Oil capped the biggest weekly loss since November last year after surging US supplies erased three months of gains that followed OPEC’s deal to cut output.
US crude stockpiles have expanded to a record for four straight weeks and output has climbed to the highest level in more than a year, government data showed on Wednesday.
Declines accelerated on Friday after a report showed US oil drilling rose for an eighth straight week.
US crude stockpiles inventories last week rose by 8.2 million barrels to 528.4 million, the highest level in weekly data compiled by the Energy Information Administration (EIA) since 1982.
Output advanced for a third week to 9.09 million barrels per day, the most since February last year, the EIA reported on Wednesday.
“The market is still digesting this week’s high inventory number,” Mark Watkins, the Park City, Utah-based regional investment manager for the Private Client Group at US Bank, which oversees US$136 billion in assets, said by telephone. “The shock number had the market test the US$50 band and then break through. The next two weeks should be volatile, with prices potentially falling to the US$45 level.”
West Texas Intermediate (WTI) for April delivery on Friday fell US$0.79, or 1.6 percent, to US$48.49 per barrel on the New York Mercantile Exchange. The contract lost 9 percent from last week’s US$53.33 per barrel. Total volume traded was 29 percent above the 100-day average.
Brent for May settlement declined US$0.82, or 1.6 percent, to US$51.37 per barrel on the ICE Futures Europe exchange in London.
It was also the lowest close since late November last year. The contract is down 8 percent from last week’s US$55.90. Brent ended the session at a US$2.34 premium to May WTI.
US oil rig count rose by eight to 617 this week, the highest since September 2015, according to Baker Hughes Inc data.
“The break of the band yesterday is a sign that the market was overbought,” Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone.
Oil market news:
‧ Oil output in the Permian Basin, which straddles the Texas-New Mexico border, will rise by 600,000 to 700,000 barrels per day in the year through December and “a lot of that” will be exported, Mike Loya, the head of Vitol in the Americas, said in an interview.
‧ BP PLC’s shares surged the most this year after a London newspaper reported on rumors that Exxon Mobil Corp sounded out major shareholders over a potential takeover.
‧ Implied volatility is climbing, typically an indicator that investors believe prices are set to fall and risk perception is worsening.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
‘SENSITIVE MARKETS’: The previously unannounced project would involve the company handing over control of data to a third party to sidestep privacy concerns Google has abandoned plans to offer a major new cloud service in China and other politically sensitive countries due in part to concerns over geopolitical tensions and the COVID-19 pandemic, two employees familiar with the matter said, revealing the challenges for US tech giants to secure business in those markets. In May, the search giant shut down the initiative, known as “Isolated Region” and which sought to address nations’ desires to control data within their borders, the employees said. The action was considered a “massive strategy shift,” said one of the employees, who added that Isolated Region had involved hundreds of employees
GOGOROS TO GO: The scooter maker’s CEO said that the electric vehicles ‘are the perfect complement to a program designed to stimulate the Taiwanese economy’ Minister of Economic Affairs Wang Mei-hua (王美花) yesterday announced a draw to encourage people to claim their Triple Stimulus Vouchers digitally. The prizes include movie tickets and 25 electric scooters donated by Gogoro Inc (睿能創意), Wang said. The Ministry of Economic Affairs said that it would hold a scooter draw every day for the next 10 days, beginning yesterday, after which there would be a draw every week for 15 weeks. The first winner was a Taiwan Cooperative Bank (合庫銀行) credit card user, the ministry said. The benefits of claiming the vouchers digitally extend beyond the draws, with many businesses offering special deals for