Oil posted a weekly decline as the escalating US-China trade dispute and swelling US stockpiles overshadowed tanker attacks in the Middle East.
Futures settled up 0.4 percent in New York on Friday, but still closed the week down 2.7 percent.
London-traded contracts slid for a fourth straight week.
Photo: AFP / Tasnim
The White House blamed Iran for tanker attacks near the Strait of Hormuz, the biggest global chokepoint for oil flows.
Meanwhile, the International Energy Agency said global supplies would swamp demand next year, further pressuring OPEC.
US crude stockpiles last week climbed to their highest since July 2017, sending futures to the lowest in almost five months.
The accumulation of excess supply runs counter to seasonal trends and adds to anxiety over the demand implications of the trade dispute, said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St Louis, Missouri.
“We’re seeing a backup in inventory, but what’s really crippling the market are demand concerns,” O’Grady said. “There is a negative effect for the world economy from the trade tensions.”
The market’s muted reaction to the tanker attacks might be because “there’s no way” Iran could fully halt the flow of crude through the Strait of Hormuz, said Michael Hiley, head of over-the-counter energy trading at LPS Futures in New York.
“A couple of mines on boats that are carrying things other than crude oil, is that really going to stop the flow of crude?” he said.
While a war in the Middle East would disrupt energy flows, the region is less important for global crude markets than it was a couple of decades ago due to the rise of US shale production.
Unless the situation escalates dramatically, the prospect of a prolonged trade spat between the US and China — the world’s two biggest economies — probably remains the key price driver.
West Texas Intermediate (WTI) for July delivery on Friday closed up US$0.23 at US$52.51 a barrel on the New York Mercantile Exchange, down 2.74 percent for the week. Prices have advanced 16 percent year to date.
Brent for August settlement rose US$0.70 to US$62.01 on London’s ICE Futures Europe exchange, down 2 percent for the week.
The global benchmark crude on Friday traded at a US$9.24 premium to WTI for the same month.
US officials released images that they said show Iran was involved in Thursday’s attacks on the tankers.
British Secretary of State for Foreign and Commonwealth Affairs Jeremy Hunt said the incidents posed a serious danger to the region and that it was almost certain that Iran’s Islamic Revolutionary Guard was involved.
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
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
RSS