Oil posts biggest weekly loss in a month ahead of Opec+ meeting
[NEW YORK] Oil prices fell more than 1 per cent lower on Friday (May 2) and recorded their biggest weekly losses since the end of March, as traders turned cautious ahead of an Opec+ meeting to decide the group's output policy for June.
US West Texas Intermediate (WTI) crude futures settled 95 US cents or 1.6 per cent to settle at US$58.29 a barrel. Brent crude futures closed down 84 cents or 1.4 per cent at US$61.29 a barrel.
For the week, Brent fell over 8 per cent and WTI lost about 7.7 per cent.
The Opec+ meeting was moved up to Saturday from the original plan of Monday, three sources told Reuters on Friday, although it was not clear why the meeting was rescheduled.
Members of the group, which includes the Organization of the Petroleum Exporting Countries and its allies, are deliberating whether to make another accelerated oil output increase in June or stick with a smaller hike, two of the sources said.
Either way, oil traders braced for more supply from the group, at a time when fears of an economic slowdown caused by a trade war between the US and China have prompted market experts to lower demand growth expectations for this year.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
'This market is all about Opec now with even the tariff war taking a back seat,' United Icap energy specialist Scott Shelton said.
Reuters reported this week that officials from Saudi Arabia, the de facto leader of Opec+, have briefed allies and industry experts that they are unwilling to prop up oil markets with further supply cuts.
Opec+ is currently cutting output by more than five million barrels per day.
Traders were also cautious given the possibility of a de-escalation of the trade dispute between China and the US, after Beijing on Friday said it was evaluating a proposal from Washington to hold talks to address US President Donald Trump's tariffs.
'There is some optimism when it comes to US-China relations but the signs are only very tentative,' Harry Tchilinguirian, group head of research at Onyx Capital Group, said.
Friday's oil price decline was kept in check by rising equity markets, UBS analyst Giovanni Staunovo said, as Wall Street climbed after US jobs data showed payrolls increased more than expected last month.
A threat by Trump on Thursday to impose secondary sanctions on buyers of Iranian oil also helped ease some of the pressure on oil prices, as it could tighten global supply.
The threat, which came after US talks with Iran over its nuclear programme were postponed, could also complicate trade talks with China, which is the world's largest importer of Iran's crude.
Signs of slowing US oil output growth could also be somewhat supportive for oil prices from a longer-term point of view, StoneX oil analyst Alex Hodes said.
US drillers cut the number of oil rigs operating for the first time in three weeks, data from oilfield services provider Baker Hughes showed. The oil rig count, an early indicator of future output, fell by four to 479 this week. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
an hour ago
- Business Times
BYD unleashes an EV industry reckoning that alarms Beijing
[BEIJING] The price war engulfing China's electric vehicle (EV) industry has sent share prices tumbling and prompted an unusual level of intervention from Beijing. The shakeout may just be getting started. For all the Chinese government's efforts to prevent price cuts by market leader BYD from turning into a vicious spiral, analysts say a combination of weaker demand and extreme overcapacity will slice into profits at the strongest brands and force feebler competitors to fold. Even after the number of EV makers starting shrinking for the first time last year, the industry is still using less than half its production capacity. Chinese authorities are trying to minimise the fallout, chiding the sector for 'rat race competition' and summoning heads of major brands to Beijing last week. Yet previous attempts to intervene have had little success. For the short term at least, investors are betting few automakers will escape unscathed. BYD, arguably the biggest winner from industry consolidation, has lost US$21.5 billion in market value since its shares peaked in late May. 'What you are seeing in China is disturbing, because there's a lack of demand and extreme price cutting,' said John Murphy, a senior automotive analyst at Bank of America. Eventually, there will be 'massive consolidation' to soak up the excess capacity, Murphy said. For automakers, relentless discounting erodes profit margins, undermines brand value and forces even well-capitalised companies into unsustainable financial positions. Low-priced and low-quality products can seriously damage the international reputation of 'Made-in-China' cars, the People's Daily, an outlet controlled by the Communist Party, said. And that knock would come just as models from BYD to Geely, Zeekr and Xpeng start to collect accolades on the world stage. For consumers, price drops may seem beneficial but they mask deeper risks. Unpredictable pricing discourages long-term trust – already people are complaining on China's social media, wondering why they should buy a car now when it may be cheaper next week – while there's a chance automakers, as they cut costs to stay afloat, may reduce investment in quality, safety and after-sales service. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Auto CEOs were told last week they must 'self-regulate' and should not sell cars below cost or offer unreasonable price cuts, according to sources familiar with the matter. The issue of zero-mileage cars also came up – where vehicles with no distance on their odometers are sold by dealers into the second-hand market, seen widely as a way for automakers to artificially inflate sales and clear inventory. Chinese automakers have been discounting a lot more aggressively than their foreign counterparts. Murphy said US automakers should just get out. 