Oil extended its retreat from a seven-week high and Asian energy shares declined, while the dollar weakened versus major peers as traders weighed prospects for a U.S. interest-rate hike this year. European equity index futures advanced.
Crude sank below $47 a barrel in New York, dragged down by possible increases in supplies from Iraq and Nigeria, and the MSCI Asia Pacific Energy Index of shares fell for a fourth day. The Bloomberg Dollar Spot Index snapped its biggest two-day advance in a month as South Korea’s won led gains in emerging markets. New Zealand’s currency strengthened after its central bank said the pace of interest-rate cuts in the nation will be gradual. U.S. Treasury bond volatility was near a 20-month low.
Financial markets have been dominated over the past week by speculation about the timing of the Federal Reserve’s next increase in borrowing costs and an air of caution is evident before Chair Janet Yellen speaks Friday at an annual symposium in Jackson Hole, Wyoming. Regional Fed presidents including William Dudley and John Williams indicated last week that a rate hike could come as soon as next month, while futures prices indicate a 51 percent chance of such a move this year.
“With investors waiting for Yellen, it’s unlikely that we’ll see a strong direction in the stock market,” said Toshihiko Matsuno, a senior strategist with SMBC Friend Securities Co. in Tokyo. Still, “oil, which had been rebounding, has started to correct again,” dragging down commodity-related shares, he said.
Preliminary gauges of this month’s manufacturing activity in the euro area and the U.S. are scheduled for release on Tuesday, while central banks in Turkey and Hungary have policy meetings. A report is also forecast to show sales of new homes in America held near an eight-year high in July.
West Texas Intermediate crude for October delivery slid 1 percent to $46.92 a barrel as of 7:05 a.m. London time. Militants in Nigeria have made a proposal to end hostilities, a development that could boost the nation’s oil output, and Iraq is in the process of boosting crude exports by about 5 percent.
WTI crude jumped 9.1 percent last week, buoyed by speculation that informal talks among major producers next month will bring about an output freeze.
“We’re seeing a bit of profit-taking,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “There is still plenty of supply around. It wouldn’t be surprising to see this downtrend continue and it’s possible we could see some sort of basing around $44 to $45 a barrel.”
Gold held near a one-week low, while silver added 0.6 percent. Zinc advanced as much as 1.2 percent in London after Morgan Stanley said it was bullish and that demand from China’s steel industry would continue to support the price. The metal, which is used to galvanize steel, has surged more than 40 percent this year.
A gauge of energy stocks on the MSCI Asia Pacific Index was down 0.9 percent, the biggest loss among 10 industry groups. Cnooc Ltd., China’s biggest offshore oil and gas producer, dropped by 1.2 percent.
Japan’s Topix index fell for the first time in three days, while Australia’s S&P/ASX 200 Index advanced to a two-week high. Hong Kong’s Hang Seng Index declined 0.3 percent and the Shanghai Composite Index gained 0.2 percent.
Trading volumes in Tokyo and Hong Kong were down more than 15 percent from their 30-day averages, according to data compiled by Bloomberg.
Futures on the Euro Stoxx 50 Index added 0.4 percent, while those on the S&P 500 Index were little changed. Contracts on the U.K.’s FTSE 100 Index gained 0.5 percent.
The Dollar Spot Index lost 0.2 percent, after jumping 0.6 percent over the last two trading days. South Korea’s won strengthened 0.9 percent versus the greenback, rebounding from its weakest close of the month, and the Japanese yen rose 0.2 percent.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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