Oil was on Friday buoyed by a wider risk rally driven by monetary and fiscal responses to the COVID-19 pandemic to head for its first weekly gain in five, despite a continued deterioration in demand.
Futures in New York edged higher toward US$23 per barrel and were up about 1 percent this week after losing more than half of their value since the middle of last month.
However, crude’s recovery looks fragile, given the extent of demand loss and the deluge of new supply following the breakup of the OPEC+ alliance.
The International Energy Agency said that oil consumption could fall by as much as 20 million barrels per day, while industry consultant IHS Markit Ltd said that the world would run out of places to store oil in as little as three months.
“Production is going to have to be reduced or even shut in. It is now a matter of where and by how much,” IHS Markit vice president and head of oil markets Jim Burkhard said.
The US is urging Saudi Arabia to dial back its plan to flood the crude market, but the window to pressure the kingdom and Russia might have already closed as demand evaporates at a record pace.
Any agreement on supply between the three biggest producers would likely be too little and too late, Goldman Sachs Group Inc said, forecasting that crude would fall to less than US$20 per barrel in the next two months.
“The Saudi-Russia price war being called off is now totally irrelevant,” Vanda Insights founder Vandana Hari said in Singapore. “It’s now all about how the pandemic affects demand.”
West Texas Intermediate for May delivery advanced 0.6 percent to US$22.73 per barrel on the New York Mercantile Exchange as of 7:29am in London after falling 7.7 percent on Thursday. The contract was up 1.3 percent this week, following a 58 percent collapse over the previous four weeks.
Brent crude for May delivery fell 1 percent to US$26.09 per barrel on the ICE Futures Europe exchange following a 3.8 percent drop on Thursday.
In another bad omen for oil prices, the US Department of Energy was forced to rescind an offer to buy from shale producers to top up emergency stockpiles after US President Donald Trump failed to win funding from the US Congress.
The purchases would have targeted small to medium-sized producers that have borne the brunt of the market meltdown.
Additional reporting by AFP and AP
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
RSS