Oil prices fell below US$45 a barrel in Asia yesterday after OPEC decided not to cut production levels at its meeting over the weekend in Vienna.
Benchmark crude for delivery next month fell US$1.88 to US$44.37 a barrel by midmorning in Singapore on the New York Mercantile Exchange. Oil prices dropped US$0.78 on Friday to settle at US$46.25 a barrel.
OPEC members said on Sunday they would strive to adhere more closely to the group’s current output quotas. OPEC is overshooting its daily target level of just under 25 million barrels a day by about 800,000 barrels.
PHOTO: BLOOMBERG
Prices had risen from under US$35 a barrel last month as investors anticipated OPEC would cut production by up to 1 million barrels a day on top of 4.2 million barrels of reductions announced since September.
“The gains we’ve seen in oil over the last two or three weeks were from pricing in a further cutback, which didn’t come through,” said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. “So now we’re seeing some profit-taking.”
Russian Deputy Prime Minister Igor Sechin said his country, the world’s second-largest producer, would reduce crude sales. Analysts were skeptical Russia would follow through with production cuts given the country’s reliance on oil income.
“Russia tends to be more talk than action than OPEC,” Pervan said. “I think they’d be pretty hesitant to bring volumes down, but it’s worth watching.”
Oil traders will likely turn their attention to global crude demand and the possibility of a second-half economic recovery.
US Federal Reserve Chairman Ben Bernanke said on Sunday on CBS’ 60 Minutes that the US recession “probably” will end this year if the government succeeds in bolstering the banking system.
However, Bernanke said that even if the recession, which began in December 2007, ends this year, the unemployment rate will keep climbing past the current quarter-century high of 8.1 percent.
“The market now doesn’t have that supply-side issue to support it,” Pervan said. “There’s more downside risk now that the focus is shifting from supply to demand issues.”
“All we need to see is one or two weak numbers out of the US, and we’re right back into the low US$40s and high US$30s,” he said.
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,
US president-elect Donald Trump said he would “never say” if Washington is committed to defending Taiwan from China, but “I would prefer that they do not do it [ an attack],” adding that he has a “good relationship” with Chinese President Xi Jinping (習近平). “I never say because I have to negotiate things, right?” Trump said in an interview with NBC’s Meet the Press host Kristen Welker after saying he would not reveal his incoming administration’s stance on Taiwan’s defense in the event of an attack. Asked the question again, Trump, in a reference to China, said: “I would prefer that they
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