Oil prices lower every day; OPEC’s effective and efficient decisions needed

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Today, it was a day of 5-month lows in Oil prices. This happened because of bothers on OPEC glut, and whether it would be extended. Nevertheless promises from Saudi Arabia about Russia’s preparation to join OPEC’s future cuts.

 

Low Prices of Oil

U.S. West Texas Intermediate crude oil futures  were more than 3 percent down in early trading. They came to a price of less than $44 a barrel. Which makes it the lowest since Nov 14. Yesterday, oil was down for 4 percent.

Brent Crude also went down for 3%. It went to a price less than $47. The lowest since november the 30th. The 30th of November was the date when OPEC activated a price rally. The day they announced that the output cuts are to start in the first half of 2017.

Trade losses

Both landmarks sleeked losses to trade near Thursday’s close by 1320 GMT. “OPEC and non-OPEC nations were really near to agreeing a deal on supply cuts.” said Adeeb Al-Aama, Saudi’s OPEC Governor.

  • “Based on today’s data, there’s a growing conviction that a six-month extension may be needed to rebalance the market, but the length of the extension is not firm yet.”

Deeper cut is not so likely. Speculations say that OPEC indeed will extend the cuts on May 25th. But the question is what is initially good about this. The 1017 has and will have 1.8 million bpd. That is the agreement which OPEC countries made in the beginning.

Hedge funds had speeded up decrease of their long positions. Thursday was a day when Brent crude trading volumes came to a record high. Counting about 542,000 contracts.

Pierre Andurand is the official in one of the worlds largest funds specialising in oil. He busted up his fund’s last long positions in oil last week. He is now running a very reduced risk at the moment.

“It is now-or-never for oil bulls,” said U.S. commodity analysis firm The Schork Report. They either put up a defense here or risk further emboldening the bears for a run at the $40 threshold (for WTI).” (Reuters)

 

Brend And WTI Futures

Both Brent and WTI futures are down about 17 percent so far this year despite OPEC efforts to support prices. The benchmarks are trading around levels last seen before the joint deal to cut output was first announced.

“So far OPEC’s strategy to draw down inventories has not worked.” (Neil Beveridge)

” If their strategy is to have any chance of success.. It is evident to us that OPEC will need to keep the output cuts active way more than the next six months. ”

Adding to cares about protruding inventories, traders pointed to exalted U.S. oil output. It is up more than 10 percent since mid-2016 to 9.3 million bpd. Which makes it almost matching output of top producers Russia and Saudi Arabia.

“Any likelihood of an increase in the level of cuts remains slim with OPEC officials playing down this possibility.” said James Woods, global investment analyst at Rivkin Securities. (Reuters)

 

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Nay oil prices are plummeting, BHP Billiton under pressure to sell its shale

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The Reasons

Two main shareholders are pressuring BHP Billiton about its oil and gas fields. $20 billion worth active to be sold, but the Company might overcome the selling because of the declining oil prices.

According to the investors opinion, BHP Billiton is a serious producer of deepwater oil and gas. But its shale business (from 2011) is now a capital reflux and shareholders would be in a better position if it sells the business. The main thing is, that now is not a really suitable moment for doing so.  Prices are having a fiasco, and the oversupply just burns it forward.

BHP officials see oil as core business, and they also see shale operations as their core value:

  • “The risk is doing it for the wrong reasons – because people are telling you do it – and getting out quickly. We’re at $40 oil. It’s not necessarily the greatest time to be contemplating that.” Said an analyst who owns BHP shares.

 

Timing is crucial

Based on recent deals performed in the Permian and Eagle Ford shale areas ($30,000 – $40,000 net care),  Australian Tribeca Partners judged that BHP could fetch $10 billion for its shale assets and their value.

BHP announced it wants to hold on to its Permian area. There it has been strengtehning its position. Doing so by picking up high grade acreage. Later it plans to trade acreage or work with other companies in order to boost production.

Company’s success was confirmed when they cut their costs by 64%. That happened in the Black Hawk region during the past 4 years.

“On many measures we’re one of the lowest-cost operators. If we aren’t he The One.” Andrew Mackenzie, company CEO told investors in April.

He was explaining his disallowance of a suggestion for company to spin off its U.S. oil and gas assets. This was suggested by fund manager Elliott Management to company.

