Oil prices recovered some ground on Friday, rallying above US$71 a barrel on speculation that OPEC could slash output in an effort to stop crude’s downward spiral.
Light, sweet crude for November delivery rose US$2 to settle at US$71.85 a barrel on the New York Mercantile Exchange after earlier rising as high as US$74.30. On Thursday, prices lost US$4.69 to settle at US$69.85 a barrel.
Oil is now down US$75 — or 51 percent — since catapulting to a record high of US$147.27 on July 11.
PHOTO: AP
In London, December Brent crude rose US$1.76 to settle at US$69.60 a barrel on the ICE Futures exchange.
The bearish sentiment around oil has grown more feverish in recent days, lopping more than US$11 off prices in the previous three trading sessions alone. A barrel of crude hasn’t been this cheap in almost 14 months.
The pullback comes as a widening economic slowdown forces a wholesale contraction in US energy demand: Americans are driving less, airlines are keeping more planes on the ground and businesses are ramping down operations.
Worried about the financial fallout of the oil price drop, the OPEC, which controls 40 percent of the world’s oil supply, called a special meeting for next Friday in Vienna, Austria to address the slide. Underscoring the cartel’s anxiety, it moved up the date of the meeting by nearly a month.
An Iraqi lawmaker said on Friday the government expects to cut its budget next year by US$15 billion because of falling oil prices. Abbas al-Bayati, a senior lawmaker of the United Iraqi Alliance, the largest Shiite bloc in parliament, said the recent plunge would cut into earlier budget estimates, which were made when crude was hovering around US$120 a barrel.
Analysts say OPEC could decide to trim output by as much as 1 million barrels a day in a bid to halt the slide, in addition to a 500,000 barrel per day cut announced last month.
That may have led some traders to bid up oil on Friday, though any rally will likely be short-lived given the rapidly waning appetite for petroleum products, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.
”Demand is really in trouble,” Armstrong said. “Every week we get figures showing falling US demand for energy. European demand is just beginning to turn down, and all indications are that China is in for a significant economic downturn.”
“We could have prices in the low US$60 range very soon,” he said.
Still, some analysts say crude’s decline has been overdone amid the panicked selling in world equity markets.
“Even in a dire economic situation, a lot of energy use isn’t discretionary, so I expect prices to bounce back at some point,” said Gavin Wendt, head of mining and resources research at consultancy Fat Prophets in Sydney.
In other NYMEX trading, heating oil futures rose US$0.461 to settle at US$2.1569 a gallon, while gasoline futures rose US$0.441 to settle at US$1.661 a gallon. Natural gas for January delivery rose US$0.91 to US$7.306 per 1,000 cubic feet.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
China is deploying its largest navy fleet in regional waters in nearly three decades, posing a threat to Taiwan that is more pronounced than previous Chinese war games, the Ministry of National Defense said today. Speaking in Taipei, ministry spokesperson Sun Li-fang (孫立方) said the scale of the current Chinese naval deployment in an area running from the southern Japanese islands down into the South China Sea was the largest since China held war games around Taiwan ahead of 1996 Taiwanese presidential elections. China's military has yet to comment and has not confirmed it is carrying out any exercises. "The current scale is
RSS