- China Exports Fall Most in Seven Months
China’s exports dropped the most since February as global demand remained tepid, adding to pressure to the yuan, which is near a six-year low.
- Exports fell 10 percent from a year earlier in September, the customs administration said Thursday
- Imports declined 1.9 percent
- In yuan terms, shipments declined 5.6 percent, imports rose 2.2 percent
- Trade surplus fell to $42 billion
Lackluster trade data may increase pressure on the yuan at the same time new property curbs challenge the resilience of the nation’s economic recovery. Third-quarter growth probably held up at 6.7 percent for a third straight quarter, according to a Bloomberg survey of economists before the official report due Oct. 19.
The data are “consistent with a significant slowdown in global trade volumes,” said Sue Trinh, head of Asia FX strategy at RBC Capital Markets in Hong Kong. “China is running out of options and letting the RMB go is the lowest cost option for them. We’ve seen them move in this direction after getting past the formal SDR inclusion date. There’s more work to do.”
“The numbers cut against the view that stronger competitiveness from a weaker yuan and more demand as U.S. households strengthen will return exports to a growth path,” Bloomberg Intelligence economists Fielding Chen and Tom Orlik wrote in a report. For the yuan, “shrinking exports will add to fears it has further to fall.”
“The export backdrop merely underlines some of the downside risks to GDP growth,” said Michael Every, head of financial markets research at Rabobank in Hong Kong. “Expect the yuan to move down with it. China is still being kept afloat by a housing bubble and massive state stimulus.”
“The expectation of a weaker yuan won’t have a big impact on trade in the next two months, since the effect of depreciation on trade is diminishing,” said Zhu Qibing, chief macro economy analyst at BOCI International (China) Ltd. in Beijing. “Exports are likely to return to positive in October at the earliest as Christmas orders come in.”
Falling exports to the European Union and U.K. suggest the downside risks to China’s economic recovery from Brexit can’t be ignored, said David Qu, a markets economist at Australia & New Zealand Banking Group Ltd. in Shanghai.
- Exports to EU fell 9.8 percent, U.K. shipments slid 10.8 percent, U.S. down 8.1 percent
- Crude oil imports rose to a record as a new strategic reserve site became operational
- Steel exports shrank for a third month to the lowest since February
- Yuan depreciation’s impact on trade is limited, customs spokesman says at a briefing
- Yuan has dropped 3.4 percent against the dollar this year, the biggest decline in Asia, and weakened 6.2 percent against a 13-currency trade-weighted index
- The People’s Bank of China on Thursday weakened the daily reference rate for the seventh day in a row, the longest weakening run since January
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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