 

Company’s Image

 

BHP can rely its glory and positive status on energy consultant Wood Mackenzie. He stated that BHP has amid the lowest costs between shale operators. In the Permian Basin area, its richest parts. Costs are about $30.20 a barrel.  

“BHP is active in the swap market, and we expect its operational success to open doors with swap and strategic partners.” Mackenzie also said in one report, thinking about the market for trading acreage with other operators.

Its less attractive Fayetteville acreage, valued at $919 million on its books at the end of 2016, is back up for sale.

The Fayetteville acreage, which value is estimated at about $919 million is upholding sale. It is the company’s less attractive acreage. And this value is assesed at the end of 2016.

 

Finishing

One way BHP could deprive shale, while retaining exposure to a potential recovery in oil prices, would be to sell the shale assets to a well-regarded shale operator. All of that in order to have a return for an equity stake in that company. And later it could sell down the track. Said BT’s Saunders.

There are different companies active in areas where BHP holds acreage. Some of them are ConocoPhillips, EOG Resources Inc, Anadarko Petroleum, and Marathon Oil Corp, and many others…

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Bar nickel inch higher; beside multi-week lows, and oil price collapse

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SHFE

 

Marginally higher trade among base metals traded on the SHFE. Due to weaker dollar during Asian morning trade on Friday May 5. But there remained near multi-week lows following an overnight collapse in the oil price. Nickel took the uptrend, as expectations of increased supply continued to push prices down.

“European markets are buoyed by the prospects of centrist Emmanuel Macron winning the second round in the French presidential election on Sunday. [May 7]”

The strength in the European markets had pushed the dollar down yesterday’s night. Reaching a November 2016 low of 98.695. Dollar index had recently rebounded to 98.78 as of 04:32 BST. But it was still much lower compared with 99.38 at approximately the same time on Thursday.

Overnight Oil Collapse

Following, an overnight collapse in the price of oil continues to keep SHFE base metals prices under pressure this morning.

The oil price is now back to its lowest point since mid-November with WTI oil sitting at $45.51 a barrel and below the level that prevailed before the OPEC’s oil production ceiling. (According to NAB.)

Despite the pressure, SHFE bases metals prices are inching higher. The exception is nickel, which is bucking the uptrend based on fears over increased supply following the rejection of Regina Lopez as the Philippines Environment Minister on Wednesday May 3.


Nickel below 76,000 yuan per tonne

September nickel contract on SHFE stood at 75,340 yuan per tonne as of 03:54 BST. Down 930 yuan compared with the previous session’s close.

“Nickel led the sector lower as the market reacted to the failure of the Philippines Environment Minister to be confirmed by lawmakers. Ms Lopez had been spearheading the closure of the nickel mining industry due to new environmental laws.”
Appointment of  Lopez as DENR secretary came as a glimmer of hope for nickel prices amid a weakened Chinese stainless steel sector. Also a number of China-backed nickel pig iron projects coming on stream in Indonesia.

Since the country relaxed its ban on the export of unprocessed ores in January, Indonesia’s first nickel ore shipment arrived in China on Monday May 1.

A possibility that Indonesia may expand its export quota, is adding to fears of increased supply in the market.
Union workers at Glencore plc’s Raglan nickel mine

have voted 99.6% in favour of a strike mandate. Means that the USW’s negotiation committee for the mine has the authority to initiate a strike if they consider it suitable. The Raglan mine, located in the Nunavik region of northern Quebec, produces more than 37,000 tonnes of nickel-in-concentrate annually.

Copper up marginally, but the pressure is present

June copper contract on SHFE stood at 45,200 yuan per tonne as of 03:54 BST. Up 20 yuan compared with the previous session’s close.


In the mean time, the LME’s three-month copper price stood at $5,530 per tonne as of 04:48 BST. Down 0.19% from last close.  LME copper inventories rose a net 32,925 tonnes to 317,850 tonnes, with 29,275 tonnes going into Busan, after a rise of 31,250 tonnes on Thursday.
Observing the supply side, Southern Copper said a strike at its Peruvian operations in April caused a production loss of

“only 1,418 tonnes of copper”.

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IRON ore in China: Imports ease in April amid gloomy glance

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Reasons

China’s April iron ore down, due to vessel-tracking and port data suggesting a decline of several million tonnes from the near-record levels recorded in March.

