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Facebook Shares Tumble on Lower Engagement Announcement

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  • Facebook Shares Tumble on Lower Engagement Announcement

Facebook Inc. said it’s making major changes to its flagship social network, shifting users’ news feeds back toward posts from friends and family and away from businesses and media outlets — a transition that is likely to mean people spend less time on the site. The shares tumbled the most in more than a year.

In a post Thursday, Chief Executive Officer Mark Zuckerberg said community feedback has shown that public content has been “crowding out the personal moments that lead us to connect more with each other.” The goal of the product teams will be to help Facebook’s more than 2 billion monthly users find content that will lead to more meaningful social interactions, he said.

Facebook and companies from Twitter Inc. to Apple Inc. have been confronting a mounting public backlash against technology and social media, as the public grapples with a constantly connected life in which they are exposed to fake or biased news, cyber bullying and even internet addiction. Zuckerberg’s vision for Facebook has always been a platform for giving people a voice and a place to make meaningful connections, though he spent much of last year on the defensive.

“By making these changes, I expect the time people spend on Facebook and some measures of engagement will go down,” Zuckerberg wrote. “But I also expect the time you do spend on Facebook will be more valuable. And if we do the right thing, I believe that will be good for our community and our business over the long term too.”

Facebook’s shares fell as much as 5.5 percent, the most since November 2016, to $177.40. They were trading down 4.1 percent at 9:45 a.m. in New York.

Last week, Zuckerberg said his resolution for 2018 was to “fix” the social network he co-founded. His vow followed a year that saw Facebook come under sharp criticism for contributing to a climate of extreme political polarization, the distribution of fake news and escalating privacy concerns. Last year, lawmakers berated Facebook, Alphabet Inc.’s Google and Twitter for failing to prevent Russian manipulation on their platforms during the 2016 U.S. presidential election.

“This is recognition of the issues they’ve faced with toxic content,” said Brian Wieser, an analyst at Pivotal Research Group. “People are frustrated with the Russia revelations and fake news and have taken it into their own hands and stopped engaging.”

The Menlo Park, California-based company has kept revenue growing by consistently selling more advertising in its news feed, striking partnerships with media companies to distribute their stories, and including more video postings, which draw higher ad rates. Facebook’s latest changes don’t impact ads — only business and media-oriented content posted by pages and other people, according to a person familiar with the matter.

European Union competition chief Margrethe Vestager said Friday that allowing advertisers to tailor political content to personal tastes on social media such as Facebook is a danger to democracy, according to interview in Vienna’s Der Standard newspaper.

In a note earlier this week, Wieser reported Nielsen data showing that in September — the most recent month for which this data is available — core Facebook consumption failed to grow year-over-year for a second consecutive month.

“Facebook is already experiencing declines in consumption and the company is responding with these changes today,” Wieser said. “Good on Facebook — they are doing the right thing, long-term. It may not be good for the business in the short term.”

Facebook’s popularity and user growth have skyrocketed since its founding in 2004, when it was a sort of online scrapbook and bulletin board for college students. In the company’s early years, the news feed was a scrolling update about the personal activities of friends and family members. Months before the company went public in 2012, Facebook started featuring “sponsored story” ads in users’ feeds, and it rolled out mobile advertising that same year. Since then, annual sales have soared from $5.1 billion to an estimated $40.2 billion last year — and the news feed has become increasingly crowded with advertisements and posts from brands and publications.

The changes promised aren’t entirely new — Facebook has been shifting the content on its news feed toward posts from friends and family and away from brands and publications for more than a year. With the latest change, Facebook’s algorithm will prioritize posts that spark back-and-forth discussion or inspire people to share and react. That means posts like a friend asking for advice, recommendations for a trip or an article that prompts interaction, according to a post by Facebook’s head of news feed, Adam Mosseri.

A large part of brands and media companies’ strategies is to post articles and videos from their pages to engage consumers — items that aren’t considered “meaningful interactions” between people. Downplaying those posts from brands and businesses may put revenue at risk, said James Cakmak, an analyst at Monness Crespi Hardt & Co.

“There will be less opportunity to expose Facebook users to brands,” Cakmak said. “But those opportunities to get in front of users will be that much more impactful if it’s more selective.”

Though the shift back to personal interaction may not mean fewer paid marketing spots in users’ feeds, any drop in engagement and attention may still translate to fewer ad dollars. Travis Parker Martin is the co-founder of Bootkik, a Calgary-based startup that attributes the majority of its growth to its Facebook presence. More than 90 percent of the education startup’s marketing budget has been spent on Facebook ads. Given Thursday’s announcement, Martin said he plans to significantly decrease that.

“Only a few weeks ago, we decided that we might be better served growing our presence on YouTube. We were frustrated that the returns were diminishing on Facebook.” Martin said. “This confirms that we will have to pursue other channels.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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