Posts Tagged ‘oil’

Energy firms down in Asia after oil slump, broader markets slip

November 14, 2018

Asian energy firms took another battering on Wednesday after oil prices suffered their worst day in three years, while the region’s equity markets fell into negative territory.

The pound enjoyed some support after Britain and the EU said they had reached a draft Brexit deal, though observers were cautious as it faces a number of hurdles before being given the green light.

Both main crude contracts plunged Tuesday — Brent lost 6.6 percent and WTI 7.1 percent — on oversupply fears just as demand falters in the face of the China-US trade war and easing economic growth.

Image result for Sinopec, photos

With prices now down more than a fifth from their four-year highs seen in early October, oil kingpin Saudi Arabia this week said it will cut output. The announcement fuelled an initial surge in the crude market before a Donald Trump tweet calling for it to keep prices low sent the commodity plunging.

The selling continued on Tuesday and then Wednesday in Asia after OPEC trimmed its outlook for demand this year.

And energy firms were caught in the crossfire.

Hong Kong-listed CNOOC dived four percent while Sinopec and PetroChina each lost around three percent. In Tokyo, Inpex was more than two percent down and Woodside Petroleum sank 3.5 percent.

“Oil prices remain the hottest topic in capital markets if not in the world after extending their slide to 12 days and suffering one of the more precipitous falls in years,” said Stephen Innes, head of Asia-Pacific trade at OANDA.

“It’s all about the toxic combination of weakening global demand and oversupply that has sent prices tumbling.”

Broader markets were also lower. Tokyo ended the morning down 0.1 percent, with traders also taking note of data showing the Japanese economy shrunk in July-September owing to weakness in China and a series of natural disasters hitting domestic spending.

– Sterling uncertainty –

Hong Kong and Shanghai were each down 0.4 percent, Sydney lost more than one percent and Singapore was off 0.3 percent.

Seoul dropped 0.4 percent and Wellington gave back 0.3 percent, though Manila, Taipei and Jakarta edged up.

There was little movement after comments from the White House’s top economics adviser Larry Kudlow that US and Chinese officials were “having communications at all levels” on trade ahead of a possible meeting between Trump and President Xi Jinping this month.

With both sides digging their heels in, expectations for a breakthrough are low, analysts said.

On currency markets the pound managed to hold on to small gains that came on the back of news that Prime Minister Theresa May finally had a Brexit agreement to put to her cabinet.

However, she must now get it past a divided cabinet before putting it to parliament, where both pro- and anti-Brexit MPs unhappy with the few details that have so far emerged from the pact.

“Failure to pass the deal will raise the prospects of a disorderly Brexit, a general election and also a second referendum,” said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank.

“By the end of the week with some certainty the pound won?t be trading near current levels, it could be significantly higher or massively lower.”

The euro was also enjoying some lift from the Brexit news, though the gains were tempered by news that Italy’s populist government had stuck to its wallet-busting budget plan, putting it on course for a standoff with Brussels.

– Key figures around 0250 GMT –

Tokyo – Nikkei 225: DOWN 0.1 percent at 21,784.17 (break)

Hong Kong – Hang Seng: DOWN 0.4 percent at 25,699.63

Shanghai – Composite: DOWN 0.4 percent at 2,643.15

Oil – West Texas Intermediate: DOWN 39 cents at $55.30 per barrel

Oil – Brent Crude: DOWN 31 cents at $65.16 per barrel

Euro/dollar: UP at $1.1305 from $1.1287 at 2200 GMT

Pound/dollar: UP at $1.3010 from $1.2964

Dollar/yen: UP at 113.94 yen from 113.82 yen

New York – DOW: DOWN 0.4 percent at 25,286.49 (close)

London – FTSE 100: FLAT at 7,053.76 (close)

AFP

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Oil prices rise by more than 1% after Saudi announcement to cut supply

November 12, 2018

Oil prices rose by more than one percent on Monday after top exporter Saudi Arabia announced a December supply cut, a measure likely aimed at halting a market slump that has seen crude decline by 20 percent since early October.