83.27 million tonnes of the iron ore was dismissed at Chinese ports in April. Down 3.7 percent from March’s 86.46 million.

The vessel-tracking and port data often show numbers below the official Chinese customs data. Who reported 95.56 million tonnes of iron ore imports in March. That would be the second-highest on record. The ship data does point to lower imports in April. About 3 million tonnes.

 

China’s largest suppliers

It seems that much of the decline in iron ore imports was borne by Australia. Being China’s number one supplier, with the data showing imports of 53.9 million tonnes in April. Down from 58.9 million in March.

 

Rather, second largest supplier Brazil saw Chinese imports of 18.48 million tonnes in April. UP from March’s 16.54 million.

The lower imports from Australia in April are the result of earlier weather-related disruptions. There was rainy period in Western Australia state that affected both mines and rail networks.

This means imports from Australia are likely to recover again in May, which may be a bearish signal for prices if miners such as Rio Tinto, BHP Billiton and Fortescue Metals Group decide to chase volumes over prices.

 

Forecasts & Opinions

This can already partly be seen by the 11 percent jump in iron ore shipments from Port Hedland, the terminal used by BHP and Fortescue, to 34.86 million tonnes in April from 31.5 million in March. Sailing time lasts of around two weeks between northwest Australia and China.

Ultimately iron ore prices are driven by steel prices and margins, and here the outlook is less certain, with the main Shanghai rebar contract trending lower in recent weeks. Because the resilience of China’s infrastructure and construction spending.

 

Chinese steel

While Chinese steel output has remained robust so far this year, the market seems to be rolling toward the opinion that margins will be under pressure. Specially in the second half of the year as domestic demand growth slows and exports struggle.

Already Chinese steel mills are seeing lower exports, with shipments of products sent overseas slumping 25 percent to 20.72 million tonnes in the first quarter of this year compared to the same period last year.

Exports are the key factor for the 800 million tonnes-a-year Chinese steel sector. And a significant downturn is another important factor for the industry.

 

Iron ore prices

Spot Asian iron ore prices have performed worse than Chinese steel rebar futures in recent weeks. Dropping 28 percent from a peak of $94.86 a tonne on Feb. 21 to $68.68 on Wednesday(May 3rd).

The sharp decline is partly due to the strong rally over the past 13 months, which saw prices almost triple. Sending iron ore to levels that appeared well overbought. Given the market remains well supplied and will have to absorb more than 100 million tonnes of new low-cost production from Australia and Brazil this and next year.

While China buys about two-thirds of seaborne iron ore, this still leaves one-third that can influence the market. Recent news are pretty positive for the major exporters.

  • Japan’s imports of iron ore in April reached the highest since vessel-tracking data started in January 2015. With 11.62 million tonnes discharged during the month, up from 10.45 million the prior month.  Asia’s third-largest importer, South Korea, saw 7.17 million tonnes offloaded in April, the most since October 2015, according to the data. (Reuters)

April’s fall in China’s iron ore imports is related to earlier weather issues in Australia. Considering the info that shipments have already recovered, there is unlikely to be any supply tightness.

So the price is exposed to Chinese demand, and then the outlook is less certain and will depend on how much spending stimulus the authorities in Beijing consider suitable.

 

 

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Base metal prices keeping a downward trend (info & data)

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Important to know of Today’s market:

  • European CB President Mario Draghi Speaks
  • Bank of Canada Governor Poloz Speaks
  • UK Services Purchasing Managers Index rose to actual 55.0 (forecast was 53.3)

For more info: https://www.investing.com/

 

LME Today:

All base metal prices on the London Metal Exchange humbled today in morning trade, May 4. After a significant sell-off on Wednesday that saw copper prices down 3.7% and nickel falling 3.3%.

Three-month copper price fell further this morning as it began trading below $5,600 per tonne. Nickel price fell additionaly $150 per tonne. All other base metals saw a slight decline.

Metal Bulletin senior analyst, William Adams, said:

“The battering the base metals suffered on Wednesday has poured cold water on last week’s attempted rebounds and has opened the way for more price weakness, especially in the case of nickel where prices have dropped to levels not seen since June last year.”  (Metal Bulletin)

Copper inventories on the LME have risen by over 60,000 tonnes over the last two days.

