Oil on Friday extended its biggest monthly decline since May as concern over US-China trade tensions outweighed signs that OPEC’s supply cuts are trimming stockpiles.
Futures fell 2.8 percent in New York, extending last month’s slide to almost 6 percent.
Concerns about demand for swelling US production have been stoked as China prepared to start taxing US oil from today. US oil explorers, even as they cut drilling to a 19-month low, are producing record volumes of crude.
“It’s simply positioning ahead of the long weekend,” Mizuho Securities USA futures director Bob Yawger said in New York.
“If you were long, would you want to go home this weekend still long, with really no idea what kind of twitter feed the POTUS [president of the United States] is going to unload while you hanging out at the beach bar?” he added.
Oil remains under pressure as the outlook for the global economy continues to be weak and the US pumps out crude at record-high levels.
Furthermore, Russia earlier said that it was cutting production, but not as much as it had agreed to with OPEC and its allies. At the same time, there are signs that inventories are being drawn down.
US stockpiles fell in the week ended Aug. 23 to the lowest level since November last year, government data showed.
Beijing’s impending 5 percent tariff on US oil is particularly responsible for the recent weakness in West Texas Intermediate relative to Brent.
The US benchmark was fetching a US$5.49 per barrel discount to its global counterpart, the widest in nearly a month.
“The wider spread is a sign of the trade war,” said Rob Haworth, who helps oversee US$151 billion at US Bank Wealth Management in Seattle.
Chinese buyers would have to find alternatives, as US oil has become more expensive, he said.
“That will push up Brent prices, while weakening US oil,” he added.
West Texas Intermediate for delivery next month sank US$1.61 to settle at US$55.10 per barrel on the New York Mercantile Exchange.
Brent for settlement next month, which expired on Friday, fell US$0.65 to US$60.43 per barrel on the ICE Futures Europe Exchange. The more-active November contract sank US$1.24 to US$59.25.
Traders are also keeping an eye on Hurricane Dorian, which was expected to become a Category 4 storm and make landfall on Florida’s east coast, the first major hurricane to hit the area in 15 years.
Threats of the storm had already forced Chevron Corp to remove some nonessential staff from two of its platforms in the Gulf of Mexico.
In other energy trading, wholesale gasoline fell US$0.07 to US$1.61 per gallon and heating oil declined US$0.03 to US$1.83 per gallon, while natural gas fell US$0.01 to US$2.29 per 1,000 cubic feet.
Gold fell US$7.40 to US$1519.10 per ounce and silver rose US$0.02 to US$18.19 per ounce, while copper fell US$0.03 to US$2.53 per pound.
Additional reporting by AP
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts