Oil prices fall as supply concerns ease

The field center of the Johan Sverdrup oil field in the North Sea, west of Stavanger. Brent crude fell 1.3 percent, to $42.28 a barrel on Monday and US West Texas Intermediate was down 60 cents. (AFP)
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Updated 13 October 2020

Oil prices fall as supply concerns ease

  • US producers begin restoring output after Hurricane Delta; Norwegian strike affecting production ends

LONDON: Oil prices fell on Monday as force majeure at Libya’s largest oilfield was lifted, a Norwegian strike affecting production ended and US producers began restoring output after Hurricane Delta.

Brent crude fell 57 cents, or 1.3 percent, to $42.28 a barrel and US West Texas Intermediate was down 60 cents, or 1.5 percent, at $40.00.

“It’s all about ending production disruptions ... (which) are not helpful in a period with ongoing demand concerns,” said UBS oil analyst Giovanni Staunovo.

Production in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), is expected to rise to 355,000 barrels per day (bpd) after force majeure at the Sharara oilfield was lifted on Sunday.

Rising Libyan output will pose a challenge to OPEC+ — a group comprising OPEC and allies including Russia — and its efforts to curb supply to support prices.

“If oil demand recovery continues to struggle due to new or stricter COVID-related mitigation measures, the (OPEC+) producer group may need to reconsider the planned tapering of their voluntary supply cuts,” said BNP Paribas analyst Harry Tchilinguirian.

Front-month prices for both contracts gained more than 9 percent last week in the biggest weekly rise for Brent since June. But both fell on Friday after Norwegian oil companies struck a deal with labor union officials to end a strike that had threatened to cut the country’s oil and gas output by close to 25 Friday.

Hurricane Delta, which inflicted the biggest blow in 15 years to energy production in the US Gulf of Mexico, was downgraded to a post-tropical cyclone at the weekend.

Workers headed back to production platforms on Sunday and French oil major Total was working to restart its 225,500 barrel per day Port Arthur refinery in Texas.

Prices were also pressured by a jump in new COVID-19 cases, which has raised the spectre of more lockdowns.

Infections are at record levels in the US Midwest.

Goldman Sachs, meanwhile, said that the outcome of the US presidential election would not impact its bullish oil and natural gas outlook and that an overwhelming Democratic victory could be a positive catalyst for these sectors.


Researchers say new model shows Turkish inflation well above official tally

Updated 22 October 2020

Researchers say new model shows Turkish inflation well above official tally

  • Since last year, opposition lawmakers have raised questions about the accuracy of official inflation data
  • Year-on-year inflation was 11.75% according to the official tally announced earlier this month

ISTANBUL: Turkish monthly inflation was more than triple the official rate in September, according to a new model developed by a group of academics and researchers based on more frequent data than the government statistics office.
Veysel Ulusoy, a professor at an Istanbul-based university and head of the independent Inflation Research Group (ENAG), said the model collects “several times more” price data than the official Turkish Statistical Institute (TUIK) tally, and is meant to complement it.
Since last year, opposition lawmakers have raised questions about the accuracy of official inflation data, arguing that the published rate was lower than the market realities.
According to ENAG’s first published finding, consumer prices in September rose 3.61% from the previous month, compared to TUIK’s calculation of 0.97% increase.
Year-on-year inflation was 11.75% according to the official tally announced earlier this month. ENAG has not yet published a year-on-year figure.
TUIK was not immediately available for comment.
“We observed price differences and volatility in almost all groups in the basket,” Ulusoy said in an interview. ENAG brings together academics from multiple Turkish universities.
“TUIK collects 550,000 prices for all the basket items in a month. ENAG calculations include several times more than that, constructing a richer set of data,” Ulusoy said.
Turkish annual inflation has remained in double digits this year despite a sharp economic contraction in the second quarter due to the coronavirus pandemic. High prices and a record low lira prompted the central bank to raise interest rates last month, and it is expected to hike again on Thursday.
The ENAG model can calculate inflation as frequently as every hour, meaning it can fill gaps for researchers and investors, Ulusoy said. It weighs items in the same way as TUIK, but excludes price data from health, education spending and alcoholic drinks.
The September calculation showed that school-related items had the most price spikes including computers, tablets and mobile phones, as well as children’s’ clothing and some agricultural goods.
Ulusoy said the ENAG model showed that tablets and computer prices were up more than 30% in September from August due to school reopenings, while TUIK put these items at around 4% month-on-month.
Last year opposition parties submitted parliamentary questions to Finance Minister Berat Albayrak over claims that TUIK tweaked inflation data for political reasons, claims dismissed as groundless by the head of the institute.