Oil prices climb as positive China factory data eases demand concerns

The Caixin/Markit Manufacturing Purchasing Managers’ Index for September expanded for a second straight month as Chinese factories ramped up production and new orders rose. (AFP)
Updated 30 September 2019

Oil prices climb as positive China factory data eases demand concerns

  • The Caixin/Markit Manufacturing PMI for September expanded for a second straight month as Chinese factories ramped up production

SINGAPORE: Oil prices edged up on Monday after China’s factories unexpectedly ramped up production in September, easing concerns about demand at the world’s largest crude importer amid an ongoing trade war with the United States.
Brent crude futures rose 9 cents to $62 a barrel by 0300 GMT while US West Texas Intermediate (WTI) crude futures rose 13 cents to $56.04 a barrel.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for September expanded for a second straight month as Chinese factories ramped up production and new orders rose, beating market expectations.
“The Caixin data was a real surprise and should be positive for Asia’s markets today,” said Jeffrey Halley, OANDA senior analyst in Singapore.
He added that the data would need to post similar results over the next few months to point to a China oil demand growth recovery. The country is the world’s second largest oil user.
Brent is set to rise 2.6 percent in September, its first monthly gain since June, with prices lifted by an unprecedented attack on Saudi’s oil facilities on Sept. 14 that reduced its production by half. WTI is set to rise 1.7 percent this month.
World’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day, sources told Reuters last week although Saudi Aramco has yet to confirm it is fully back online.
“Most of this is already priced in when the Saudis said they were going to do it (resume production) fast,” said Avtar Sandu, a senior commodities manager at Phillip Futures in Singapore.
While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, how much of it is actually restored could only be determined in the next few weeks, he added.


World Bank chief tells China it needs ‘vital’ reforms

Updated 21 November 2019

World Bank chief tells China it needs ‘vital’ reforms

BEIJING: World Bank chief David Malpass urged China on Thursday to further open up its economy and reduce state subsidies, echoing key demands made by the United States in protracted trade war negotiations.

Malpass made the remarks after a roundtable meeting with Chinese Premier Li Keqiang and the heads of other global institutions, including the International Monetary Fund and the World Trade Organization.

“I encouraged new reforms and liberalization,” he said.

Beijing is struggling to kickstart the economy, which expanded at its slowest pace for nearly three decades in the third quarter amid cooling global demand for its exports and a looming debt crisis at home.

Malpass said Beijing must resolve bilateral trade disputes and improve transparency in lending to avoid a sharp downturn on growth over the coming decades.

“China could improve the rule of law, allow the market to play a more decisive role in allocating resources including debt and investment, reduce subsidies for state-owned enterprises... and remove barriers to competition,” he said.

“It is hard to achieve but it is vital for reducing any inequality and building higher living standard,” Malpass said.

State-owned behemoths dominate lucrative sectors of China’s economy — including energy, aviation and telecommunications — where access to private players is restricted.

China’s trade partners have also long complained about the lack of an equal playing field and theft of intellectual property.

The country’s rubber-stamp parliament in March passed a foreign investment law that promises to address these issues, but local governments are still working on detailed rules needed to implement it.

Li said both domestic and foreign companies registered in China will be treated equally.

“They will have equal access to investment opportunities, equitable access to resources, legal protection in accordance with the law,” he said.

Beijing has also announced a timetable to open up its financial sector to foreign investors next year, as it attempts to woo outside capital to shore up an economy battered by the trade war with the United States.

China and the US have slapped tariffs on over $360 billion worth of goods in two-way trade.

Negotiators from both sides have been working toward a partial deal, but US President Donald Trump on Wednesday said Beijing has not made sufficient concessions, making him reluctant to conclude a bargain.

Economic data shows the uncertainty created by the trade spat between the world’s two biggest economies is undermining global growth.

IMF chief Kristalina Georgieva warned that implementing all the announced tariffs would cut $700 billion out of the world economy next year.

“What should be our priorities? First, to move from trade truce to trade peace,” she said.