The promise of billions of federal stimulus dollars did little to sway energy markets this week, with pessimistic investors focused on dour economic news that signaled the world’s appetite for energy will shrink further still.
Oil prices fell all but one day of the short trading week, including Friday, as economists voiced growing concerns about deflation.
Benchmark crude for March delivery fell US$0.54 to settle at US$38.94, on the New York Mercantile Exchange. That contract expired on Friday and there was a very low volume in trades.
Light, sweet crude for April delivery fell US$0.15 to US$40.03 a barrel.
“People are scared,” said Phil Flynn, an analyst at Alaron Trading Corp, who noted that gold prices rose above US$1,000 an ounce as investors looked for a safe place to put their money.
While Brent prices fell US$0.10 to settle at US$41.89 on Friday on the ICE Futures exchange in London, it was still trading at a premium to US benchmark crude, which is used to formulate gas in a limited Midwest market.
Investors digested woeful economic news all week including disappointing earnings reports by J.C. Penney and Lowe’s to end the week on Friday.
J.C. Penney Co reported a 51 percent drop in fourth-quarter profit as customers sharply cut spending on clothing and other more discretionary items. The department store chain also projected a wider first-quarter loss than analysts had predicted.
Home improvement retailer Lowe’s said its fourth-quarter profit dropped 60 percent after customers cut back on spending. Lowe’s earnings forecast for this year was worse than expected.
Flynn expects oil prices to eventually drop well below US$30 a barrel in coming months as manufacturers cut operations and millions of laid-off workers stop commuting to work.
“We’re getting ready for a tailspin, but you just don’t know what’s going to happen,” Flynn said. If it weren’t for the new federal stimulus package and promises of further OPEC production cuts, “we’d probably already be there.”
Trading on the NYMEX has been erratic because of a influx of “dumb money” entering the market, analyst Stephen Schork said.
Amateur investors are flocking to energy funds that have bet crude prices will eventually spike again.
“They’re looking at the fact that crude went to US$150 a barrel a year ago, and its in the 30s today,” Schork said. “They think it’s going back up.”
Oil prices jumped briefly on Thursday after the Energy Information Agency reported that crude inventories in US storage houses fell unexpectedly.
But Newedge analyst Antoine Halff said the drop came mostly from the Atlantic Coast.
Oil supplies in other areas continued to build as refineries cut back on gasoline production.
The inventory report “may actually be seen as profoundly bearish,” Halff said, noting that demand on the East Coast has been shrinking in recent months.
The US Department of Transportation said motorists drove 3.8 billion fewer miles (6.1 billion kilometers) in December than they did a year earlier. The 1.6 percent fall in driving marks the 14th consecutive monthly decline.
In other NYMEX trading, gasoline futures fell US$0.024 to settle at US$1.0746 a gallon (US$0.2839 per liter). Natural gas for March delivery slid US$0.076 to settle at US$4.01 per 1,000 cubic feet (US$0.1416 per cubic meter).
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