Oil up on weak dollar though US-China tensions weigh

Oil up on weak dollar though US-China tensions weigh
A rancher walks past a pump jack in Loving County, Texas. Brent is on track for a fourth straight monthly gain in July and WTI is set to rise for a third month. (Reuters/File)
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Updated 28 July 2020

Oil up on weak dollar though US-China tensions weigh

Oil up on weak dollar though US-China tensions weigh
  • Hurt by domestic economic concerns, dollar index reaches its lowest since Sept. 2018

SINGAPORE: Oil prices edged higher on Monday helped by a weak dollar and expected US stimulus measures but gains were capped by rising global coronavirus cases and tensions between the United States and China.

Brent crude rose 32 cents, or 0.7 percent, to $43.66 a barrel, while US West Texas Intermediate (WTI) crude was up to $41.62 a barrel or 33 cents.

The US dollar index reached its lowest since September 2018, hurt by deteriorating US-China relations and domestic economic concerns as coronavirus infections showed no sign of slowing.

“Massive monetary stimulus has bullish implications for oil,” analysts from Raymond James said in a note, adding that oil prices have historically moved upwards with inflation spikes and that the current US money supply increase is unprecedented.

Oil price gains were capped by escalating China-US tensions following the closures of consulates in Houston and Chengdu. Global coronavirus cases, meanwhile, exceeded 16 million.

In Asia, fresh lockdowns were imposed and in Europe, Britain imposed a quarantine on travelers returning from Spain.

Brent is on track for a fourth straight monthly gain in July and WTI is set to rise for a third month. Helping are unprecedented supply cuts from the Organization of the Petroleum Exporting Countries and others including Russia.

Output has also fallen sharply in the United States although the US oil rig count rose last week for the first week since March.

Oil demand has improved from the deep trough of the second quarter, although the recovery path is uneven as resumption of lockdowns in the United States and other parts of the world is capping consumption.

“Oil appears to be caught between opposing forces, crushing price volatility and ranges,” said Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA.


Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier. (Shutterstock)
Updated 23 January 2021

Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
  • Spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday — the opening day of the event

PARIS: Emerging stronger from the COVID-19 pandemic, Asia is set to dominate this year’s virtual World Economic Forum as a virus-battered West struggles and a new US president faces particularly daunting challenges.

The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier.
While the coronavirus leaves a mounting death toll and upends economies, depriving millions of people of work, China and Asian countries in 2021 are making a strong comeback from the virus that hit them first.
In virtual format because of the pandemic, next week’s event is headlined: “A Crucial Year to Rebuild Trust.”
The spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday, the opening day of the event that will last through next Friday.
The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.
US President Joe Biden will not appear at the virtual Davos, which has never been a fixture on the White House calendar — even if the new administration has pledged to revive a US multilateral foreign policy after four years of Donald Trump’s America First approach.
Trump had been an exception as he stopped in Davos twice, with the real estate billionaire enjoying mixing with the global business elite.
Before him, Bill Clinton was the only American president who had traveled to Davos, and that was just once.
Showing up from Asia are China’s and South Korea’s presidents as well as the prime ministers of India and Japan.
Following the first virtual session, Davos will move in May to Singapore, far from the luxury Swiss ski resort where it has taken place since it was launched in 1971, the brainchild of German professor Klaus Schwab.
The stated reason for the changes is health safety.

FASTFACT

The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.

But a virtual forum is not particularly attractive for the world’s well-heeled movers and shakers, who value huddles behind closed doors in fancy hotels over meetings in formal settings.
French insurance-credit group Euler Hermes said in a study this month that the “world’s economic center of gravity” (WECG) has been moving toward Asia since 2002.
“The COVID-19 crisis could accelerate the shifting global balance toward Asia,” it added.
“By 2030, we forecast the WECG, could be located around the confluence of China, India and Pakistan,” the study projected.
The speech by Xi, who addressed Davos back in 2017, seems almost to set the clock back, as if the business world seeks to erase the Trump era.
Four years ago, he presented himself as the champion of free trade, much to the joy of Davos participants who feared the newly elected Trump’s protectionist moves.
Biden is nevertheless sending John Kerry, the special climate envoy who will be welcomed after the new Democratic president has brought Washington back into the Paris climate accord.
The agenda includes workshops titled: “Stakeholder Capitalism: Building the Future” as well as “Advancing a New Social Contract” and “Resetting Consumption for a Sustainable Future.”
In a column published in mid-January, Schwab said 2021 could be a positive and historic year, 75 years after the original “Year Zero” following the devastation of World War II.
“We once again have a chance to rebuild,” he said, calling for rethinking capitalism in the light of a pandemic that has worsened inequality.
He said “COVID-19 has delivered the final blow” to the post-war model where free markets and limited government produced prosperity and progress that now is “no longer sustainable, environmentally or socially.”