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Front-month Brent crude futures, a benchmark for global oil prices, were at $71.37 per barrel at 0531 GMT, up $1.19, or 1.7 percent, from their last close.

US crude production increased to a record 11.6 million barrels per day and will cross the 12 million threshold next year. (AFP)

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US West Texas Intermediate (WTI) crude futures were at $60.87 per barrel, up 68 cents, or 1.1 percent.

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Saudi Arabia plans to reduce oil supply to world markets by 0.5 million barrels per day (bpd) in December, its energy minister said on Sunday, as the OPEC power faces uncertain prospects in getting other producers to agree to a coordinated output cut.

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Khalid Al-Falih told reporters that Saudi Aramco’s customer nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 percent.

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Saudi Arabia is the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC).

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Peter Kiernan, lead energy analyst at the Economist Intelligence Unit in Singapore, said OPEC was “focused on mitigating downside risks” after crude prices declined by around 20 percent over a month following a supply surge, particularly from the top three producers the United States, Russia and Saudi Arabia.

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“Saudi Arabia has stepped in front of the oil market bears, proactively announcing they will reduce exports,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

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A big concern for Saudi Arabia and other traditional producers from the Middle East-dominated OPEC is the surge in US output.

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US energy firms last week added 12 oil rigs in the week to Nov. 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday.

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The rig count indicates US crude output, already at a record 11.6 million bpd, will increase further.

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“One thing that is abundantly clear, OPEC is in for a shale shocker as US crude production increased to a record 11.6 million barrels per day and will cross the 12 million threshold next year,” Innes said.

Reuters

Oil producers discuss output cuts as prices go down

November 11, 2018

Major oil producers meet in Abu Dhabi on Sunday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash.

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Oil prices shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centered on higher supply and fears of sluggish demand.

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Saudi Energy Minister Khalid Al-Falih

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Brent crude dropped below $70 a barrel on Friday for the first time since April while the New York’s West Texas Intermediate (WTI) sank below $60 a barrel, a nine-month low.

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The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand.

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The slide also comes during signs of a softer-than-expected impact from US sanctions on Iran oil exports.

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“Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the US, more than compensating for lost Iranian barrels,” Forex.com analyst Fawad Razaqzada told AFP.

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“With the Iranian sanctions not being as severe as initially feared, officials from the OPEC and non-OPEC producers may discuss at the weekend the need to bring compliance back down toward the 100-percent level or risk another 2014-style slide in prices,” he said.

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Energy ministers of top producers Russia and Saudi Arabia will join other OPEC and non-OPEC officials for the meeting of the Joint Ministerial Monitoring Committee, which oversees production levels.

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The world’s second and third crude producers — after they were overtaken by the United States thanks to shale oil — Russia and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash.

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Through large production cuts starting at the beginning of 2017, they managed to push up oil prices from below $30 a barrel to over $85 a barrel in October, strongly improving their revenues.

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But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.

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Saudi Arabia raised its production from around 9.9 million barrels per day in May to around 10.7 million bpd in October, according to Energy Minister Khalid Al-Falih.

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Kuwait, Iraq, Russia and the United Arab Emirates also boosted their output.

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Cailin Birch, analyst at the Economist Intelligence Unit, said a slowing oil demand is beginning to appear in China, the world’s largest importer of crude oil.

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“The recent drop in oil prices reflects a combination of factors. For one, signs of slowing oil demand are beginning to appear; the rate of GDP growth in China is beginning to ease,” Birch told AFP.

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The meeting, which will also be attended by the oil ministers of Kuwait, Venezuela and host nation the UAE, is not due to make decisions but will most likely send signals.

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The JMMC, a technical committee, is expected to make important recommendations on production cuts to a key ministerial meeting in Vienna next month for the OPEC and non-OPEC producers.

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Commerzbank, Germany’s second-largest lender, said Friday oil producers must act to prevent a free fall of prices.