 

Copper below $5,600/t

On Wednesday, the LME copper price plummeted by over $200 per tonne at the close of trading. Three-month copper price is down $39.50 to $5,560.50 per tonne.
Copper inventories up 32,925 tonnes to 317,850 tonnes, with 29,275 of this in Busan. It follows a rise of 31,250 tonnes yesterday.

  • Reuters wrote that German copper products group Wieland will be acquiring the copper and steel tube business Wolverine Tube as part of its plans to expand internationally.

Workers at PT Freeport Indonesia still continuing with the one-month announced strike. They are persistent & not giving up their ideas. This is reducing the copper outputs. And will surely lead to lower supplies.
 

Other base metals fall

Three-month aluminium price fell $12.50 to $1,911 per tonne.  Stocks declined 1,175 tonnes to 1,609,925 tonnes. 

“Held well against yesterday’s sell off, trading in a $19 range (vs copper that spanned $196) with evidence of consumer buying via the spreads market. Light turnover in comparison to the copper and nickel.” (F.M.)
Nickel plunged another $150 to $9,080 per tonne. Yesterday nickel prices declined $285.  Inventories were up 30 tonnes to 380,502 tonnes.
The 3month zinc price fell $26.50 to $2,548.50 per tonne. Inventories for zinc fell 2,250 tonnes to 342,475 tonnes. Glencore’s zinc production rose 9% y-o-y, with the company adding that it currently has no plans to restart idled capacity in Australia and Peru.
Lead started trading today at $2,167.60 per tonne – a decline of $34.50 on yesterday’s close. Stocks were up 5,550 tonnes to 174,250 tonnes.
The three-month tin price decreased just $60 to $19,830 per tonne as it consolidates around the $19,800-19,900 mark.
Tin stocks on the LME fell to the lowest recorded since 1980 yesterday. Stocks declined a further 35 tonnes today and currently stand at 2,630 tonnes. (Numbers from Fast Markets)

Finishing

Metal Bulletin wrote an article on data about: Spanish unemployment, services PMI across Europe, data on UK lending, EU retail sales and a host of US data including: Challenger job cuts, initial jobless claims. Also non-farm productivity, labour costs, the trade balance. Paying attention to factory orders and natural gas storage. There’s many going on today, it will also be a challenging trade for next few days.

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Weaker Chinese data; U.S. aluminium sector asks Britain & EU to unite against China

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U.S. Representatives

Spokesman of the U.S. aluminum industry are speaking to EU counterparts. They have written to British Prime Minister Theresa May. Asking urgent action against “massive illegal subsidies” in China that bluster Western jobs.

Trade lawyers and some governments accuse China of unfairly subsidizing major industries in breach of the rules of the World Trade Organization (WTO). While China became part of the World Trade Organization in 2001.

 

Shifting focus to Aluminium

 

U.S. this year has reversed the focus to aluminum. Following European and U.S. action to protect their steel industries from China speaking about steel and copper of earlier times.

It has lodged a query with the WTO and launched an investigation into whether Chinese imports compromise national security.

“The WTO and U.S. and European leaders must act quickly to ensure a fair playing field.” Michael Bless, CEO CENX.O, told a news conference in London yesterday. China says it supports the work of the WTO.

  • The aluminum industry, represented by the China Trade Taskforce, has written to May urging her “to actively engage with the WTO on this matter and press for action”.

“A strong WTO that acts swiftly in situations such as this will be a vital part of securing Britain’s post-Brexit future” (Reuters)

The prime minister’s office had no immediate comment.

The industry leaders were also speaking to Brussels officials and to the Russian government. This floated the idea of an OPEC-style body for the aluminum industry.

They could not endorse that, but it was an

“acknowledgement of the severity of the issue”.

 

China’s Act

 

When China, the biggest aluminum consumer, joined the WTO it represented just over 10 percent of aluminum production worldwide. Now it is the world leader, accounting for more than 50 percent of global output and China’s Hongqiao has overtaken Russia’s Rusal as the biggest producer, while the U.S. and European sectors have gathered.

Industry body European Aluminium said the number of primary European aluminum smelters fell by nearly 40 percent between 2002 and 2015.

