Oil rose yesterday as Saudi Arabia offered reassurance that OPEC would keep global crude markets in balance after concerns over the US-China trade dispute triggered the steepest monthly slump this year.
Futures gained 1.7 percent in New York after another plunge on Friday concluded last month’s 16 percent sell-off, which was driven by worries that the trade dispute would crimp fuel demand.
Saudi Arabian Minister of Energy and Industry Khalid al-Falih said that recent volatility was “unwarranted” and reiterated his confidence that OPEC and its allies will keep taking action to stabilize the market beyond this month.
Photo: Reuters
The trade tensions mean oil has moved close to the edge of a bear market, having fallen about 18 percent from a high in late April.
A tense situation in the Middle East has not been enough to support prices. There could be greater clarity this week on whether Russia will keep cooperating with Saudi Arabia on production cuts as ministers from the countries meet in St Petersburg, Russia.
“The market was overwhelmed by general bearish sentiment last week,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “Oil is not immune to global growth weakness but there is now a significant risk that the market is overselling.”
West Texas Intermediate (WTI) crude for July rose US$0.93 to US$54.43 a barrel on the New York Mercantile Exchange at 8:21am, after falling as much as US$1.39 earlier. The contract is now down about 18 percent from its closing high on April 23.
Brent for August settlement advanced US$0.66 to US$62.65 a barrel on London’s ICE Futures Europe exchange. The July contract closed 3.6 percent lower at US$64.49 before expiring on Friday. The global benchmark crude was trading at a premium of US$8.08 to WTI.
There could be a recession in nine months if the US imposes 25 percent tariffs on an additional US$300 billion of Chinese exports and Beijing retaliates, Morgan Stanley said.
Investors might still be underestimating the risks to the global economy from the trade dispute, Chetan Ahya, the bank’s chief economist, wrote in a note released on Sunday.
“I would like to reiterate my confidence, based on my discussions with several key producers, and on our track record, that we will do what is needed to sustain market stability beyond June,” al-Falih said in an interview with state-run Saudi Press Agency. “We have previously stated our commitment to do whatever it takes to stabilize markets and we have delivered on those promises. And I am making that commitment again.”
RISK REMAINS: An official said that with the US presidential elections so close, it is unclear if China would hold war games or keep its reaction to angry words The Ministry of National Defense said it was “on alert” as it detected a Chinese aircraft carrier group to Taiwan’s south yesterday amid concerns in Taiwan about the possibility of a new round of Chinese war games. The ministry said in a statement that a Chinese navy group led by the carrier Liaoning had entered waters near the Bashi Channel, which connects the South China Sea and the Pacific Ocean and separates Taiwan from the Philippines. It said the carrier group was expected to enter the Western Pacific. The military is keeping a close watch on developments and “exercising an
FIVE-YEAR WINDOW? A defense institute CEO said a timeline for a potential Chinese invasion was based on expected ‘tough measures’ when Xi Jinping seeks a new term Most Taiwanese are willing to defend the nation against a Chinese attack, but the majority believe Beijing is unlikely to invade within the next five years, a poll showed yesterday. The poll carried out last month was commissioned by the Institute for National Defense and Security Research, a Taipei-based think tank, and released ahead of Double Ten National Day today, when President William Lai (賴清德) is to deliver a speech. China maintains a near-daily military presence around Taiwan and has held three rounds of war games in the past two years. CIA Director William Burns last year said that Chinese President Xi Jinping
REACTION TO LAI: A former US official said William Lai took a step toward stability with his National Day speech and the question was how Beijing would respond US Secretary of State Antony Blinken yesterday warned China against taking any “provocative” action on Taiwan after Beijing’s reaction to President William Lai’s (賴清德) speech on Double Ten National Day on Thursday. Blinken, speaking in Laos after an ASEAN East Asia Summit, called the speech by Lai, in which he vowed to “resist annexation,” a “regular exercise.” “China should not use it in any fashion as a pretext for provocative actions,” Blinken told reporters. “On the contrary, we want to reinforce — and many other countries want to reinforce — the imperative of preserving the status quo, and neither party taking any
President William Lai (賴清德) yesterday said that China has “no right to represent Taiwan,” but stressed that the nation was willing to work with Beijing on issues of mutual interest. “The Republic of China has already put down roots in Taiwan, Penghu, Kinmen and Matsu,” Lai said in his first Double Ten National Day address outside the Presidential Office Building in Taipei. “And the Republic of China and the People’s Republic of China [PRC] are not subordinate to each other.” “The People’s Republic of China has no right to represent Taiwan,” he said at the event marking the 113th National Day of
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