US oil futures in New York yesterday slid to the lowest in 12 years as turmoil in China’s markets pushed crude closer to US$30 a barrel.
Prices of West Texas Intermediate slid as much as 5.5 percent yesterday on concern that the economic slowdown in the world’s biggest commodity consumer is worsening.
China’s central bank reduced the onshore yuan’s fixing to the lowest since March 2011, triggering a sell-off that led to the closure of Chinese stock exchanges.
Prices of Brent oil will slump to US$30 in the next 10 days, Nomura Holdings Inc said.
UBS Group AG predicted that an oversupply would push prices even lower.
“The market trades on greed and fear, and right now fear dominates greed,” said Gordon Kwan (關榮樂), a Hong Kong-based analyst at Nomura.
FUTURES
“Commodity futures markets are always forward looking and they fear that the depreciation of the yuan foreshadows further weakness in the Chinese economy,” he said.
Oil prices capped the biggest two-year loss on record last year as OPEC effectively abandoned output limits amid a global glut.
Stockpiles at Cushing, Oklahoma, the delivery point for US benchmark crude, rose to a record, while nationwide stockpiles remained about 100 million barrels above the five-year average, according to US Energy Information Administration data.
West Texas Intermediate prices to be delivered next month fell as much as US$1.87 to US$32.1 per barrel — the lowest intraday level since Dec. 29, 2003 — on the New York Mercantile Exchange.
LONDON
Prices were at US$32.41 at 8:25am in London.
The contract lost 8.3 percent the previous three days to close at US$33.97 on Wednesday.
The most-traded options contract on Nymex gives holders the right to sell WTI futures for next month at US$30.
Brent prices for settlement next month fell as much as US$2.07 to US$32.16 per barrel on the London-based ICE Futures Europe exchange.
The contract dropped 6 percent to US$34.23 on Wednesday, the lowest close since June 2004.
The European benchmark was at a premium of US$0.2 cents to West Texas Intermediate.
The global economy will sputter along this year as China’s slowdown prolongs a commodity slump, the World Bank said on Wednesday.
FORECASTS
The Washington-based development bank lowered its forecast for this year’s growth to 2.9 percent, from a 3.3 percent projection in June, according to its Global Economic Prospects report.
The People’s Bank of China yesterday reduced the yuan’s fixing by 0.51 percent to 6.5646, the weakest since March 2011 and a reminder of the August cut that sparked turmoil in global financial markets.
Trading on the CSI 300 Index was suspended after it plunged more than 7 percent.
“Clearly the economic concern is a factor, but that doesn’t really explain everything,” said Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS’s wealth-management unit in Hong Kong.
“There is a weak backdrop given that the market is oversupplied. If there is continued build in inventory, the market will not be pleased and if the market loses patience then the next step is a bit below [US]$30,” Schnider said.
PROTECTIONISM: China hopes to help domestic chipmakers gain more market share while preparing local tech companies for the possibility of more US sanctions Beijing is stepping up pressure on Chinese companies to buy locally produced artificial intelligence (AI) chips instead of Nvidia Corp products, part of the nation’s effort to expand its semiconductor industry and counter US sanctions. Chinese regulators have been discouraging companies from purchasing Nvidia’s H20 chips, which are used to develop and run AI models, sources familiar with the matter said. The policy has taken the form of guidance rather than an outright ban, as Beijing wants to avoid handicapping its own AI start-ups and escalating tensions with the US, said the sources, who asked not to be identified because the
FALLING BEHIND: Samsung shares have declined more than 20 percent this year, as the world’s largest chipmaker struggles in key markets and plays catch-up to rival SK Hynix Samsung Electronics Co is laying off workers in Southeast Asia, Australia and New Zealand as part of a plan to reduce its global headcount by thousands of jobs, sources familiar with the situation said. The layoffs could affect about 10 percent of its workforces in those markets, although the numbers for each subsidiary might vary, said one of the sources, who asked not to be named because the matter is private. Job cuts are planned for other overseas subsidiaries and could reach 10 percent in certain markets, the source said. The South Korean company has about 147,000 in staff overseas, more than half
Taipei is today suspending its US$2.5 trillion stock market as Super Typhoon Krathon approaches Taiwan with strong winds and heavy rain. The nation is not conducting securities, currency or fixed-income trading, statements from its stock and currency exchanges said. Yesterday, schools and offices were closed in several cities and counties in southern and eastern Taiwan, including in the key industrial port city of Kaohsiung. Taiwan, which started canceling flights, ship sailings and some train services earlier this week, has wind and rain advisories in place for much of the island. It regularly experiences typhoons, and in July shut offices and schools as
CHEMICAL FIRE: 10 Indian employees were injured by smoke inhalation at a Tata Electronics plant in Tamil Nadu state that produces components for Apple Inc At least 10 people received medical treatment, with two hospitalized after a major fire on Saturday disrupted production at a key Tata Electronics Pvt Ltd plant in southern India that makes Apple Inc’s iPhone components. The fire occurred at the plant in the city of Hosur in Tamil Nadu state that makes some iPhone components. It broke out near another building inside the Tata complex, which was to begin producing complete iPhones in the coming months. The fire was contained to one building and has been extinguished fully, top district administrative official K.M. Sarayu said. No decision has been made on when
RSS