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“If they fail to signal any intention to reverse the latest increase in production, oil prices threaten to slide further,” the bank said in a note.

AFP

Northern Iraq May Be Free, but the South Is Seething

November 10, 2018

In Iraq: Winning the war, Losing the peace

The world has focused on rebuilding the country’s north after defeating the Islamic State while ignoring festering resentment and poverty in Basra.

Iraqi protesters watch an official building in flames as they demonstrate against the government and the lack of basic services in Basra on Sept. 6. (Haidar Hohammed Ali/AFP/Getty Images)

Iraqi protesters watch an official building in flames as they demonstrate against the government and the lack of basic services in Basra on Sept. 6. (Haidar Hohammed Ali/AFP/Getty Images)

BASRA, Iraq—Recent violent protests in the southern Iraqi city of Basra have brought to light years of suffering by Iraqis in what is known as the economic capital of Iraq due to its vast oil reserves and deep-sea port access connecting the country to the international market. Basra, a predominantly Shiite city, also has a significant minority population, including black Iraqis and Christians. It is Iraq’s second-largest city and has developed a reputation for fostering some of Iraq’s greatest artists. During the first Gulf War, the Iraqi military used Basra as a route for the Kuwait invasion; ironically, a decade later, U.S.-led forces used it as a path toward Baghdad during the 2003 invasion.

The current crisis in Basra is not a recent development. It stems from years of inattention from both the international community and the Iraqi government.

The current crisis in Basra is not a recent development. It stems from years of inattention from both the international community and the Iraqi government.

Increased civil unrest in the region has been exacerbated by the government’s focus on defeating the Islamic State in northern Iraq and unequal distribution of resources, making the current situation both expected and preventable. Basra’s once glorious canals, winding through a city previously known as the Venice of the Middle East, are now open-air sewers.

Following successful military operations against the Islamic State, most of the international focus has been on celebrating the liberation of northern Iraq and reconstruction of these areas. With most national and international attention focused on reconciling Iraq’s diverse communities in these liberated areas, Iraq’s predominantly Shiite southern cities have been neglected and their relative stability taken for granted.

Demonstrations and ensuing clashes with government security forces throughout this summer led to 27 deaths by the end of September, as well as the unsolved assassination of the women’s rights and anti-corruption activist Soad al-Ali. These protests, reflecting Iraqi anger about government corruption, also highlighted the lack of job opportunities and poor public services in the southern city. The protests not only targeted Iraqi officials but also foreign powers for their perceived role in supporting ineffective kleptocratic elites, with attacks on both the U.S. and Iranian consulates in Basra.

More than 80 percent of Iraq’s total GDP comes from the oil-rich area around Basra, which, being Iraq’s only province with coastal access, is also the country’s only port for exporting oil by sea. Despite the fact that the vast majority of Iraq’s oil resources are located in Basra province, the budget allocated for the region by the central government doesn’t reflect that wealth.

Indeed, the Iraqi government and the international community have neglected the region while disproportionately focusing development assistance in northern Iraq. The south’s security situation is deteriorating, and poverty levels are rising as a result. This is particularly worrying because many young southerners who fought to defeat the Islamic State are now destitute.

The Old City suburb of Basra (Al-Basra al-Qadima), Iraq, seen on March 1, is a residential area home to many cultural institutions such as Basra’s writing and arts clubs. The neighborhood was one of the wealthier parts of Basra but has fallen into disrepair following lack of investment after the 2003 war. (Ahmed Twaij for Foreign Policy)

The rise of the Islamic State in Iraq temporarily served as a uniting force, with many Iraqis in the south concerned by the threat posed by the terrorist group. This concern famously triggered the call for volunteer fighters by Grand Ayatollah Ali al-Sistani, Iraq’s leading Shiite cleric—a call answered principally by the predominantly Shiite youths of Iraq’s southern cities, who made up the majority of the Popular Mobilization Forces (PMF).

