No intent to drive US shale out of business says OPEC chief

Mohammad Barkindo said OPEC had established a line of communication with US independent producers and thanked both the US and the G20 for helping to “restore communication" between OPEC+ producers. (Screengrab)
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Updated 09 July 2020

No intent to drive US shale out of business says OPEC chief

  • Mohammad Barkindo: There is no objective whatsoever from us as a group or as individual countries to drive US shale production out of business
  • Mohammad Barkindo: Without the US shale probably, we could have entered into a worse crisis than we are seeing in this pandemic

LONDON: OPEC Secretary Mohammad Barkindo said there was no aim to drive US shale oil producers out of business, after the price of US barrels briefly turned negative in April.
He was speaking in a CERAWeek interview ahead of next week’s OPEC+ market monitoring panel meeting. The Organization of the Petroleum Exporting Countries (OPEC) and other exporters including Russia are collectively known as OPEC+. In April the group agreed the single largest output cut in history in response to plunging oil prices that followed in the wake of the coronavirus pandemic.
“There is no objective whatsoever from us as a group or as individual countries to drive US shale production out of business,” said Barkindo. “No. It is not in our interest to do that. It is not in the interest of the global industry to do that. Without the US shale probably, we could have entered into a worse crisis than we are seeing in this pandemic.”

It costs more for US shale drillers to produce oil than their conventional counterparts in OPEC, so the slide in prices this year has had a devastating impact on that industry. The situation reaching crisis point on April 21 when storage space at Cushing in Oklahoma, the main delivery point for US light sweet crude oil, became full, forcing prices to turn negative for the first time ever.
Barkindo said OPEC had established a line of communication with US independent producers and thanked both the US and the G20 for helping to “restore communication" between OPEC+ producers.
Oil prices dipped on Thursday amid concerns about the renewed spread of the coronavirus in the US and other countries.
Brent crude was down about 0.2 percent to $43.20 in early afternoon trade in London while US WTI also dipped by about 0.7 percent to $40.59.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.