down more steeply. The price drop is also expected to drive output curbs for economic reasons or due to a lack of storage.
International benchmark Brent crude, which fell 24 percent in the previous session, touched $15.98 a barrel on Wednesday, hitting its lowest since June 1999. By 1225 GMT, it had recovered to $19.72, up 39 cents or 2 percent.
US West Texas Intermediate was up 9 cents, or 0.8 percent, at $11.66.
“Overall, we are at price levels which will have a strong impact on production worldwide,” said Olivier Jakob, oil analyst at Petromatrix. “We are getting close to $5 a barrel for some crude grades.”
The prospect of supply outstripping demand for several months, at least, led to two of the wildest oil trading days in history this week. The nearby US contract fell into negative territory for the first time ever on Monday.
“Be prepared for more surprises in this broken oil market,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
Wednesday’s low for Brent took prices back to a time when OPEC was also tackling a supply glut and business and consumers were concerned — unnecessarily as it turned out — about the Millennium Bug affecting computers after the turn of the century.
In the latest sign of excess supply, the American Petroleum Institute on Tuesday reported that US crude inventories rose by 13.2 million barrels.
The US government’s official supply report is due later on Wednesday.
Although OPEC+ agreed this month to reduce output by 9.7 million bpd, starting from May, producers are already considering further steps.
Saudi Arabia on Tuesday said it was ready to take extra measures with other producers. Iraq made similar comments, although the next formal OPEC+ meeting is in June.
The United States and other countries also said this month they would pump less, bolstering efforts by OPEC+.
But in a development that raises doubt over a formal US supply cut, two of three Texas regulators on Tuesday delayed a vote to force producers to curtail output.


Thailand finance minister: economy to recover next year with 4% growth

Updated 23 November 2020

Thailand finance minister: economy to recover next year with 4% growth

  • Economy had bottomed but recovery was not fast as the battered tourism sector hurt supply chains
  • Budget for the next fiscal year will still focus on boosting domestic activity

BANGKOK: Thailand’s economy is expected to grow 4 percent in 2021 after a slump this year and fiscal policy will support a tourism-reliant economy struggling from the impacts of the coronavirus pandemic, the finance minister said on Monday.
Southeast Asia’s second-largest economy shrank a less than expected 6.4 percent in the third quarter from a year earlier after falling 12.1 percent in the previous three months.
The economy had bottomed but recovery was not fast as the battered tourism sector, which accounts for about 12 percent of gross domestic product (GDP), has also hurt supply chains, Finance minister Arkhom Termpittayapaisith said.
“Without the COVID, our economy could have expanded 3 percent this year, he said. “As we expect a 6 percent contraction this year, there is the output gap of 9 percent,” he told a business forum.
“Next year, we expect 4 percent growth, which is still not 100 percent yet,” Arkhom said, adding it could take until 2022 to return to pre-pandemic levels.
There is still fiscal policy room to help growth from this year’s fiscal budget and some from rehabilitation spending, he said.
The budget for the next fiscal year will still focus on boosting domestic activity, Arkhom said, and the current public debt of 49 percent of GDP was manageable.
Of the government’s 1 trillion baht ($33 billion) borrowing plan, 400 billion would be for economic revival, of which about 120 billion-130 billion has been approved, Arkhom said.
He wants the Bank of Thailand to take more action short term on the baht, which continued to rise on Monday, despite central bank measures announced on Friday to rein in the currency strength.
“They have done that and they have their measures... which should be introduced gradually and more intensely,” Arkhom said.