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These heavily armed, trained, and experienced fighters are now returning to their home cities in southern Iraq, including Basra, to face deprivation. Confounded by international and local calls for disarmament, demobilization, and reintegration, these former fighters, having risked their lives to fight the Islamic State, are now being left jobless and sometimes homeless

Confounded by international and local calls for disarmament, demobilization, and reintegration, these former fighters, having risked their lives to fight the Islamic State, are now being left jobless and sometimes homeless

as Iraq’s debilitated economy is unable to continue providing salaries for an expanding security sector. Their situation threatens ongoing stability in Iraq. And their grievances are aggravated by the fact that reconstruction and redevelopment funds are being directed only toward the land that they risked their lives to liberate.

In this Tuesday, September 4, 2018 file photo, protesters try to storm the governor's building during protests demanding better public services and jobs, in Basra, Iraq. (AP Photo/Nabil al-Jurani)

In this Tuesday, September 4, 2018 file photo, protesters try to storm the governor’s building during protests demanding better public services and jobs, in Basra, Iraq. (AP Photo/Nabil al-Jurani)

The United Nations Development Program, in the first quarter of 2018, dedicated upwards of $153 million toward northern Iraq, with similar programs focused on these liberated areas by the U.S. Agency for International Development (USAID), Britain’s Department for International Development, and other international actors. Similarly, a lack of development opportunities and governmental corruption prior to 2014 in Mosul and the surrounding areas resulted in the rise of the Islamic State in Iraq.

Source:https://foreignpolicy.com/2018/11/09/northern-iraq-may-be-free-but-the-south-is-seething-basra-isis-sistani-pmf-shiites-oil-poverty/

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U.S. Stocks Gain After Midterms

November 7, 2018

Election results remove one source of angst, as a split Congress will make radical policy changes less likely, analysts say

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U.S. stocks extended a recent rebound Wednesday as investors weighed a congressional power divide and looked ahead to signals about interest-rate and trade policies.

The S&P 500 rose 0.8%, while the Dow Jones Industrial Average added 134 points, or 0.5%, to 25769. Both indexes were on track for their sixth advance in the past seven sessions. The Dow is about 4% below its recent record, while the S&P 500 is 5% off its September peak.

The tech-heavy Nasdaq Composite climbed 1.2% Wednesday.

Anxiety about the health of the global economy and rising rates pulled major indexes off recent all-time highs last month with investors eyeing several sources of uncertainty heading into the end of the year.

But analysts said Tuesday’s anticipated midterm election results, with Democrats claiming a majority in the House of Representatives and Republicans retaining control of the Senate, removed one source of angst.

Even though worries about tighter financial conditions and trade policy continue to hang over markets, some investors said a split Congress will make radical economic policy changes less likely.

“Markets typically do well when you have a split Congress,” said Todd Jablonski, chief investment officer at Principal Portfolio Strategies. “Investors feel comfortable with that; it gives a sense of stability and a sense that change won’t happen too quickly.”

Few investors expect Tuesday’s results to mean a reversal in recent tax cuts and pushes for deregulation that have helped propel stocks higher. Now, many are now turning their attention to the Federal Reserve’s two-day meeting that begins Wednesday.

The central bank is expected to hold rates steady before raising them again next month, but some analysts think adjustments to the central bank’s projected path for next year could jolt markets again. Higher rates tend to make stocks less attractive and push up borrowing costs for large companies and consumers.

“There’s this delicate balance of not hiking too fast,” said Peter Lazaroff, co-chief Investment Officer at Plancorp. “It will be really interesting to hear what they say.”

About 65% of investors expect at least three more interest-rate increases by the end of 2019, CME Group data show.

On Wednesday, the yield on the benchmark 10-year U.S. Treasury note edged down to 3.187%, according to Tradeweb, from 3.214%. Bond yields fall as prices rise. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, declined 0.3%.

How a Divided Congress Could Defy Gridlock

How a Divided Congress Could Defy Gridlock

Here are three key issues that could provide common ground​ for Democrats and President Trump​, despite a split Congress. Photo: Getty Images.