Trade lawyers say the ascendancy of China’s aluminum sector defies commercial logic as it faces higher bills for energy than the U.S. and Europe. It has the biggest input costs.

“China has no natural advantages other than illegal state support,” Alan Price of Washington law firm Wiley Rein said. (Reuters)

 

Main areas

 

Century Aluminum, which is majority-owned by Glencore, reported a first-quarter net loss. Part of the justification for the U.S. investigation into whether Chinese aluminum is a threat. It is that Century’s smelter in Kentucky is the only producer of high-purity aluminum required for U.S. combat aircraft.

In Europe, the main concern is how to maintain smelting capacity as part of a strong value chain, creating thousands of indirect jobs, rather than security, European Aluminium said in an email.

EU trade ministers, meeting in Brussels next week, are expected to discuss new rules on dealing with anti-dumping, which are likely to have most impact on Chinese imports.

In conclusion, the idea of OPEC-like association in the Aluminium market would impact prices in a really good way. That would make producers happy. But it will also have a great impact on Chinese economy. Mostly their imports, and also their production.

 

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Oil immerses, on U.S. stock decline

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Oil prices tumbled lower today, May 3. Right after the U.S. government data showed a smaller-than-expected decline in domestic crude inventories. There was also shown a weak demand for gasoline. And it is feeding bothers about a supply glut.

 

Oil Numbers & Data

Benchmark Brent crude LCOc1 was down 8 cents at $50.38 a barrel.

U.S. West Texas Intermediate (WTI) crude CLc1 was down 18 cents at $47.48 a barrel at 11:33 EST.

Weekly crude stocks fell by 930,000 barrels to 527.8 million. Which makes it less than half the 2.3 million-barrel draw that had been in forecast. (EIA)

“U.S. domestic production increased again, and continues its steady climb.” said John Kilduff. (Again Capital hedge fund partner in New York.)

Noteworthy, sharp drop in imports turned what would have been an increase in stocks into a small drawdown.

EIA data also showed gasoline stocks rose by 191,000 barrels, which was much less than the 1.3 million-barrel gain that had been forecast. However, gasoline demand slipped 2.7 percent over the last four weeks from the same period a year ago.

  • “This is continuing a trend since the beginning of the year in which sales have been lower and that is casting a shadow on the market and pressuring crude oil prices.” Andrew Lipow, president of Lipow Oil Associates in Houston. (Reuters)

While the market remains anchored on U.S. production, oil investors continue to watch.. And think whether producing countries have been complying with their 2016 deal to cut output around 1.8 million bpd by the middle of the year.

 

Russia’s position

 

Russia’s oil cut exceeds level demanded in OPEC-led pact. Under the deal, Russia promised to cut its average daily production gradually by 300,000 barrels to 10.947 million bpd. From the October level of 11.247 million bpd.

With global crude inventories still bulging, investors are now focused on whether OPEC and others will agree to extend the cuts to the second half of the year. This will most probably become true on May 25th.

Russia, contributing the largest production cut outside OPEC, said that as of May 1, it had curbed output by more than 300,000 bpd. Since hitting peak production in October.

Russia has achieved its reduction target a month ahead of schedule. OPEC production showed the group’s compliance had fallen slightly.

Alexander Novak, Russian Energy Minister has said he would meet managers of key Russian oil producer before the OPEC event. He wants them to discuss extending the cuts. That meeting has yet to take place.

Russia’s Deputy Prime Minister Arkady Dvorkovich refused to comment about this subject when asked today.

 

More Oil from East

 

  • “Although OPEC is expected to extend a self-imposed output cap by another six months, it would be a challenge convincing several non-OPEC members to join the endeavor.” Said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. (Reuters)

According to some news by Reuters it is clear that there was more oil from Angola and higher UAE output than originally. Thought meant OPEC compliance with its production-cutting deal slipped to 90 percent in April. From a revised 92 percent in March. Certainly, there are a lot of manipulations happening in the Oil market. Will it come out stronger after the May 25… We will see.

 

 

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Copper price falls below $5,700/t; all base metals down

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Financial Markets on Wednesday:

 

  • Fed expected to stand pat on rates
  • Jobs data and service sector activity to serve as prelude to Fed
  • Apple sales disappoint, shares off 1.5%
  • Oil bounces back from 1-month low
  • Global stocks show caution ahead of Fed decision

 

 

LME on Wednesday:

“Prices have dropped this morning but are consolidating. The rally yesterday failed to inspire a push beyond resistance.” 

