Oil prices steady as investors weigh demand concerns

The OPEC, Russia and other oil producers agreed in December to reduce supply by 1.2 million barrels per day from the start of this year. (AFP)
Updated 21 October 2019

Oil prices steady as investors weigh demand concerns

  • ‘Weakness in oil price reflected a bearish view of the global energy demand’
  • Economic headwinds are curbing bullish sentiment and fueling oil demand concerns

SINGAPORE: Oil prices largely held steady on Monday, recouping some early losses as investors took stock of global economic pressures that could impact oil demand.
Global benchmark Brent crude oil futures were down 1 cent to $59.41 a barrel by 0648 GMT.
US West Texas Intermediate crude oil futures were off 2 cents at $53.76 a barrel.
Signs of still ample global oil supply combined with concerns about economic growth in China, the world’s largest oil importer, pressured prices lower for a second session earlier on Monday.
“Weakness in oil price reflected a bearish view of the global energy demand, as the slowdown in manufacturing and trades seemed not to be ending anytime soon,” said Margaret Yang, market analyst at CMC Markets.
Russia, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output as the country prepared for winter.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other oil producers, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million barrels per day (bpd) from the start of this year.
Additionally, talks between OPEC members Kuwait and Saudi Arabia to restart oil production from joint fields in the Neutral Zone between the two countries, with capacity of 500,000 barrels per day could mean more supply returning to the market.
Kuwait’s deputy foreign minister on Saturday said negotiations were “very positive” after Kuwaiti media, citing unidentified sources, said the two Gulf oil producers had agreed to resume crude output from the oilfields.
But any increase in Neutral Zone production from will be compensated by a supply cut from other Saudi Arabian and Kuwaiti fields as both countries are committed to their targets under the OPEC+ output reduction agreement.
While market participants believe OPEC+ could decide to extend production cuts in an upcoming December meeting, economic headwinds are curbing bullish sentiment and fueling oil demand concerns.
China’s economic growth slowed to 6 percent year-on-year in the third quarter, its weakest in 27-1/2 years and short of expectations due to soft factory production and continuing trade tensions.
“OPEC-led supply curtailment policies though lending support has struggled to boost oil prices as markets fixate over persistent demand-side concerns,” Phillip Futures analyst Benjamin Lu said.
Still, a 9.4 percent year on year increase in China’s refinery throughput for September signaled that petroleum demand remained robust.


Alibaba confirms huge Hong Kong public listing worth at least $13bn

Updated 15 November 2019

Alibaba confirms huge Hong Kong public listing worth at least $13bn

  • Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade
  • Alibaba Chief Executive Officer said the group wanted to participate in Hong Kong’s future

HONG KONG: Chinese technology giant Alibaba on Friday confirmed plans to list in Hong Kong in what it called a $13 billion vote of confidence in the turbulent city’s markets and a step forward in its plans to go global.
The enormous IPO, which Hong Kong had lobbied for, will come as a boost for authorities wrestling with pro-democracy protests that have tarnished the financial hub’s image for order and security and hammered its stock market.
Alibaba will offer 500 million shares at a maximum of HK$188 apiece to retail investors, the company said. The number eight is considered auspicious in China.
Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade after insurance giant AIA raised $20.5 billion in 2010.
Alibaba had planned to list in the summer but called it off owing to the city’s long-running pro-democracy protests and the China-US trade war. The US and China are now working on sealing a partial trade deal.
Daniel Zhang, Alibaba Chief Executive Officer, said the group wanted to “contribute, in our small way, and participate in the future of Hong Kong.”
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” he said.
The firm’s shares are already traded in New York. A second listing in Hong Kong is expected to curry favor with Beijing, which has sought to encourage its current and future big tech firms to list nearer to home after the loss of companies such as Baidu to Wall Street.
In the statement, Zhang said that when Alibaba went public in 2014 it “missed out on Hong Kong with regret.”
Mainland authorities have also stepped up moves to attract such listings, including launching a new technology board in Shanghai in July.
The listing comes after the city’s exchange tweaked the rules to allow double listings, while Chief Executive Carrie Lam had also been pushing Alibaba’s billionaire founder Jack Ma to sell shares in the city.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said.
It has long been expected to launch a multibillion-dollar stock listing in Hong Kong but appeared to postpone the offering because of political and economic turmoil.
Hong Kong’s key Hang Seng Index rose 0.48 percent in morning trading following the announcement
Chinese shoppers set new records for spending on Monday’s annual 24-hour “Singles’ Day” buying spree, despite an economic slowdown in the country and the worries over the US trade war.
It said consumers spent $38.3 billion on its platforms over that stretch, up 26 percent from the previous all-time high mark set last year.
Alibaba also said it saw record amounts of cross-border sales, underlining its plans to expand globally.
“Globalization is the future of Alibaba Group. We firmly believe the marriage of digital technology and commerce will bring about unprecedented change that will not be limited by borders,” Zhang said.