A voter waiting to get a ballot at a polling station in Hillsboro, Va., on Tuesday. PHOTO: ANDREW CABALLERO-REYNOLDS/AGENCE FRANCE-PRESSE/GETTY IMAGES

Analysts are also closely monitoring trade signals ahead of a scheduled meeting between President Trump and President Xi Jinping of China at the Group of 20 leaders summit in Buenos Aires later this month.

Cautious comments from corporate executives this third-quarter earnings season about tariffs and rising input costs have largely overshadowed another period of strong profit growth, analysts said. Some continue to cite signs that sales increases might be peaking, potentially removing a factor that has powered stocks higher in recent years.

“Whilst one element of uncertainty has eased as a result of this election, other areas of uncertainty remain high and may well increase over the coming months,” said Richard Turnill, BlackRock’s global chief investment strategist. “Our view is that U.S.-China trade tensions are the single greatest geopolitical risk that could threaten the sustained economic expansion.”

Health-care stocks were among the market’s leaders, with CVS Health helping lift the group for the second straight session following upbeat Tuesday earnings. The S&P 500 health care sector rose 1.8%.

Investors were also keeping a close eye on oil prices Wednesday, with U.S. crude on the brink of entering a bear market barely a month after hitting its highest level in nearly four years. The slump has come after the Trump administration granted more waivers for sanctions against Iran than some had expected, leading to projections for oversupply. Oil stabilized in early trading, adding 0.8% and lifting energy shares.

Large technology companies also rose, with Amazon.com, Netflix, Google-parent Alphabet and Microsoft all up at least 2%. The market’s best performers have been among the hardest hit by recent volatility amid signs that outsize revenue gains might not be sustainable.

Chip giant Qualcomm is slated to post earnings after the market closes, another key event for the technology sector and investors monitoring the rate of sales growth.

“It’s the trend that needs to be the focus for investors to try to identify where things are going as the impact of the tax cuts wanes from an earnings perspective next year,” Mr. Lazaroff said.

Elsewhere, the Stoxx Europe 600 rose 1%, with oil-and-gas stocks among the best performers.

Stocks in Asia were mixed. Hong Kong stocks closed up 0.1% after earlier rising more than 1%. Japan’s Nikkei Stock Average fell 0.3%.

—Steven Russolillo and Saumya Vaishampayan contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

https://www.wsj.com/articles/as-midterm-election-results-come-in-u-s-futures-asian-stocks-rise-1541559473

Christine Lagarde: China should only ease policy when needed

November 7, 2018

China’s economy faces external and internal pressures, including trade friction with the United States, but should only ease policy when needed, Christine Lagarde, the managing director of the International Monetary Fund, said on Tuesday.

Christine Lagarde  —  Photographer: Justin Chin/Bloomberg

Speaking at a news conference in Beijing, Lagarde said she was reasonably upbeat about the global economy.

Reporting by Kevin Yao; Writing by Ryan Woo; Editing by Clarence Fernandez

Reuters

Bloomberg LIVE Coverage:

https://www.bloomberg.com/news/live-blog/2018-10-19/new-economy-forum-in-singapore-day-two?srnd=premium

“What concerns me at the moment is some countries have chosen the good choice in the easy times,” Lagarde says referring to removing subsidies to fossil fuels, setting a price on carbon tax. But as the price of oil rises, then the temptation to reinstate subsidies comes back.

 

Is This Good-Bye? Petrobras CEO Ends Presser on Sentimental Note

November 6, 2018
  • Ivan Monteiro hasn’t received an invitation to remain as CEO
  • Bolsonaro has freedom to change Petrobras management in 2019
Ivan Monteiro Photographer: Andre Coelho/Bloomberg

Ivan Monteiro concluded the presentation of Petrobras’ quarterly financial results, perhaps his last as chief executive of the state-controlled oil producer, by praising the company’s progress in the past four years and offering an unusual “thank you” to the media.

