Saudi Arabia Announces Plans To Cut Oil Production

Oil prices climbed on Monday as the world’s biggest supplier
Saudi Arabia announced plans to cut production, in the face of
fears of oversupply.

Saudi Arabia’s energy minister said Monday that oil-producing
nations should cut output by one million barrels per day to
re-balance the market.

Khalid al-Falih’s comments follow a meeting in Abu Dhabi at the
weekend, where the OPEC group and its allies had already started
laying the groundwork to cut supply in 2019, reversing an almost
year-long expansion.

Saudi Arabia had said the kingdom would cut its production by
500,000 barrels per day.

Oil prices advanced steadily through Monday, with both Brent
Crude and West Texas Intermediate (WTI) seeing gains of more than a
dollar per barrel.

“In the short term this is a positive for oil, but we must
question the impact longer term unless it’s the sign of more to
come from OPEC,” said Neil Wilson, chief market analyst at
Markets.com.

“Saudi Arabia cannot act alone though — realistically it needs
to pull together OPEC allies, and critically Russia, to curb
production if it wants prices to hold. The language from Russia
suggests it is not ready to follow the Saudis yet.”

Last week, higher US energy stockpiles drove WTI crude to its
longest losing streak in more than 30 years, while Brent Crude
dropped below $70 a barrel for the first time since April.

– China focus –
In equities, Asian markets were largely flat Monday following
lacklustre US trading at the end of last week and nervousness over
Chinese growth.

Hong Kong and Tokyo hovered between positive and negative
territory, both closing up 0.1 percent.

Taiwan was flat, Seoul slid 0.3 percent, and Sydney closed up
0.3 percent.

“Asia stocks are trading tentatively as global growth worries
and uncertainty over the course for oil prices weighs on
sentiment,” said Stephen Innes, head of trading for Asia-Pacific at
OANDA.

“Investors are… left to ponder if this is the beginning of a
more definitive downturn or just another wobble.”

China’s economy is in the spotlight this week, with key monthly
data expected Wednesday and stocks tumbling last week on mounting
concerns of a slowdown.

Chinese e-commerce giant Alibaba took a record $30.7 billion in
orders on Sunday during its annual “Singles Day” shopping
frenzy.

However, sales growth slowed to 27 per cent this year from 39
per cent in 2017, adding to mounting concerns over the outlook for
the Asian powerhouse.

“But where we can get some comfort from this number is that
Chinese consumers are slowing, not collapsing,” Junheng Li, founder
of JL Warren Capital LLC, told Bloomberg News.

Major retailers got a Single’s Day lift in China, with
Suning.com gaining 1.5 per cent and Shanghai Bailian Group climbing
2.2 per cent.

China’s banking stocks were mixed however after the government
gave new guidance on requirements for banks to lend to private
companies. Last week bank shares dropped as investors balked at
what were seen as unprecedented government demands on lenders.

Industrial & Commercial Bank of China (ICBC), the Bank of China
and the China Merchants Banks all started the week with gains.

In Europe, where pressure is mounting on British Prime Minister
Theresa May over her Brexit plan, the FTSE opened up 0.6 percent in
early trading.

– Key figures around 0830 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 22,269.88
(close)

Hong Kong – Hang Seng: UP 0.1 percent at
25,633.18 (close)

Shanghai – Composite: UP 1.2 percent at
2,630.52 (close)

Euro/dollar: DOWN at $1.1241 from $1.1351 at
2200 GMT Friday

Pound/dollar: DOWN at $1.2849 from $1.3022

Dollar/yen: UP at 114.15 yen from 113.76
yen

Oil – West Texas Intermediate: UP $1.05 at
$61.23 per barrel

Oil – Brent Crude: UP $1.67 at $71.85 per
barrel

New York – Dow: DOWN 0.8 percent at 25,989.30
(close)

London – FTSE 100: UP 0.6 percent at
7,146.18.

(AFP)