Oil rises on stronger financial markets, expectations of extended supply cuts

Global crude oil demand growth could drop below 1 million barrels per day in 2019, energy consultancy FGE said. (AFP)
Updated 11 June 2019

Oil rises on stronger financial markets, expectations of extended supply cuts

  • Crude oil futures on Tuesday were pushed up by a broader lift in financial markets
  • Russia said on Monday it might support an extension of supply cuts that have been in place since January

SINGAPORE: Oil prices rose on Tuesday in line with firmer financial markets and bolstered by expectations that producer group OPEC and its allies will keep withholding supply.
Front-month Brent crude futures, the international benchmark for oil prices, were at $62.71 at 0630 GMT, 42 cents, or 0.7 percent, above Friday’s close.
US West Texas Intermediate (WTI) crude futures were at $53.85 per barrel, 59 cents, or 1.1 percent, above their last settlement.
Prices fell by around 1 percent in the previous session and crude futures are down by some 20 percent from their 2019 peaks in late April, dragged lower by a widespread economic downturn that has started to impact oil consumption.
Traders said crude oil futures on Tuesday were pushed up by a broader lift in financial markets after Beijing eased financing rules to stem an economic downturn.
On the production side, Russia said on Monday it might support an extension of supply cuts that have been in place since January, warning oil prices could fall as low as $30 per barrel if producers supply too much crude.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russia, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices.
OPEC+ is due to meet in late June or early July to decide output policy for the rest of the year.
“Without OPEC+ adherence to supply discipline in the deteriorating environment prices would drop to $40 in a heartbeat, which suggests the extension deal is a lock,” said Stephen Innes, managing partner at Vanguard Markets.
Energy consultancy FGE said global crude oil demand growth could drop below 1 million barrels per day (bpd) in 2019, down from previous expectations of 1.3 to 1.4 million bpd.
“This effectively gives us an extra 300,000-400,000 barrels per day of supply,” said FGE chairman Fereidun Fesharaki.
Despite Tuesday’s stronger markets, concerns about the health of the global economy remained.
“With China slowing, the EU sickly and the US data starting to wobble, an economic downturn remains a clear and present danger,” said Innes.


Germany mulls how to attract skilled labor from outside EU

Updated 54 min 23 sec ago

Germany mulls how to attract skilled labor from outside EU

  • The new legislation will take effect March 1
  • German official said shortage of skilled workers is currently biggest risk to business

BERLIN: Chancellor Angela Merkel is meeting top German business and union officials on Monday to discuss how to attract skilled workers from outside the European Union as the country tries to tackle a shortfall of qualified labor.
Legislation is due to take effect March 1 making it easier for non-EU nationals to get visas to work and seek jobs in Germany. Arrangements currently applied to university graduates are being expanded to immigrants with professional qualifications and German language knowledge.
“Many companies in Germany are urgently seeking skilled workers, even in times of a weaker economy,” Eric Schweitzer, the head of the Association of German Chambers of Commerce and Industry, told the Funke newspaper group. “For more than half of companies, the shortage of skilled workers is currently the biggest risk to business.”
He called for “unbureaucratic and effective implementation” of the new legislation.
Sectors including information technology and nursing have complained of a shortage of workers.
Monday’s meeting will discuss which countries German business wants to focus on “and we will cut out the bureaucratic hurdles,” Labor Minister Hubertus Heil told RBB Inforadio. He named as examples the process of recognizing professional qualifications, language ability and visa procedures.
Like many other European countries, Germany is trying to strike a balance between the needs of its labor market, an aging native population and concern about immigration.
Heil said that the aim isn’t to undercut German wages and “our problem at the moment is rather that we are not being overrun, that we are not getting qualified workers.”