Monteiro was chief financial officer of Petroleo Brasileiro SA in 2015, when the company struggled to publish its financial reports amid billions of dollars in writedowns related to a corruption scandal uncovered by the Carwash investigation. He became CEO when Pedro Parente resigned after a nationwide trucker strike this year. It’s not clear whether Monteiro will remain in the job under the presidency of Jair Bolsonaro in 2019.

“The next government will have all the freedom to make any changes it deems necessary,” he told reporters when asked about possible shifts in Petrobras’ management.

Monteiro declined to say whether he would like to keep the job. So far he hasn’t received an invitation to stay, he said, before ending the meeting by offering “a special hug to journalists who covered Petrobras all these years.”

Asked whether that was a farewell, he only smiled.

https://www.bloomberg.com/news/articles/2018-11-06/is-this-good-bye-petrobras-ceo-ends-presser-on-sentimental-note?utm_source=google&utm_medium=bd&cmpId=google

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Petrobras Results Jump on Rising Oil Prices

November 6, 2018

With uncertainty from corruption probes mostly over, Brazilian oil major plans to boost production in its offshore fields

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SÃO PAULO—Brazilian oil major Petróleo Brasileiro SA’s PBR 1.80% profit jumped in the third quarter from a year earlier, boosted by a rise in the price of oil.

Net income attributable to Petrobras shareholders reached 6.6 billion reais ($1.8 billion), soaring from 266 million reais in the third quarter of 2017, while sales revenue rose to 98.3 billion reais from 71.8 billion reais, the company said.

Petrobras agreed at the end of September to pay $853.2 million to Brazilian and U.S. authorities to end yearslong investigations into company corruption. Excluding those settlement costs, Petrobras would have had a net income attributable to shareholders of 10.3 billion reais, the company said.

Adjusted earnings before interest, taxation, depreciation and amortization came to 29.9 billion reais compared with 19.2 billion reais a year earlier.

The net income and adjusted Ebitda figures came in lower than expected, according to Gabriel Francisco, an analyst at XP Investimentos in São Paulo. He nevertheless still rates the company’s shares as a “buy” because of its plans to boost production from its pre-salt fields, among other things.

Petrobras’s preferred shares fell more than 3% shortly after the open.

 

With uncertainty about the corruption probes mostly over, the company plans to ramp up output from its offshore fields in the pre-salt area, so called because the oil deposits are located in deep water off the coast of São Paulo and Rio de Janeiro states, under the ocean floor, beneath thick layers of salt.

Petrobras has been increasing production from the pre-salt wells while at the same time cutting costs, which will keep operations profitable even if the price of oil falls much lower than it has recently, analysts say.

The company’s “cost advantage in pre-salt is its big ace in the hole,” Mr. Francisco said.

Even with the advantages from its pre-salt production, Petrobras still faces potential challenges. The state-controlled company has faced government interference in the past, most recently in 2011-2014 during the administration of Brazilian President Dilma Rousseff, which forced Petrobras to maintain fuel prices artificially low to help keep inflation under control.

With the presidential victory of market-friendly Jair Bolsonaro, who has signaled he won’t meddle with the company’s operations, the outlook for Petrobras has improved, according to Paul Cheng, an analyst at Barclays Capital.

“What he says sounds great, and if he does what he says, then you probably want to own Petrobras,” Mr. Cheng said. “But talk is cheap, so we’ll be watching his actions.”

Following Ms. Rousseff’s ouster at the end of an impeachment process, her successor and former Vice President Michel Temer allowed Petrobras to set fuel prices based on market conditions, boosting income and permitting it to cut net debt from just over $100 billion at the end of 2015.

Petrobras said Tuesday net debt fell to $72.9 billion at the end of the third quarter, from $73.7 billion at the end of the previous three-month period and from $84.8 billion at the end of 2017.

The company has embarked on a program of asset sales as part of its effort to cut debt, and it has made some progress despite court cases that have held up some of the bigger disposals. Last week Petrobras announced an agreement to sell its half of a joint venture that owns stakes in oil fields in Nigeria for about $1.5 billion.

