Oil prices slid on Friday after the collapse of a US automakers bailout plan heightened worries about slowing demand as the global financial crisis bites.
Light sweet crude for delivery in January dropped US$1.70 a barrel to close at US$46.28 on the New York Mercantile Exchange.
On London’s InterContinental Exchange, Brent North Sea crude for January slipped US$0.98 to settle at US$46.41 a barrel.
AFP
Oil prices had soared more than 10 percent Thursday on signs that OPEC and Russia would cooperate next week in cutting production to support sagging prices.
“The beginning of a commodity rally that had included oil, may come to a halt as a consequence of the crisis of confidence in the wake of the bailout failure,” MF Global analyst John Kilduff said.
A US$14 billion plan to rescue ailing US automakers collapsed in the US Senate late on Thursday, raising the prospect of imminent bankruptcy for General Motors and Chrysler with millions of jobs at stake. The news weighed heavily on global stock markets on Friday, in turn depressing commodity prices.
“Crude futures tracked equity markets lower” on Friday, said Nimit Khamar, an analyst at Sucden brokers.
“Risk aversion set in after the auto industry bailout hit a snag,” Khamar said.
OPEC is widely expected to announce an output cut at a meeting on Wednesday in a bid to bolster prices that have plunged from record highs above US$147 in July.
OPEC, which pumps 40 percent of world crude, has called on non-members to play a role in reducing output to stem the sharp slide in crude prices of the last five months.
Russia said on Thursday it was ready to join forces with OPEC to stem the plunge in prices and could even become part of the oil cartel if membership were in Moscow’s interests.
Russia ranks alongside Saudi Arabia, de facto leader of OPEC, as the world’s largest oil exporter.
“The auto bailout failure will raise the specter of a deep recession as the ripple effect off the automakers supply chain spreads out. The paucity of credit may contract further as a consequence of the vast amount of debt issued by the car companies’ finance arms,” Kilduff said.
“The Treasury will be required to issue even more debt to cover the cost of the social fallout from expanded welfare, unemployment benefits, and pension guarantees,” he said.
Kilduff said Goldman Sachs oil analysts were issuing alarms months ago “super-spikes” to US$200 a barrel.
Those analysts “have now adopted the conclusion that we came to earlier this week: that the market was in a process of ‘bottoming,’” he said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS