KUALA LUMPUR: Sime Darby Plantation, the world’s biggest oil palm planter by land holdings, is considering exiting its palm and rubber operations in the West African nation of Liberia, industry sources said. The potential move comes as the Malaysian company’s return on investment in Liberia has been lower than expected due to disappointing planting activity […]
SINGAPORE: Oil prices were around 2019 highs on Wednesday, propped up by supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela.
But soaring U.S. production and expectations of an economic slowdown look set to cap prices, analysts said.
U.S. West Texas Intermediate (WTI) crude oil futures hit 2019 highs of $56.39 per barrel shortly after 0300 GMT on Wednesday, up 30 cents, or 0.5 percent, from their last settlement.
International Brent crude futures were at $66.58 per barrel, up 13 cents, or 0.2 percent, from their last close and not far off their 2019 high of $66.83 per barrel from Monday.
Oil prices have been supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC-member and top crude exporter Saudi Arabia is expected to reduce shipments of light crude oil to Asia in March as part of the effort to tighten markets.
OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.
“We have lowered Saudi crude oil output in line with announcements … (and) are now assuming that Saudi Arabia will produce in the first three quarters of 2019 less than the 10.31 million bpd target it agreed to at the Dec. 7 OPEC, non-OPEC meeting,” French bank BNP Paribas said in a note.
Because of the cuts, BNP said it expected oil prices “to rally through Q3 2019”, with Brent to average $73 per barrel by then and WTI to average $66.
Another key oil price driver has been U.S. sanctions on oil exporters Iran and Venezuela.
Despite the sanctions, Iran’s crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship tracking data. Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November.
SHALE BOOM, WEAKER ECONOMY
Standing against the supply cuts and sanctions is U.S. crude output , which soared by more than 2 million bpd in 2018 to a record 11.9 million bpd, thanks to booming shale oil production, which the Energy Information Administration on Tuesday said was expected to keep rising.
BNP Paribas said surging U.S. output would feed into lower oil prices towards the end of the year, with Brent to dip to an average of $67 a barrel by the fourth quarter and WTI to average $61.
“U.S. oil production growth, driven by shale, will be increasingly exported in greater volumes to international markets while the global economy is expected to witness a synchronised slowdown in growth,” the bank said.
HONG KONG, Feb 19 — Asian markets were mixed today with investors cautiously optimistic that China and the US can reach a deal ending their trade war as the two sides prepare to resume talks this week. With New York closed for a public holiday…
HONG KONG: Asian markets mostly rose Tuesday with investors cautiously optimistic that China and the US can reach a deal ending their trade war as the two sides prepare to resume talks this week.
With New York closed for a public holiday there were few catalysts to drive buying, though the release of Federal Reserve minutes on Wednesday will be pored over for an idea of the bank’s interest rate plans.
Top-level officials from the world’s two biggest economies will reconvene in Washington after a series of negotiations in Beijing last week, with the US side telling Donald Trump they had been “very productive”.
The positive tone from the diplomats, and the president’s indication he could extend a deadline for agreement, boosted regional markets Monday, extending a 2019 rally fuelled by optimism of an end to the nearly year-long tariffs spat.
Shanghai added 0.3%, having piled on more than two percent Monday, while Hong Kong rose 0.2% and Tokyo finished the morning 0.1% higher.
Sydney gained 0.5%, Singapore put on 0.3% and Taipei 0.2%, with Seoul flat and Wellington marginally lower.
Britain’s Labour strife
However, OANDA senior market analyst Jeffrey Halley warned of trouble ahead if Chinese and US officials do not agree a deal.
“The rallies (Monday) were impressive given the talks ended last week without any concrete results and have yet to even recommence in Washington this week due to the US public holiday,“ he said.
“Without sounding like a damp squib, there is now a vast amount of ‘optimism’ baked into currency, stock and energy market prices globally and precisely zero concrete detail. The unwind, should no deal be struck, could be very ugly.”
Oil prices were mixed after rallying Monday on trade talks hope and signs that OPEC and other key producers are narrowing output.
“Saudi Arabia seems willing to do whatever is necessary to reach levels of US$80 (RM327) a barrel, and judging by the price reaction, they’re on track,“ said Eugen Weinberg, head of commodities research at Commerzbank AG.
“Even rather bearish factors, like a stronger-than-expected rise in US oil production, does not seem to derail the price recovery.”
On currency markets the pound was down, with uncertainty fanned by news that seven pro-remain MPs had split from Britain’s opposition Labour Party over its handling of Brexit and a row over antisemitism.
The move “looks awfully like a bungled mess of the creation of a new party, which we think is more likely to be pound-negative… by giving Brexit a less effective opposition”, said Peter Chatwell, head of European rates strategy at Mizuho International, told Bloomberg News.
He added that it left both main parties “with clear pro-Brexit mandates”. — AFP
KUALA LUMPUR: Malaysian palm oil prices are set to hold steady in 2019 at an average of RM2,303 a tonne, according to estimates by the Malaysian Palm Oil Council (MPOC), while global output of the tropical oil is expected to rise by 3 million tonnes.
“Global palm oil production is projected to be 72 million tonnes, with Malaysia and Indonesia as leading producers,“ the MPOC said in an online conference presentation today.
Rising production could cap recent price gains for palm oil, which has been recovering after touching a 3-year low last November at RM1,940 a tonne.
Benchmark palm oil was trading at RM2,281 a tonne today. The tropical oil averaged RM2,308 last year, according to Refinitiv Eikon data.
MPOC, Malaysia’s key marketing agency for palm oil, also estimated that Malaysian output would rise to 20.2 million tonnes in 2019 and pegged Indonesian production at 42.8 million tonnes.
Malaysia produced 19.5 million tonnes of palm oil last year, while Indonesia’s 2018 output stood at 42 million tonnes, based on estimates by the Indonesia Palm Oil Association.
Malaysian palm oil output is expected to rise as newly replanted areas start to mature, but the increase will be marginal due to ageing trees and a possible El Nino in 2019 that will curb production, the MPOC said in its presentation.
“Indonesian production is forecast to reach a record high of 42.8 million tonnes in 2019 due to improving weather conditions as well as newly maturing areas,“ it added.
Palm oil exports in 2019 are also expected to increase in 2019, in line with an expected rise in demand from key importer India due to its declining domestic oilseed production.
“India is expected to increase its (vegetable oil) imports by 500,000 tonnes, reaching 15.15 million tonnes, out of which palm oil will account about 10 million tonnes,“ said the MPOC presentation.
Industry regulator the Malaysian Palm Oil Board forecast Malaysia’s a slight rise in production to 20.3 million tonnes this year due to favourable weather conditions and an expansion in oil palm matured area, according to an online presentation.
It estimated Malaysia’s 2019 exports at 17.2 million tonnes, up from 16.5 million tonnes last year, due to “expected stronger palm oil demand from major markets.”
LONDON, Feb 15 — Global energy demand will surge by a third over the next two decades on advancing prosperity, but Indian demand growth will eclipse that of flagging giant China, Britain’s BP forecast yesterday. “The demand for energy is…
JAKARTA: Indonesia, the world’s biggest producer of palm oil, will not accept an EU plan to curb the use of crops that cause deforestation, and argued that its higher production yield made it better placed to meet global demand, a senior Indonesian official said. A European Union draft due to come into effect after four […]
PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) plunged into the red with a net loss of RM25.22 million in the fourth quarter ended Dec 31, 2018 from a net profit of RM48.13 million a year ago, mainly due to losses from the marine segment.
The group’s revenue of RM273.24 million was 10% higher than the previous year’s corresponding quarter’s RM247.95 million, driven by higher contribution from the heavy engineering segment.
For the full-year period, it saw a net loss of RM122.69 million compared with a net profit of RM34.23 million, while the group’s revenue was 2% higher at RM974.35 million against RM956.41 million.
On prospects, MMHE said there has been positive signs that oil prices have begun to ease at between US$50-US$70 per barrel. Despite the gradual improvement, a range of factors have continued to influence oil prices including production cuts by OPEC, growth in US shale oil production and growing political tension across the globe.
The group remains prudent on the outlook for the industry in the near term given the uncertainties surrounding timing of capital spending by major oil and gas players.
“The outlook for marine business remains positive as global liquefied natural gas trade is expected to expand firmly driven by increase of exports from the US and Australia to Asia. In view of the forthcoming implementation of new rules by International Maritime Organisation, the group expects no further deferment by ship owners for dry docking activities in 2019,“ MMHE said.
The group had during the year secured a number of long term offshore fabrication frame agreements which are on call-out basis, including the long-term agreement signed with Saudi Arabian oil company (Saudi Aramco). These are expected to contribute positively to the group’s revenue in 2019 and beyond.
Meanwhile, MMHE remains committed to replenishing its order book in various geographical areas. Effort to ensure competitiveness of ongoing and future bids are continuing and remains a priority.
At 3pm, the stock was trading 1 sen or 1.5% lower at 64.5 sen on 814,600 shares done.
PUTRAJAYA: Malaysia’s uptake of crude palm oil (CPO) could increase to 1.3 million tonnes per annum by increasing the blending percentage of biodiesel from B10 to B20 as well as rolling-out the B10 mandate for industrial diesel use, said Primary Industries Minister Teresa Kok. She said the move would reduce high stock levels and encourage […]
BRUSSELS: The European Commission has concluded that palm oil cultivation results in deforestation and its use in transport fuel should be phased out, but environmentalists criticized it on Monday for allowing a number of exceptions. The commission published its proposed criteria for determining what crops caused harm at the weekend, following a law passed by […]