'Tesla probably needs to be there to compete with those companies and understand what's going on, but there's a lot of risk there for them.' Others leave no room for doubt that BYD, China's No 1 selling car brand, is the culprit. 'It's obvious to everyone that the biggest player is doing this,' Jochen Siebert, managing director at auto consultancy JSC Automotive, said. 'They want a monopoly where everybody else gives up.' BYD's aggressive tactics are raising concerns over the potential dumping of cars, dealership management issues and 'squeezing out suppliers', he said. The pricing turmoil is also unfolding against a backdrop of significant overcapacity. The average production utilisation rate in China's automotive industry was a mere 49.5 per cent in 2024, data compiled by Shanghai-based Gasgoo Automotive Research Institute show. An April report by AlixPartners meanwhile highlights the intense competition that's starting to emerge among new energy vehicle (NEV) makers or companies that produce pure battery cars and plug-in hybrids. In 2024, the market saw its first ever consolidation among NEV-dedicated brands, with 16 exiting and 13 launching. 'The Chinese automotive market, despite its substantial scale, is growing at a slower speed. Automakers have to put top priority now on grabbing more market share,' Ron Zheng, a partner at global consultancy Roland Berger GmbH, said. Jiyue Auto shows how quickly things can change. A little over a year after launching its first car, the automaker jointly backed by big names Zhejiang Geely Holding Group and technology giant Baidu, began to scale down production and seek fresh funds. It's a dilemma for all carmakers, but especially smaller ones. 'If you don't follow suit once a leading company makes a price move, you might lose the chance to stay at the table,' AlixPartners consultant Zhang Yichao said. He added that China's low capacity utilisation rate, which is 'fundamentally fuelling' the competition, is now even under more pressure from export uncertainties. While the push to find an outlet for excess production is thrusting more Chinese brands to export, international markets can only offer some relief. 'The US market is completely closed and Japan and Korea may close very soon if they see an invasion of Chinese carmakers,' Siebert said. 'Russia, which was the biggest export market last year, is now becoming very difficult. I also don't see South-east Asia as an opportunity anymore.' The pressure of cost-cutting has also led analysts to express concern over supply chain finance risks. A price cut demand by BYD to one of its suppliers late last year attracted scrutiny around how the car giant may be using supply chain financing to mask its ballooning debt. A report by accounting consultancy GMT Research put BYD's true net debt at closer to 323 billion yuan (S$58 billion), compared with the 27.7 billion yuan officially on its books as at the end of June 2024. The pain is also bleeding into China's dealership network. Dealership groups in two provinces have gone out of business since April, both of them ones that were selling BYD cars. Beijing's meeting with automakers last week was not the first attempt at a ceasefire. Two years ago, in mid-2023, 16 major automakers, including Tesla, BYD and Geely signed a pact, witnessed by the China Association of Automobile Manufacturers (CAAM), to avoid 'abnormal pricing'. Within days though, CAAM deleted one of the four commitments, saying that a reference to pricing in the pledge was inappropriate and in breach of a principle enshrined in the nation's antitrust laws. The discounting continued unabated. BLOOMBERG
CNA
an hour ago
- CNA
Japan's Q1 GDP contraction narrows on consumption improvement, revised figure shows
TOKYO :Japan's economy contracted in the January-March quarter at a slower pace than initially estimated, government data showed on Monday, with consumption figures revised upwards even as uncertainty on U.S. tariffs clouds the outlook. Gross domestic product shrank an annualised 0.2 per cent in the three months to March, the Cabinet Office's revised data showed, slower than the 0.7 per cent contraction in the initial estimate and economists' median forecast. The revised quarter-on-quarter number translates as flat in price-adjusted terms, compared with a 0.2 per cent shrinkage issued on May 16. Monday's revised data reinforced analysts' concern that the economy was losing steam even before U.S. President Donald Trump's so-called reciprocal tariffs in April 2. Private consumption, which accounts for more than half of the Japanese economy, inched up 0.1 per cent, versus flat in the preliminary reading. The capital expenditure component of GDP, a barometer of private demand-led strength, rose 1.1 per cent in the first quarter, revised down from 1.4 per cent in the initial estimate. Economists had estimated a 1.3 per cent rise. External demand, or exports minus imports, knocked 0.8 per centage point off growth, the same as the initial reading. On the other hand, domestic demand contributed 0.8 per centage point. Japan faces a 24 per cent U.S. tariff starting in July unless it can negotiate a lower rate. It is also scrambling to find ways to persuade Washington to exempt its automakers from 25 per cent tariffs on automobiles, Japan's biggest industry. Policymakers and analysts are concerned global trade tension unleashed by U.S. tariffs may complicate the Bank of Japan's efforts to normalise monetary policy. The BOJ is set to hold a two-day policy meeting early next week.
