Oil steady as virus fears counter positive factory data

Oil pump jacks are seen in McKenzie County, in western North Dakota. Over the past month, Brent crude oil has been trading in a range between $41 and almost $45. (AP/File )
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Updated 04 August 2020

Oil steady as virus fears counter positive factory data

  • Fears over rising COVID-19 cases weigh on market; euro zone manufacturing activity expands modestly

LONDON: Oil prices steadied on Monday as rising COVID-19 cases around the globe and oversupply worries fueled by the prospect of OPEC and its allies winding back output cuts were offset by positive industry data in Europe and Asia.

Brent crude rose 5 cents, or 0.1 percent, to $43.57 a barrel by while US West Texas Intermediate crude gained 6 cents, or 0.1 percent, to $40.33.

Over the past month, Brent has been trading in a range between $41 and almost $45.

“Oil continues to trade in an incredibly rangebound manner,” said Warren Patterson, ING’s head of commodities strategy.

“Speculators appear to be getting more nervous about the demand recovery, with the path much more gradual than market expectations coming into the second half of the year.”

Coronavirus cases have continued to climb in the United States and have reached almost 18 million globally, with more countries imposing new restrictions or extending existing curbs in an effort to control the pandemic. While fuel demand recovers slowly in the face of the resurgence of the virus, investors are also worried about oversupply as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, prepare to ease oil supply cuts from August.

“Concerns appear to be developing that a rise in OPEC+ production will coincide with uneven recovery in oil demand due to localized setbacks following secondary waves of COVID outbreaks,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.

OPEC+ members have been cutting output since May by 9.7 million barrels per day (bpd). From this month cuts will officially taper to 7.7 million bpd until December.

Russian oil and gas condensate output increased to 9.8 million bpd over Aug. 1-2, from 9.37 million bpd in July, a source familiar with data said on Monday.

Oil prices fell earlier in the session but found some support after a survey showed manufacturing activity across the eurozone expanded last month for the first time since early 2019. 

Positive manufacturing data in Asia also helped to support oil prices.

A Reuters poll on Friday indicated that oil is set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, though a second COVID-19 wave could slow the pace of a recovery.

Bosnia enters olive oil market with award-winning ‘liquid gold’

Updated 30 October 2020

Bosnia enters olive oil market with award-winning ‘liquid gold’

LJUBUSKI, Bosnia: Blessed with sunshine, virgin land and ample ground water, southern Bosnia is breaking into the olive oil market, winning medals and helping put the country on the map for “liquid gold.”

“When I started to plant olive trees, I was told: ‘You’re crazy’,” recalls Dragan Mikulic, 65, who runs a 50-hectare orchard in Ljubuski, in Bosnia’s southern Herzegovina region.

After little over a decade, he has become one of the top olive growers in the Balkans.

Wedged between high mountains to the north and the Adriatic Sea to the south, the grove’s 7,000 trees stand in perfect rows beneath sunny skies.

“Look at this sun. It’s like this all the time. The water coming down from these mountains passes through here, on its way to the sea,” Mikulic says.

“The soil consists of 30-percent sandy earth in which the trees breathe, and 70-percent stone, rich in minerals. It’s all here.”

‘With a gracious climate, uncontaminated soil and water, Herzegovina has unimaginable possibilities for the development of olive growing.’

Miro Barbaric Agriculture expert

But it was not that easy at the start.

Recalling the “madness” of the early days, he describes having to use “tons of explosives” to break up a rocky patch of scrubland and turn it into a flat surface where he could plant the trees.

“We chose the olive because it is, as we say here, the tree of God,” adds Mikulic, whose oil in recent years has won 32 gold medals in competitions in Italy, Croatia and Bosnia.

Other producers have now followed in his footsteps.

Officially, 776 tons of olives were harvested in Bosnia last year, 27 percent more than the previous year.

The industry is still small compared to neighboring Croatia, the regional leader.

But “with a gracious climate, uncontaminated soil and water,” Herzegovina has “unimaginable possibilities for the development of olive growing,” says Miro Barbaric, an agriculture expert from the Bosnian Agro-Mediterranean Institute.

Access to underground water has only been possible over the last 15 years thanks to new drilling techniques.

But it is key to the growth of this new crop in the region, once home mainly to tobacco.

Due to the lack of rain, the olive trees need between 150 and 200 liters of water per day, according to Mikulic, who has drilled two boreholes in his olive grove and installed a drip irrigation system.

His neighbor Jure Susac, a 66-year-old winegrower who also has olive trees now, says he drilled a borehole nearly 300 meters deep.

“I know that the olive loves a lot of water. I have plenty of it. The pump never stops working,” Susac says.

“And, voila,” he adds, pointing to the bunches of plump green olives on the trees “in excellent health” in his orchard, just a few days before the October harvest.

Susac has also won medals for his trees, the majority of which are bearing olives this year.

Hailing the turnout as “exceptional,” he hopes to squeeze out more than 500 liters of oil from them.

In every competition he entered with his oil, he won the gold medal, Susac says. “We are now often ahead of the Croatians.”