All base metals on the London Metal Exchange saw prices decline. Nickel fell by 2.15% while copper fell by 1.88%. Tin and aluminium dropped by smaller margins to hold on to some of Tuesday’s price rally.

3-month copper price plunged by more than $100 per tonne during premarket trading on the London Metal Exchange on May 3. After hitting a three-week high at kerb trading yesterday.

“Underlying sentiment does not seem unified at the moment and the mixed bag of manufacturing PMI data out on Tuesday has raised some doubt over how strong the underlying global economy is.” (Metal Bulletin)

It seems unlikely that consumers will feel the need to chase prices higher. So market would look for more consolidation, although bouts of tightness in the some of the metals could lead to short-covering.

Today is May option declarations day.

 

Copper falls below $5,700 per tonne

 

Copper inventories rose 16,225 tonnes to 284,925 tonnes.  After suffering a mild downturn in April, copper is facing more headwinds going into May, according to INTL FCStone.
“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said.

“Tightened credit in China during April will continue to put pressure on copper prices,” China’s Galaxy Futures said. (Fast Markets)

 

 

Currencies and Indexes 

 

The dollar index was up 0.15% to 99.07. Following, the Brent crude oil spot price fell 0.45% to 50.87.
Speaking about indexes, The FSTE 100 was down 21.31 (0.29%) to 7,228.73. The final Euro zone manufacturing PMI for April rose to a cycle high of 56.7, while the UK measure hit a three-year high of 57.3. The new orders and export orders indices for both rose strongly. Both of which point to a pick-up in second-quarter growth prospects. (ANZ)

 

“However, the March unemployment rate for Europe was unchanged at 9.5%, where it has been stuck for three months. Germany may be at a historic low of 3.9%, but France (10.1%), Italy (11.7%) and Spain (18.2%) are not,” the bank added.

 US total vehicles sales data showed sales were running at an annualised rate of 16.9 million units (mu) in April, which was below an expected 17.1 mu, but above March’s 16.6 mu.
Data on Spanish and German unemployment change, UK construction PMI and EU preliminary flash GDP are due later today.  Also due is a series of important US data including ADP non-farm employment change, ISM non-manufacturing PMI, crude oil inventories, a Federal Open Market Committee Statement and the Federal Funds Rate.

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SHFE morning report; weaker U.S. and Chinese data

Important Facts about Today’s Market:

 

  • New Zealand Employment Change QoQ rose to actual 1.2% (forecast 0.8%)
  • Germany Unemployment Change – 30K actual (forecast -10K)
  • UK Construction Purchasing Managers Index (PMI) fell to actual 52.2(forecast 52.4)
  • The US ADP Nonfarm Employment Change to actual 263K (forecast 187K)
  • Also US ISM Non-Manufacturing PMI fell to 55.2 (forecast 57.0)
  • US Crude Oil inventories to -3.641M while exp. was -1.661M
  • FED Statement & FED Interest Rate Decision

 

SHFE

 

Base metals today on the Shanghai Futures Exchange were broadly lower during Asian morning trade, as desolate economic data from China and the USA weighed on market sentiment.

US Car sales

Firstly, under-performance in US car sales during April combined with China’s weaker PMI data has left market participants concerned over weaker economic growth in these two countries, according to a Shenzhen-based senior analyst. 

Secondly,the perceived weakness has dampened market sentiment and sent the base metals prices into retreat this morning.

“Prices drifted lower as investors fretted about weaker than expected manufacturing activity in China. Metals also fell as US carmakers reported steeper-than-expected US sales declines, suggesting demand will be weaker in that region.”

Thirdly, sales at all six of the biggest automakers in the USA fell again in April, with each company’s figures coming in below analysts’ estimates resulting in the fourth consecutive month of falling sales in aggregate, according to National Australia Bank (NAB). (Metal Bulletin)

“On Monday, March US personal spending figures disappointed (0.0% compared with 0.2% expected) and now the new drop in car sales confirms the view that not all is well with the US consumer. The recent soft US data releases are challenging the view that a rebound in activity should be expected in [the second quarter].”

