Oil rises on hopes for deeper OPEC output cuts, US-China trade talks

OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day. (AFP)
Updated 11 October 2019

Oil rises on hopes for deeper OPEC output cuts, US-China trade talks

  • OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day
  • Top US and Chinese negotiators wrapped up the first of two days of scheduled trade talks on Thursday

SEOUL: Oil prices climbed early on Friday, building on gains in the previous session, after producer club OPEC hinted at making deeper cuts in supply while optimism was revived over talks between the United States and China to end their trade war.
International benchmark Brent crude futures were at $59.26 a barrel by 0251 GMT, up 16 cents, or 0.3 percent, from their previous settlement. Brent settled up 1.3 percent at $59.10 a barrel on Thursday.
US West Texas Intermediate (WTI) crude futures rose 16 cents, also up 0.3 percent, from their last close to $53.71 per barrel. In the previous session, WTI settled 1.8 percent higher at $53.55 a barrel.
On Thursday Mohammad Barkindo, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), said all options were on the table, including a deeper supply cut to balance oil markets. A decision would be taken at a December meeting between the OPEC and its partners, he said.
OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day (bpd), while leaving its 2020 demand growth estimate unchanged at 1.08 million bpd, according to OPEC’s monthly report.
Beyond OPEC, trade talks between the United States and China also remained on the market’s radar as the world’s top two economies seek to resolve a more-than-a-year-long trade row that has slowed global economic growth and curbed fuel consumption.
“Oil bought into the upbeat tone from the bilateral talks as well, for better or for worse, and was also boosted by fighting talk on prices by the OPEC secretary-general,” said Jeffrey Halley, a senior market analyst at OANDA in Singapore.
Top US and Chinese negotiators wrapped up the first of two days of scheduled trade talks on Thursday, with business groups expressing optimism that the two sides might be able to ease tensions and delay a US tariff hike set for next week.
“The United States is the largest global consumer of oil while China, the biggest driver of year-on-year oil demand growth,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
“The most significant sentiment driver hinges on the outcome of the trade talks which, if (they) end on a positive note, could go a long way to begin to repair the economic damage done ... these economic powerhouses would need more oil,” said Innes.


Saudi Arabia spends more than $57 billion on coronavirus stimulus

Updated 27 min 25 sec ago

Saudi Arabia spends more than $57 billion on coronavirus stimulus

  • SAMA announced a SR50 billion package to support the private sector on March 14

RIYADH: Saudi Arabia spent more than SR214 billion ($57 billion) on 142 initiatives to tackle the impact of the coronavirus in the Kingdom, the Saudi Press Agency reported.

Initial measures undertaken by the government to provide a buffer were followed up by a royal decree this month to extend the support to the public and private sectors and to investors.

They included the suspension of some labor-related fines, wage protection measures and the postponement of the collection of customs duties on imports.

More than 650,000 people directly benefited from the package of measures aimed at individuals, according to the Ministry of Finance’s Communications and Financial Knowledge Center.

Businesses also received help in the form of extra time to file tax and zakat returns, while families on low incomes were given support in sectors that were hard hit such as ride-hailing transport services. About SR9 billion was allocated to more than 1.2 million citizens working for businesses affected by the pandemic.

In its Policy Responses to COVID-19 Tracker, the International Monetary Fund notes that Saudi Arabia has been hit by two shocks — “the spread of COVID-19 and the sharp decline in oil prices. Government policy is responding to both these developments.”

The Kingdom also implemented a number of fiscal measures with the Saudi Arabian Monetary Authority (SAMA) reducing its policy rates twice in March. SAMA announced a SR50 billion package to support the private sector on March 14, aimed particularly at SME’s by boosting banking sector liquidity.

The regulator instructed banks to delay repayment of loans for all Saudi employees by three months without extra fees and to provide finance to customers who lost their jobs.