Straits Times
an hour ago
- Straits Times
Key US-China trade talks set for Monday in London
FILE PHOTO: The American and Chinese flags are photographed on the negotiating table, during a bilateral meeting between the United States and China, in Geneva, Switzerland, May 10, 2025. KEYSTONE/EDA/Martial Trezzini/Handout via REUTERS/File photo LONDON - Top U.S. and Chinese officials will sit down in London on Monday for talks aimed at defusing the high-stakes trade dispute between the two superpowers that has widened in recent weeks beyond tit-for-tat tariffs to export controls over goods and components critical to global supply chains. At a still-undisclosed venue in London, the two sides will try to get back on track with a preliminary agreement struck last month in Geneva that had briefly lowered the temperature between Washington and Beijing and fostered relief among investors battered for months by U.S. President Donald Trump's cascade of tariff orders since his return to the White House in January. "The next round of trade talks between the U.S. and China will be held in the UK on Monday," a UK government spokesperson said on Sunday. "We are a nation that champions free trade and have always been clear that a trade war is in nobody's interests, so we welcome these talks." Gathering there will be a U.S. delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, and a Chinese contingent helmed by Vice Premier He Lifeng. The second-round of meetings comes four days after Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Trump's January 20 inauguration. During the more than one-hour-long call, Xi told Trump to back down from trade measures that roiled the global economy and warned him against threatening steps on Taiwan, according to a Chinese government summary. But Trump said on social media the talks focused primarily on trade led to "a very positive conclusion," setting the stage for Monday's meeting in London. The next day, Trump said Xi had agreed to resume shipments to the U.S. of rare earths minerals and magnets. China's decision in April to suspend exports of a wide range of critical minerals and magnets upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world. That had become a particular pain point for the U.S. in the weeks after the two sides had struck a preliminary rapprochement in talks held in Switzerland. There, both had agreed to reduce steep import taxes on each other's goods that had had the effect of erecting a trade embargo between the world's No. 1 and 2 economies, but U.S. officials in recent weeks accused China of slow-walking on its commitments, particularly around rare earths shipments. "We want China and the United States to continue moving forward with the agreement that was struck in Geneva," White House spokeswoman Karoline Leavitt told the Fox News program "Sunday Morning Futures' on Sunday. "The administration has been monitoring China's compliance with the deal, and we hope that this will move forward to have more comprehensive trade talks." The inclusion at the London talks of Lutnick, whose agency oversees export controls for the U.S., is one indication of how central the issue has become for both sides. Lutnick did not attend the Geneva talks, at which the countries struck a 90-day deal to roll back some of the triple-digit tariffs they had placed on each other since Trump's inauguration. That preliminary deal sparked a global relief rally in stock markets, and U.S. indexes that had been in or near bear market levels have recouped the lion's share of their losses. The S&P 500 Index, which at its lowest point in early April was down nearly 18% after Trump unveiled his sweeping "Liberation Day" tariffs on goods from across the globe, is now only about 2% below its record high from mid-February. The final third of that rally followed the U.S.-China truce struck in Geneva. Still, that temporary deal did not address broader concerns that strain the bilateral relationship, from the illicit fentanyl trade to the status of democratically governed Taiwan and U.S. complaints about China's state-dominated, export-driven economic model. While the UK government will provide a venue for Monday's discussions, it will not be party to them but will have separate talks later in the week with the Chinese delegation. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
