LONDON: Oil prices fell on Monday as concerns over weak economic growth in China, the world’s top oil importer, overshadowed fears supply might be crimped by a potential EU ban on Russian crude
Brent crude futures were down $3.73, or 3.4 percent, to $103.41 a barrel at 1403 GMT, while US West Texas Intermediate crude futures fell $3.98, or 3.8 percent, to $100.71 a barrel.
Markets in Japan, Britain, India and across Southeast Asia were closed for public holidays on Monday.
China released data on Saturday showing factory activity in the world’s second-largest economy contracted for a second month to its lowest since February 2020 because of COVID lockdowns.
“A slowing to that extent, when China is already suffering from a property bust and worries about its (until recently) increased regulation, is potentially a major issue for commodity markets and the world economy,” said Tobin Gorey, a Commonwealth Bank commodities analyst, in a note.
On the supply side, Libya’s National Oil Corp. said on Sunday it would temporarily resume operations at the Zueitina oil terminal after it declared force majeure in late April on some shipments as political protesters forced a number of oil facilities to suspend operations.
Limiting the downside for prices was the EU leaning toward banning Russian oil imports by the end of the year, according to two EU diplomats, after talks between the European Commission and EU member states over the weekend.
The European Commission may spare Hungary and Slovakia from the embargo due to their strong dependency on Russian oil, two EU officials said on Monday, as the Commission is set to finalize its next batch of sanctions on Russia on Tuesday.
Around half of Russia’s 4.7 million barrels per day of crude exports go to the EU, supplying about a quarter of the EU’s oil imports in 2020.
While Western countries have refrained from buying Russian oil due to sanctions on those exports, the impact on global supply has been somewhat cushioned as India has been picking up heavily-discounted Russian cargoes.
Still, “Russia’s ability to redirect all unwanted cargoes from the West to Asia is limited,” consultancy Rystad Energy said.
“In the case of embargoes, Russia will be forced to cut production further as it lacks storage capacity for extra crude volumes.”
RIYADH: Saudi Arabia is expected to grow by around 10 percent in 2022, well above the current consensus expectations of 6.3 percent, according to a recent report by Capital Economics.
The economic research consultancy attributed future growth to the expected rise in oil sector output and the likelihood of a more relaxed fiscal policy in the Saudi economy.
Saudi Arabia’s economy expanding at the fastest rate in a decade
Saudi Arabia’s economy expanded by a robust 2.2 percent quarter-on-quarter in Q1, which translates into year-on-year growth of 9.6 percent, the fastest rate since 2011, according to the report.
This expansion resulted from a rise in output from all sectors, but was mainly driven by a sharp rise in the oil sector which grew 2.9 percent over the quarters, reported the General Authority for Statistics.
Saudi Arabia continued to increase oil production in accordance with the OPEC+ deal, with last year’s 1 million barrel per day output cut creating favorable conditions that led to a boost in output by 20.4 percent.
Oil production in Saudi Arabia was 10.3 million bpd in March, which translated into a growth of 26.7 percent year-on-year.
It also marked the fastest pace recorded since 2003, said Capital Economics in another report released in April.
Non-oil sector plays pivotal role in Saudi Arabian economy
The non-oil sector saw a growth of 2.5 percent as the economy continues to move toward being fully reopened after the COVID-19 pandemic.
A previous report from Capital Economics also noted that the non-oil sector has rebounded strongly since the omicron wave ended in January 2022.
Last year’s advancement in the fourth quarter also led Capital Economics to forecast a robust growth rate for this year. Interestingly, the growth in the fourth quarter of 2021 was largely led by the non-oil sector which rose 4.9 percent.
Point of sales transactions rose from 2.1 percent 3m/3m in March to 5.0 percent over the first half of April. Furthermore, mobility declined only slightly in the country since the start of the holy month of Ramadan.
RIYADH: While Fitch cut China’s 2022 gross domestic product forecast to 4.3 percent from 4.8 percent, South Korea’s April consumer price index, a gauge to measure inflation, has exceeded expectations, hitting a 13-year high.
Elevated employment levels in Ireland have kept the manufacturing growth booming, while German unemployment levels have fallen.
Australia’s central bank raised its main cash rate by 25 basis points to 0.35 percent, its first hike in more than a decade.
S.Korea April CPI growth hits over 13-year high, tops expectations
South Korea’s consumer prices rose much faster than expected in April, and at their fastest pace in more than 13 years, government data showed on Tuesday.
Statistics Korea showed the country’s CPI increased 4.8 percent in April from a year before, up from a 4.1 percent rise in the previous month.
It was the fastest annual growth since October 2008 and stood above the central bank’s 2 percent target for a 13th consecutive month.
Employment boost keeps Irish manufacturing growth booming — PMI
Rapid Irish manufacturing growth continued at a similar level in April to the previous month as the strongest boost to employment in almost a year mostly offset a slight slowdown in new orders and output growth, a survey showed on Tuesday.
The AIB S&P Global manufacturing Purchasing Managers’ Index fell slightly to 59.1 from 59.4 in March. That was still among the highest marks set in nearly 24 years of data collection.
“The Irish data for April paint a very similar picture to March, with strong growth in orders, output and employment, but less confidence on the outlook for business activity and continuing very elevated inflationary pressures,” AIB chief economist Oliver Mangan said.
