Oil recorded its biggest weekly gain in a month, after a volatile week marked by China loosening its COVID-19 restrictions and speculation about OPEC+ output policy.
Front-month volatility spiked to 53 percent earlier this week, the highest it has been since September, with crude trading in a US$10 range.
West Texas Intermediate (WTI) for December delivery dropped 1.53 percent to US$79.98 a barrel on Friday, but rose 4.85 percent from a week earlier.
Photo: Bloomberg
Brent crude for December delivery declined 1.51 percent to US$85.57 a barrel, posting a 2.32 weekly gain.
Speculation of OPEC+ output cuts sent crude swinging as traders tried to foretell what the cartel might decide over the weekend, while prices got a boost as China, facing extraordinary unrest, began to ease COVID-19 policies, aiding the outlook for energy consumption.
The gyrations have become too much for many traders to stomach. Open interest for WTI stands at its lowest since 2014.
Analysts expect the liquidity crisis to continue as positions continue to be closed out before year end.
Oil staged a sharp rebound this week after hitting its lowest level since last year on Monday, with demand prospects improving due to the scaling back of China’s “zero COVID” policy following protests.
The rally was aided by broader market sentiment reacting optimistically to signals from US Federal Reserve officials early in the week that the pace of interest rate hikes would slow.
However, the four-day rally on Friday came to a halt after bearish headwinds reasserted themselves into the market.
Faster-than-expected US employment growth figures reignited fears that the Fed would tighten further to slow down growth, while the EU agreed to a US$60 a barrel price cap on Russian oil.
The move is intended to allow Russian oil to keep flowing to global markets while limiting financial gains for Russian President Vladimir Putin.
Biden administration officials are trying to reassure oil market participants that the price cap will not trigger supply disruptions and price volatility after it kicks in tomorrow.
Those who watch the issue carefully have raised the risk of “over-compliance,” in which companies not prohibited by law from working in a given area nevertheless exit entirely because of concerns about contravening US policies, or for other reasons such as reputation risks.
A senior Treasury official acknowledged the unprecedented nature of the price cap during a call with reporters on Friday, but said that the US has tried to counter that by engaging extensively with industry players ahead of the implementation.
The countries in the price cap coalition have tried to make the policy as easy as possible to follow, the official said, speaking on condition of anonymity due to the sensitive nature of the talks.
Additional reporting by staff writer
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS