Oil headed for its biggest weekly drop since 2008 as an unprecedented dual supply-demand shock showed no signs of abating.
Futures on Friday reversed a loss to rise, tracking a rebound in US equity futures, while a retaliatory US attack on an Iraqi militia might have lent some support. They were still down 21 percent this week as COVID-19 batters demand.
The schism between former OPEC+ allies appeared to harden as Russian oil producers said that they plan to ramp up production next month, while the Kremlin said that there are no plans for discussions with Saudi Arabia.
The kingdom earlier in the week said that it would boost output by more than 25 percent next month.
The deluge of new supply coinciding with evaporating demand threatens a major shakeout on the US shale patch and could destabilize the governments of some OPEC producers. It has pushed a gauge of oil volatility to record levels and sent Brent’s market structure into a super-contango, where prompt prices are more than US$10 per barrel cheaper than contracts for delivery in 12 months.
“That supply-side shock that we’re seeing is expected to start almost immediately,” Australia & New Zealand Banking Group Ltd senior commodities analyst Daniel Hynes said in a Bloomberg TV interview. “The market is still hopeful of some sort of stimulus-led recovery later in the year, so that’s why the back end of the curve is holding up relatively well.”
West Texas Intermediate futures for delivery next month rose 3.7 percent to US$32.65 per barrel on the New York Mercantile Exchange as of 7:28am on Friday in London after dropping as much as 3.7 percent earlier. They closed down 4.5 percent on Thursday.
Brent crude for May settlement on Friday added 3.3 percent to US$34.32 per barrel on the ICE Futures Europe exchange. The contract on Thursday plunged 7.2 percent and has fallen 24 percent this week. The global benchmark traded at a US$1.21 premium to West Texas Intermediate for the same month, near the narrowest since late 2016.
In the US, several independent oil companies have already announced plans to scale back operations amid the flood of cheap crude. The US industry is also encouraging the Trump administration to waive a law that mandates only domestic vessels can be used to transport goods between US ports.
The response from US drillers will not be enough to prevent a record crude production surplus of 6 million barrels per day next month, Goldman Sachs Group Inc said in a note.
Taiwan’s exports soared 56 percent year-on-year to an all-time high of US$64.05 billion last month, propelled by surging global demand for artificial intelligence (AI), high-performance computing and cloud service infrastructure, the Ministry of Finance said yesterday. Department of Statistics Director-General Beatrice Tsai (蔡美娜) called the figure an unexpected upside surprise, citing a wave of technology orders from overseas customers alongside the usual year-end shopping season for technology products. Growth is likely to remain strong this month, she said, projecting a 40 percent to 45 percent expansion on an annual basis. The outperformance could prompt the Directorate-General of Budget, Accounting and
The demise of the coal industry left the US’ Appalachian region in tatters, with lost jobs, spoiled water and countless kilometers of abandoned underground mines. Now entrepreneurs are eyeing the rural region with ambitious visions to rebuild its economy by converting old mines into solar power systems and data centers that could help fuel the increasing power demands of the artificial intelligence (AI) boom. One such project is underway by a non-profit team calling itself Energy DELTA (Discovery, Education, Learning and Technology Accelerator) Lab, which is looking to develop energy sources on about 26,305 hectares of old coal land in
Netflix on Friday faced fierce criticism over its blockbuster deal to acquire Warner Bros Discovery. The streaming giant is already viewed as a pariah in some Hollywood circles, largely due to its reluctance to release content in theaters and its disruption of traditional industry practices. As Netflix emerged as the likely winning bidder for Warner Bros — the studio behind Casablanca, the Harry Potter movies and Friends — Hollywood’s elite launched an aggressive campaign against the acquisition. Titanic director James Cameron called the buyout a “disaster,” while a group of prominent producers are lobbying US Congress to oppose the deal,
Two Chinese chipmakers are attracting strong retail investor demand, buoyed by industry peer Moore Threads Technology Co’s (摩爾線程) stellar debut. The retail portion of MetaX Integrated Circuits (Shanghai) Co’s (上海沐曦) upcoming initial public offering (IPO) was 2,986 times oversubscribed on Friday, according to a filing. Meanwhile, Beijing Onmicro Electronics Co (北京昂瑞微), which makes radio frequency chips, was 2,899 times oversubscribed on Friday, its filing showed. The bids coincided with Moore Threads’ trading debut, which surged 425 percent on Friday after raising 8 billion yuan (US$1.13 billion) on bets that the company could emerge as a viable local competitor to Nvidia
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