Oil rises as Saudi Arabia signals OPEC cuts to continue under new energy minister

In the US, drilling companies cut the number of operating oil rigs for a third week in a row last week. (Reuters)
Updated 09 September 2019

Oil rises as Saudi Arabia signals OPEC cuts to continue under new energy minister

  • Prices on Monday were also supported by a rise in oil imports in China in August
  • In the US, drilling companies cut the number of operating oil rigs for a third week in a row last week

TOKYO: Oil rose on Monday on expectations that Saudi Arabia, the world’s largest oil exporter, will continue to support output cuts by OPEC and other producers to prop up prices under new energy minister Prince Abdulaziz bin Salman.
Prices climbed for a fourth day and were also supported by comments from the United Arab Emirates’ energy minister that OPEC and its allies are committed to balancing the crude market.
Global benchmark Brent was up 53 cents, or 0.9 percent, at $62.07 a barrel by 0425 GMT, while US West Texas Intermediate was 57 cents, or 1 percent, higher at $57.09 a barrel.
Salman, a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), was named to the position on Sunday, replacing Khalid Al-Falih
“The change at the top doesn’t necessarily mean a shift in policy as much as it’s being viewed as a move to improve relations within OPEC and with non-OPEC producers in the wake of the latest Russian compliance fissures,” said Stephen Innes, Asia Pacific market strategist at Axi Trader.
Russia’s oil output in August exceeded its quota under the OPEC+ agreements.
Prices on Monday were also supported by a rise in oil imports in China in August, with shipments to the world’s biggest importer up 3 percent from July and nearly 10 percent higher in the first eight months of 2019 from a year earlier.
“With (refinery) maintenance season wrapping up, oil imports stayed buoyant. Attractive profit margins continue to favor higher imports; despite the industry burdened by higher products inventories,” ANZ Research said in a note.
In the US, drilling companies cut the number of operating oil rigs for a third week in a row last week.


Indian bank governor reiterates there is more scope to cut rates

Updated 16 min 42 sec ago

Indian bank governor reiterates there is more scope to cut rates

  • India’s monetary policy committee surprised markets and analysts this month by holding rates steady
  • India’s annual economic growth slowed to 4.5 percent in the July-September quarter, its weakest pace since 2013
MUMBAI: There is scope in India for cutting interest rates further and the central bank will use it when required after studying growth and inflation data, the Reserve Bank of India’s (RBI) governor, Shaktikanta Das, said on Monday.
The monetary policy committee (MPC) surprised markets and analysts this month by holding rates steady after trimming the key interest rate by 135 basis points since the beginning of the current rate reduction cycle in February.
“While taking a pause we very carefully and very definitely said there is space for further monetary policy action but the timing will have to be decided in a manner that its impact is optimum and its impact is maximized,” Das told a conference, the India Economic Conclave, organized by the Times media group.
Das said markets were surprised when the committee started cutting rates in February but subsequently accepted that it was right in doing so.
“And this time, the pause we have taken, I do hope that events will unfold in a manner which will prove that the MPC decision is right,” Das said.
He said both the government and the central bank had taken steps to help the economy recover but the outcome of events in the global economy would play a role.
Das said he hoped a recent trade deal between the United States and China would hold and not be reversed. The “Phase one” agreement reduces some US tariffs in exchange for a big jump in Chinese purchases.
“What is important in the current context is co-ordinated and timely action by all the advanced and emerging economies to revive growth,” he said.
“Growth is an issue of discussion in India and global growth is also an issue of discussion because that does impact. For a moment, I am not implying that slowdown that we have seen in India is entirely due to global factors, but it does impact growth prospects for India.”
India’s annual economic growth slowed to 4.5 percent in the July-September quarter, its weakest pace since 2013, putting pressure on Prime Minister Narendra Modi to speed up reforms as five rate cuts by the central bank have failed to boost investment.
Finance Minister Nirmala Sitharaman, while addressing the same conference, said the government was committed to reforms and was working on reviving growth. But she declined to say when she expected an improvement to come.
“I am not going to spend time saying when it is going to reverse ... As long as anybody wants the government to intervene, we shall intervene,” she said.
“We shall keep doing that until every sector feels that ‘OK, all right, we are on track now, we are moving forward’.”
Das also stressed the importance of communication for the markets and said the RBI had tried to be as clear and transparent as possible.
“Of course, communication should follow action and any communication should not be empty words, it should be followed by further action.”