Australia’s central bank hikes rates 25 bps to 0.35 percent
Australia’s central bank on Tuesday raised its main cash rate by a surprisingly large 25 basis points to 0.35 percent, its first hike in more than a decade, and flagged further tightening to come as it runs down the curtain on pandemic stimulus.
Wrapping up its May policy meeting, the Reserve Bank of Australia said now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the economy during the pandemic.
A majority of analysts in a Reuters poll had expected a rise to 0.25 percent given inflation had shocked by surging to 20-year highs in the March quarter.
German unemployment sinks in April as pandemic measures ease
German unemployment fell in April, Labour Office figures showed on Tuesday, though the continued recovery prompted by the easing of coronavirus pandemic measures was slowed by the war in Ukraine.
The Federal Labour Office said the number of people out of work fell by 13,000 in seasonally adjusted terms to 2.287 million.
Analysts polled by Reuters had on average expected a decrease of 15,000.
The seasonally adjusted jobless rate remained stable at 5.0 percent.
China’s 2022 GDP forecast cut to 4.3 percent from 4.8 percent on COVID hit
Fitch said on Tuesday it has cut China’s GDP growth forecast for 2022 to 4.3 percent from 4.8 percent, saying pandemic-related disruptions have had an impact on the country’s economy in the first two quarters of the year.
The rating agency said it still expects a quarter-over-quarter GDP contraction in the second quarter, before the economy starts to recover.
Fitch raised its 2023 growth forecast for the country slightly higher to 5.2 percent from 5.1 percent.
Pfizer Inc. maintained sales forecasts for its COVID products on Tuesday after a series of hikes to the sales outlook for its COVID-19 vaccine last year, in a sign that dizzying growth has slowed, according to Reuters.
Several countries across the globe have eased pandemic-linked restrictions and relaxed rules related to masking and quarantines, even as cases rise in some regions.
Diminished concern over COVID among both patients and governments could generate uncertainty over Pfizer’s ability to exceed sales forecasts for its vaccine and pill, Citi analyst Andrew Baum said in a research note.
The company said it expects $22 billion in sales of its COVID pill Paxlovid this year, compared with analysts’ average expectation of $26.1 billion.
Pfizer had previously said its forecast for $22 billion in Paxlovid sales only represents a fraction of the 120 million courses the company is able to manufacture this year.
The company’s reluctance to lift that forecast could suggest a dearth of new sales contracts for the pill during the first quarter.
In prepared remarks for the company’s conference call with investors, Chief Executive Albert Bourla said the company had seen a significant pickup in the drug’s use in the United States recently, and that some countries experiencing recent outbreaks had asked for more treatment courses.
“We expect the recent trends to expand access, as well as inquiries received from governments as the virus mutates and causes spikes in infections around the world, to result in increased orders in the coming months,” Bourla said.
The drugmaker also reiterated its forecast of $32 billion in sales from the vaccine it developed with BioNTec. It had raised the forecast for the vaccine’s sales every quarter in 2021.
Pfizer expects to submit data supporting authorization of a three-dose regimen of the vaccine for children under the age of 5 to US regulators by early June. The US Food and Drug Administration has already scheduled meetings later in June to consider authorization in that age group.
The company is also working on a potential update of its vaccine to combat the omicron variant of the coronavirus, which it hopes will help provide broad coverage in the fall.
Pfizer earned $1.67 per share excluding items in the first quarter, according to Refinitiv, beating estimates for $1.47 per share.
Sales of the COVID-19 vaccine were higher than analysts had forecast in the quarter as they had been booked earlier, according to SVB Securities analyst Mani Foroohar. Foroohar said that the front loading of sales was “a clear signal of slowing in the vaccine end market.”
Pfizer’s shares were down about 1.2 percent in premarket trading.
NEW YORK: Wall Street stocks were little changed early Tuesday amid elevated volatility as markets awaited a key Federal Reserve decision and monitored ongoing developments in Ukraine, according to AFP.
After a topsy-turvy session Monday in which stocks ended the session modestly higher, equities were zig-zagging again early Tuesday.
“The markets remain edgy, as the Fed is expected to be aggressive in this monetary policy tightening cycle,” Charles Schwab investment bank said in a note.
“Moreover, sentiment continues to be hampered by the ongoing war in Ukraine, the recent jump in interest rates, the continued rally in the US dollar, and the economic impact of the covid lockdowns in China.”
About 30 minutes into trading, the Dow Jones Industrial Average dipped 0.1 percent to 33,013.97.
The broad-based S&P 500 added 0.1 percent at 4,159.94, while the tech-rich Nasdaq Composite Index advanced 0.1 percent to 12,542.79.
Analysts broadly expect the Fed on Wednesday to increase the benchmark lending rate by a half point in a bid to counter inflation.
Worries about the Fed’s moves have pressured stocks for months, prompting debate on the extent that the monetary policy shift has been baked into the market already.
Investors are also watching developments in Russia.
Michael Carpenter, US ambassador to the Organization for Security and Cooperation in Europe, said Russia plans to “annex” two eastern regions of Ukraine battered by its invasion after failing to overthrow the government in Kyiv.
Mexican President Andres Manuel Lopez Obrador said during a regular news conference on Tuesday that he has been in touch with the leaders of Bolivia, Argentina and Chile to create a lithium association.
Mexico’s Congress last month passed a bill to nationalize lithium, tightening control of strategic mineral resources, as Lopez Obrador vowed to review all contracts to exploit the metal.