Oil squeezed out a gain for the second straight week, but uncertainty around the US-China trade deal and fears of a resurgent pandemic limited the price rally.
Crude futures in New York fell 0.5 percent on Friday, but rose 1.9 percent for the week.
The US and China postponed talks planned for over the weekend that had been aimed at reviewing progress at the six-month mark of their “phase one” trade agreement, people familiar with the matter said.
Photo: Reuters
Meanwhile, a rebound in US retail sales slowed sharply last month amid a surge in COVID-19, and still-high unemployment cooled the economic recovery.
“If China headlines come out and there’s a problem with the meeting that’s going to happen, you could see a push down to the support levels,” for crude futures, said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC.
Still, US benchmark crude futures extended their rally to more than 4 percent in the past two weeks, with US crude stockpiles declining after imports from Saudi Arabia dropped and gasoline consumption rose.
Adding to support, some data points showed bright spots in the economic outlook, with US industrial production last month increasing for a third month.
However, growing signs of a resurgence of the novel coronavirus has highlighted the patchy recovery in oil consumption.
On Thursday, the International Energy Agency downgraded a majority of its demand forecasts for the next 18 months.
Meanwhile, the pace of well reactivations in the US has increased since last month, said Rystad Energy, potentially casting a further pall amid a stubborn supply overhang.
“There’s reasons to be optimistic,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures.
However, crude supplies are “one big spike away” from reversing the gradual recovery in prices “right back down,” he said.
The 3-2-1 refining margin for combined gasoline and diesel against West Texas Intermediate (WTI), which provides a rough gauge of profitability for processing a barrel of crude, is trading at its lowest seasonal level in almost a decade.
As the pandemic devastates air travel and depresses gasoline demand, weakness in the margin signals the decreasing appeal for refiners to buy up more crude.
At the same time, prompt spreads for WTI and Brent futures widened deeper into contango on Friday, signaling concerns of oversupply.
WTI for September delivery fell 0.54 percent to settle at US$42.01. The contract rose 1.92 percent for the week.
Brent Crude for October delivery dropped 0.36 percent to US$44.80, increasing 0.31 percent from a week earlier.
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
United Microelectronics Corp (UMC, 聯電) expects its addressable market to grow by a low single-digit percentage this year, lower than the overall foundry industry’s 15 percent expansion and the global semiconductor industry’s 10 percent growth, the contract chipmaker said yesterday after reporting the worst profit in four-and-a-half years in the fourth quarter of last year. Growth would be fueled by demand for artificial intelligence (AI) servers, a moderate recovery in consumer electronics and an increase in semiconductor content, UMC said. “UMC’s goal is to outgrow our addressable market while maintaining our structural profitability,” UMC copresident Jason Wang (王石) told an online earnings
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS