Oil mixed on tighter supply, surge in American virus cases

An employee fills up a car at a gas station in Bangkok. (AFP)
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Updated 07 July 2020

Oil mixed on tighter supply, surge in American virus cases

  • Brent found some support as investors expected a string of improving economic data

LONDON: Oil prices were mixed on Monday, with Brent crude edging higher on tighter supplies and positive economic data, while US benchmark WTI futures dropped on concern that a spike in coronavirus cases could curb fuel demand in the US.

Brent crude was up 6 cents, or 0.1 percent, at $42.86 per barrel. US West Texas Intermediate (WTI) crude was down 40 cents, or 1 percent, at $40.25.

“We believe that oil market participants are focusing on the current demand trends but are still ignoring the long-term implications of the corona pandemic,” Commerzbank analyst Eugen Weinberg said.

“For now, data for several cities in affected states does not show a significant reduction in road traffic week-on-week,” analysts at ING bank said. Brent found some support as investors expected a string of improving economic data.

In China, the economy is recovering while its capital markets are attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial on Monday.

Traders were also keeping an eye on US nonmanufacturing activity and retail sales for the euro zone.

German data, however, showed that the recovery from COVID-19 will be slow and painful. 

Germany’s industrial orders rebounded moderately in May and a fifth of firms in Europe’s biggest economy said in a survey published on Monday they feared insolvency.

The implied volatility for Brent crude has dropped to its lowest since prices started collapsing in March.

Production by the Organization of the Petroleum Exporting Countries (OPEC) has fallen to its lowest in decades.

OPEC and other producers including Russia, collectively known as OPEC+, have agreed to lower output by a record 9.7 million barrels per day (bpd) for a third month in July.


Huawei: Smartphone chips running out under US sanctions

Updated 08 August 2020

Huawei: Smartphone chips running out under US sanctions

  • Huawei is at the center of US-Chinese tension over technology and security
  • Washington cut off Huawei’s access to US components and technology last year

BEIJING: Chinese tech giant Huawei is running out of processor chips to make smartphones due to US sanctions and will be forced to stop production of its own most advanced chips, a company executive says, in a sign of growing damage to Huawei’s business from American pressure.
Huawei Technologies, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. The feud has spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat.
Washington cut off Huawei’s access to US components and technology including Google’s music and other smartphone services last year. Those penalties were tightened in May when the White House barred vendors worldwide from using US technology to produce components for Huawei.
Production of Kirin chips designed by Huawei’s own engineers will stop Sept. 15 because they are made by contractors that need US manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.
“This is a very big loss for us,” Yu said Friday at an industry conference, China Info 100, according to a video recording of his comments posted on multiple websites.
“Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”
More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.
Yu said this year’s smartphone sales probably will be lower than 2019’s level of 240 million handsets but gave no details. The company didn’t immediately respond to questions Saturday.
Huawei, founded in 1987 by a former military engineer, denies accusations it might facilitate Chinese spying. Chinese officials accuse Washington of using national security as an excuse to stop a competitor to US tech industries.
Huawei is a leader among emerging Chinese competitors in telecoms, electric cars, renewable energy and other fields in which the ruling Communist Party hopes China can become a global leader.
Huawei has 180,000 employees and one of the world’s biggest research and development budgets at more than $15 billion a year. But, like most global tech brands, it relies on contractors to manufacture its products.
Earlier, Huawei announced its global sales rose 13.1 percent over a year ago to $65 billion in the first half of 2020. Yu said that was due to strong sales of high-end products but gave no details.
Huawei became the world’s top-selling smartphone brand in the three months ending in June, passing rival Samsung for the first time due to strong demand in China, according to Canalys. Sales abroad fell 27 percent from a year earlier.
Washington also is lobbying European and other allies to exclude Huawei from planned next-generation networks as a security risk.
In other US-Chinese clashes, TikTok’s owner, ByteDance, is under White House pressure to sell the video app. That is due to fears its access to personal information about millions of American users might be a security risk.
On Thursday, President Donald Trump announced a ban on unspecified transactions with TikTok and the Chinese owner of WeChat, a popular messaging service.