Oil traded near a 27-month high after growth in US and European manufacturing bolstered speculation the economic recovery would strengthen fuel demand.
Futures advanced 0.2 percent on Monday after the Institute for Supply Management’s US factory index climbed to the highest in seven months. European manufacturing also grew more than estimated, powered by an export-led expansion in Germany, the region’s largest economy.
US crude inventories probably fell a fifth week, a Bloomberg News survey showed.
“In the US and euro area, people are looking for any signs of recovery and for that to flow on to demand,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd in Melbourne, Australia.
The manufacturing data “would have had a positive impact. We’re looking at crude prices in the US$91 to US$92 a barrel range,” he said.
Crude for delivery next month was at US$91.47 a barrel in electronic trading on the New York Mercantile Exchange, down US$0.08, at 3:26pm Singapore time yesterday. On Monday, the contract rose US$0.17 to US$91.55, the highest settlement since Oct. 3, 2008, after peaking at US$92.58.
The US factory index climbed to 57 last month from 56.6 in November. A reading greater than 50 points to expansion.
Construction spending in the nation, the world’s biggest oil user, rose in November for a third month, boosted by US federal government projects, the US Commerce Department said on Monday.
Factory activity in the eurozone increased to 57.1 from 55.3 the previous month, London-based Markit Economics said. That’s higher than the 56.8 reported earlier for last month.
Hedge funds have raised bullish bets on crude to the highest level in more than four years on speculation that futures will continue to climb as the US economy recovers. Oil rallied 15 percent last year, adding to a 78 percent surge in 2009.
The funds and other large speculators increased net-long positions, or wagers on rising prices, by 4.6 percent in the seven days ended Dec. 28, according to the US Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the biggest total in records going back to June 2006.
Crude has advanced as US stockpiles shrink, signaling increased demand. Inventories are expected to have dropped for a fifth week last week, the longest decline since July 2009, -according to a Bloomberg News survey before an US Energy Department report today. Supplies fell 1.75 million barrels from 339.4 million in the week ended Dec. 31, based on the median estimate of eight analysts.
Gasoline stockpiles probably increased 50,000 barrels from 214.9 million, the survey showed. Distillate fuel inventories, including heating oil and diesel, may have climbed 625,000 barrels from 161 million. The industry-funded American Petroleum Institute, which collects stockpile information on a voluntary basis, was to issue its data yesterday.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to