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Oil prices fall amid growing concerns over global economy

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2 years ago

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Brent futures and US crude falls by more than 4%.Concern about oversupply continue to cloud the oil market.Dollar weakens on Wednesday after big gains in the previous session.

LONDON: Oil fell sharply on Wednesday after slumping in the previous session, weighed down by demand concerns stemming from the state of the global economy and rising COVID cases in China.

Brent futures fell $3.04 to $79.06 a barrel for a 3.7% loss by 1452 GMT. US crude dropped $2.91, or 3.8%, to $74.02.

Both benchmarks plunged more than 4% on Tuesday, with Brent suffering its biggest one-day decline in more than three months.

“Worries about the state of the global economy are front and centre of traders’ minds and will remain so for the foreseeable future,” said PVM Oil analyst Stephen Brennock.

The Chinese government also increased export quotas for refined oil products in the first batch for 2023, signalling expectations of poor domestic demand.

Top oil exporter Saudi Arabia could cut prices for its flagship Arab Light crude grade to Asia in February, having been set at a 10-month low for this month, as concern about oversupply continued to cloud the market.

The head of the International Monetary Fund (IMF) warned that much of the global economy would face a tough year in 2023 because the main engines of global growth — the United States, Europe and China — were all experiencing weakening activity.

Monetary policy is also in focus, with the US Federal Reserve having raised interest rates by 50 basis points (bps) in December after four consecutive increases of 75 bps each. If the Fed intensifies its rate hikes, that could slow the economy and hamper fuel consumption.

OPEC oil output rose in December, a Reuters survey found on Wednesday, despite an agreement by the wider OPEC+ alliance to cut production targets to support the market.

The Organization of the Petroleum Exporting Countries (OPEC) pumped 29 million barrels per day (bpd) last month, the survey found, up 120,000 bpd from November.

Lending oil some support, the dollar weakened on Wednesday after posting big gains in the previous session. A weaker dollar typically boosts demand for oil because dollar-denominated commodities become cheaper for buyers holding other currencies.

US crude oil stockpiles are likely to have risen by 2.2 million barrels, with distillate inventories expected to have fallen, a preliminary Reuters poll showed on Monday.

Industry group American Petroleum Institute is due to release data on US crude inventories at 4:30pm EDT (2030 GMT) on Wednesday. The Energy Information Administration will release its figures at 10:30am (1430 GMT) on Thursday.

Bank UBS expects Brent prices to rise to $110 a barrel and WTI to rise to $107 in 2023.

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Business

In interbank trade, the Pakistani rupee beats the US dollar.

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6 days ago

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Business

Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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Business

The inflation rate in Pakistan dropped to its lowest level.

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On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.

The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.

Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.

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