 

China

Meanwhile, China has also had its fair share of disappointing data this week.

Following, China’s official NBS manufacturing PMI fell to 51.2 in April from 51.8 in March and below market expectations of 51.6, while the country’s non-manufacturing PMI also dropped to 54.0 in April from 55.1 in the previous month. Additionally, China’s Caixin manufacturing PMI fell to 50.3 last month from 51.2 in March.

“These three numbers taken together point to the same issues, that there is a slowdown in new domestic orders, export orders are falling, there is rising unemployment and a fundamental weakening in business confidence. Also, looking at the extreme, we may have to face the fact that the Chinese economy may be starting to embrace a downtrend,” Bands Financial Ltd said on Tuesday.

 

Copper price dips

SHFE June copper contract stood at 46,610 yuan per tonne as of 03:48 London time. Down 180 yuan compared with the previous session’s close.

“Tightened credit in China during April will continue to put pressure on copper prices,” China’s Galaxy Futures said on Wednesday.
After suffering a mild downturn in April, copper is facing more headwinds going into May, according to INTL FCStone Inc analyst Edward Meir.
“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said. (M.B.)

In conclusion, workers at PT Freeport Indonesia have continiued a month-long strike. At the world’s second-largest copper mine Grasberg. The strike is expected to hinder expansion plans at the mine.Strikers are persistent, it is the 3rd day of protests.

 

 

 

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BP’s profit tripled in the first quarter of 2017

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British Oil and Gas Company

The British oil and gas company joined oil major rivals including Exxon Mobil, Chevron and Total. They joined in posting stronger than expected quarterly profits,  mostly thanks to oil and gas prices.

BP’s profit nearly tripled in the first quarter of 2017 from a year earlier. Inspired by rising oil prices and production that hit a five-year high. While debt stacked up in order to pay for acquisitions and costs for the 2010 Gulf of Mexico spill.

Oil prices rose by 50 percent in the past year to around $54 a barrel in the first quarter.

 

BP’s expectations

 

BP expects prices to average between $50 and $55 a barrel in 2017, heading to the higher end of the range. If OPEC and major producing countries extend production cuts into the second half of the year.

The results could calm some concerns among investors. Who were shaked up when BP in February raised the oil price. They rose it to a level at which it could balance its books this year. To $60 a barrel after a string of investments that pushed up borrowing.

BP’s shares were trading 2.4 percent higher at 0721 GMT, the biggest winner on London’s bluechip FTSE 100 index.

  • “The results are positive,” but “gearing is creeping up towards the max of the 20-30 percent target range. Although divestments, including the recent $1.7 billion SECCO sale in China, should help.” (Reuters)

Net debt rose 9 percent in the quarter to $38.6 billion. Rising BP’s grab of net debt to shareholders’ equity from 26 percent to 28 percent. Which is obviously closer to its ceiling : 30 percent.

“The debt was always going to rise in the first half of the year and the 28 percent gearing, frankly, that doesn’t cause any problems at all.” (Reuters)

To keep oil prices buoyant, oil companies want the OPEC, Russia and other producers to extend their global pact to cut  for 2H17 from June 30.

”If they don’t get rolled into the second half of the year, there will certainly be more price volatility.”

 

London-based BP

 

London-based BP is set to start up seven projects this year. Including Oman and Azerbaijan, the largest number in a single year in company’s history. It hopes to add 800,000 bpd of new production by the end of the decade.

The renewal of BP’s ADCO onshore oil concession in Abu Dhabi in December was a main contributor to BP’s first quarter rise in output. Total upstream production, excluding BP’s share of Rosneft output, reached a five-year high of 2.39 million bProjects under construction are ahead of schedule and on average 15 percent below budget, BP said.

BP’s operating cash flow in the quarter rose to $2.1 billion from $1.9 billion a year earlier, hit by payments made toward settling fines related to the 2010 deadly Deepwater Horizon rig explosion and oil spill in the Gulf of Mexico.

BP took a pre-tax $161 million charge in the first quarter related to the spill. Total payments are expected to reach $4.5 billion to $5.5 billion this year.

BP reported first-quarter underlying replacement cost profit, the company’s definition of net income, of $1.51 billion, exceeding analysts’ average forecast of $1.26 billion.

 

 

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