As long as Petrobras avoids government interference into its price policy, the company should be able to generate enough cash to cut its debt even without asset sales, according to XP Investimentos’s Mr. Francisco.

“It’s still in good shape,” he said.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

https://www.wsj.com/articles/petrobras-results-jump-on-rising-oil-prices-1541511510

Oil price drops on Iran sanction exemptions, economic concerns

November 6, 2018

Oil prices slipped on Tuesday, weighed down by exemptions from Washington that will allow Iran’s biggest oil customers to keep buying from Tehran, as well as concerns that an economic slowdown may curb fuel demand growth.

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US West Texas Intermediate (WTI) crude futures were at $62.95 a barrel at 0355 GMT, down 15 cents, or 0.2 percent, from their last settlement.

Oil is in ample availability despite the sanctions against Iran as output from the world’s top-three producers, Russia, the US and Saudi Arabia, is rising. (Reuters)

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International Brent crude oil futures were down 28 cents, or 0.4 percent, at $72.89 a barrel.

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Analysts said expectations of an economic slowdown in coming months were weighing on the fuel demand outlook, while concerns eased on the supply-side after Washington granted eight importers of Iranian oil sanctions waivers that will allow them to continue purchases.

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Washington gave 180-day exemptions to eight importers — China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. These are Iran’s biggest buyers, meaning Iran will be allowed to still export some oil for now.

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Jameel Ahmad, head of market research at futures brokerage FXTM said the “sanctions on Iran have been … priced into the oil markets,” and that he would “instead focus more heavily on the global demand outlook because of the ongoing external uncertainties weighing down on economic prospects.”

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Ahmad added that he saw a slowdown in economic and fuel demand growth as “more of a risk for oil over the coming months.”

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Currency weakness is putting pressure on key growth economies in Asia, including India and Indonesia.

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At the same time, the trade dispute between the United States and China is threatening growth in the world’s two biggest economies.

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On the supply-side, oil is in ample availability despite the sanctions against Iran as output from the world’s top-three producers, Russia, the US and Saudi Arabia, is rising.

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The three countries combined produced more than 33 million barrels per day (bpd) for the first time in October, meaning they alone meet more than a third of the world’s almost 100 million bpd of crude oil consumption.

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Amid ample supply, top crude exporter Saudi Arabia has cut its December price for its Arab Light grade for Asian customers by 10 cents per barrel versus November to a premium of $1.60 a barrel to the Oman/Dubai average, state oil company Saudi Aramco said on Monday.

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The price pressure on oil has scared off financial traders.

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Hedge fund managers were net sellers of petroleum-linked futures and options for a fifth week running last week as concerns about sanctions on Iran evaporated and investors refocused on economic worries.

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Portfolio managers have been net sellers of 371 million barrels since the end of September, taking their net long position to the lowest level for 15 months, according to records published by regulators and exchanges.

Reuter

Iranian President Promises to ‘Break’ New U.S. Sanctions

November 5, 2018

Sanctions threaten to reduce Iran’s exports to the global oil supply and jolt a large regional economy that was already buckling

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Iranian President Hassan Rouhani

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Iranian President Hassan Rouhani vowed that his country would resist tough new U.S. sanctions on Iran’s oil and banks on Monday, as Tehran braced for a new era of political and economic isolation.

“Unfair sanctions are against the law, U.N. resolutions and international accords. Therefore, we will proudly break the sanctions,” Mr. Rouhani said on national television after the sanctions took effect at the stroke of midnight in Washington, or 8:30 a.m. in Tehran.

The sanctions signaled the end of American involvement in a multinational nuclear accord and punctuated the political realignment in the Middle East, with the U.S. and allies like Saudi Arabia and Israel lining up against Iran. The sanctions threaten to reduce Iran’s exports to the global oil supply and jolt a large regional economy that was already buckling.

Oil prices had risen in recent weeks in anticipation of the sanctions, but they fell Monday with Brent crude, the international benchmark, sinking about 0.69% to $72.33. The U.S. has scrambled to ensure a well-supplied oil market in the event of Iranian declines, and Saudi Arabia—the world’s biggest crude exporter—has vowed to step up output to fill the gap.

Mr. Rouhani said Iran’s oil industry had already shown its resilience, pointing to waivers that the U.S. granted last week to eight countries allowing them to continue importing Iranian crude and not be penalized. The U.S. had pushed countries to cut their purchases to zero by Sunday.

The U.S. didn’t name the countries granted exemptions, although China, Turkey and India were considered likely recipients.

“The Islamic Republic can sell its oil, and even if these eight countries weren’t exempted, we would have still sold our oil,” Mr. Rouhani said. “Isn’t that success?”

With the new restrictions, companies and governments aren’t allowed to buy Iranian oil or do deals with Iranian banks, insurers or shippers that facilitate the oil trade, unless they get permission from the U.S. Treasury Department. If they ignore the sanctions, they could face penalties including large fines and exclusion from the U.S. financial system.

What Iranian Oil Sanctions Could Mean for U.S. Pump Prices

What Iranian Oil Sanctions Could Mean for U.S. Pump Prices

The price of a tank of gas has been rising, and coming U.S. sanctions on Iran mean drivers could be in for even more pain at the pump. But that’s not the whole story. WSJ’s Sarah Kent explains why global oil prices are on a knife-edge. Photo: Getty Images

Monday’s sanctions were a milestone for President Donald Trump, who saw the nuclear deal, reached in 2015 under the Obama administration, as flawed from the start. By not curtailing Iran’s ballistic missile program and not addressing its military activities in Syria, Yemen and elsewhere in the Middle East, Mr. Trump argued, it failed to allay a chief concern about Iran: that it seeks Israel’s destruction.

Israeli Defense Minister Avigdor Lieberman on Monday called the decision to reinstate sanctions “the sea-change the Middle East has been waiting for.”

The sanctions could deepen the jeopardy that Iran’s leaders already found themselves in amid a litany of economic woes.

This year, inflation has soared to near 30%, unemployment is in the double-digits, the currency has lost value rapidly against the dollar and economic growth is expected to be negative. A wave of popular unrest not seen in almost a decade swept the country in late December, focusing initially on economic problems before crescendoing into a critique of the ruling system.

Far from altering their regional military posture or getting rid of ballistic missiles, Iranian leaders have vowed to stand up to the U.S. After Mr. Trump tweeted an image of himself Friday on a Game of Thrones-themed poster captioned “Sanctions Are Coming,” Gen. Qassem Soleimani, the leader of Iran’s elite Quds Force, posted a similar picture of himself captioned, “I Will Stand Against You.”

Mr. Rouhani said Monday that Iran would emerge victorious, and urged unspecified action to counter U.S. pressure.

“It’s not going to work out only through words,” he said. “Action means putting pressure on the U.S. so it doesn’t dare to continue with its plots.”

Mr. Rouhani, a relative moderate in Iran’s system, staked his legacy on the 2015 nuclear deal with six world powers, including European countries, Russia, China and the U.S. The deal technically remains in place, as Tehran continues talks with European signatories to try to maintain some of the benefits under it. But with the U.S.’s withdrawal announced in May, Mr. Trump has in practice nullified the most significant benefits Iran received in exchange for curbs on its nuclear program.

Iran has pledged to remain in the deal for now, but Iranian Foreign Minister Javad Zarif said in May that the country could quickly scale up its nuclear program beyond the limits prescribed if the accord falls apart. The country opened a new factory for uranium enrichment centrifuges in June.

Write to Asa Fitch at asa.fitch@wsj.com

https://www.wsj.com/articles/iranian-president-promises-to-break-new-u-s-sanctions-1541413178

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Image result for Iran, burning U.S. flag, November 4, 2018, photos

Iranian people burn the US flag as they mark the anniversary of the seizure of the US Embassy, in Tehran, Iran, November 4, 2018. Reuters