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Oil prices fall as OPEC seen unlikely to agree output restraint

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SINGAPORE Oil prices fell early on Thursday as a row between Saudi Arabia and Iran made it unlikely that the OPEC would agree any output constraints during a meeting in Vienna, just as demand worries from China resurfaced.

International Brent crude oil futures LCOc1 were trading at $49.58 per barrel at 0053 GMT, down 14 cents from their last settlement, while U.S. West Texas Intermediate (WTI) crude CLc1 was down 26 cents at $48.75 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) is set for another showdown between rivals Saudi Arabia and Iran when it meets on Thursday in the Austrian capital, with Riyadh trying to revive coordinated action or a formal oil output target, but Tehran rejecting both ideas.

“An output ceiling has no benefit to us,” said Iranian Oil Minister Bijan Zanganeh upon arriving in Vienna ahead of OPEC’s regular meeting on Thursday.

Driven largely by rising output from the Middle East, OPEC’s output is near record highs of over 32.5 million barrels per day (bpd), although there have been some disruptions, especially in Nigeria and Libya.

The spat between leading Saudi Arabia and Iran comes just as concerns have resurfaced over China’s demand.

“OPEC members will be keeping a close eye on China, with the low factory activity data that has been released possibly signalling a diminishing demand for oil – something that could do real damage to oil prices,” said Mihir Kapadia, CEO at Sun Global Investments.

Car sales in China, an important gauge for gasoline and, by extension, crude oil demand, have also fallen by almost a quarter since the end of 2015 to 2.12 million new registered vehicles in April.

Despite the price falls, low cost producers, especially in the Middle East, are feeling less inclined to restrain output as overall market conditions have improved significantly for exporters this year.

“With oil prices having rallied considerably since the abysmal start to the year … (OPEC) delegates are unlikely to be forced into extreme action,” Kapadia said.

Although prices are resisting a break above $50 per barrel, Brent is still 80 percent above a more than a decade low it hit in January.

(Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin)


Source: R-Business

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Asian shares steady, but strong yen sinks Nikkei

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TOKYO Asian shares were steady on Thursday as Wall Street eked out modest gains after the latest batch of U.S. data provided few clues on when the Federal Reserve might raise rates, while a resurgent yen pressured equity markets in Japan.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat in early trading.

Japan’s Nikkei .N225 skidded 1.3 percent, after the dollar sunk to a two-week low against the yen overnight following Japanese Prime Minister Shinzo Abe’s official announcement late on Wednesday of his widely expected decision to delay a sales tax increase.

“There were suggestions that markets were disappointed that PM Abe only announced the widely expected postponement of the sales tax increase and nothing specific on near term fiscal stimulus,” Sean Callow, senior currency strategist at Westpac, said in a note on Thursday.

Surveys over the past 24 hours also highlighted a sluggish global economy, with manufacturing activity across Asia, Europe and the Americas barely improving as producers struggled to bring in new orders.

A spate of U.S. economic data on Wednesday failed to reveal any fresh clues as to when the U.S. Federal Reserve might opt to raise interest rates, after central bank officials hinted such an increase could come as early as this month.

The Institute for Supply Management (ISM) said its index of national factory activity rose for a third straight month in May. But factories appeared to be taking in fewer deliveries from their suppliers. Separate data showed May automobile sales rose from April.

Investors focused on the brighter spots in the economy helped Wall Street pull off its lows, and braced for Friday’s key non-farm payrolls report for the latest clues on the strength of the labour market recovery.

Economists predict the report will show that U.S. employers added 170,000 jobs, slightly more than they did in April. Hourly wages are expected to show a 0.2 percent increase from the previous month.

The dollar slipped 0.2 percent to 109.32 yen JPY= after dipping as low as 109.05 on Wednesday.

The euro edged down 0.1 percent to 122.38 yen EURJPY=R, nursing its losses after dropping to lows of 121.91 overnight, its weakest since May 6.

Against the dollar, the euro was treading water at $ 1.1192 EUR= ahead of the European Central Bank’s policy meeting later in the session. The ECB is widely anticipated to hold steady on monetary policy.

Crude oil futures slipped after a choppy session on Wednesday, as investors awaited developments from this week’s OPEC meeting.

Reuters cited four sources from the Organization of the Petroleum Exporting Countries as saying the industry group was likely to discuss an output ceiling at its meeting in Vienna on Thursday. But later, Iran’s Oil Minister Bijan Zanganeh disagreed.

U.S. crude CLc1 was down 0.5 percent at $48.77 a barrel, but remained above its overnight session low of $47.75. Brent LCOc1 percent was 0.3 percent lower at $49.59.


Source: R-Business

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Singapore buys $1 billion in Alibaba stock in SoftBank sale

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<span class="focusParagraph articleLocation”>Singapore sovereign wealth funds bought $1 billion of Chinese e-commerce company Alibaba Group Holding Ltd’s (BABA.N) shares as part of an $8.9 billion sale by Japan’s SoftBank Group Corp (9984.T), Alibaba’s biggest shareholder, the company said on Wednesday.

Singapore’s GIC Private, Ltd and Temasek Holdings each purchased $500 million of Alibaba shares at $74.00 apiece through subsidiaries, Alibaba said, offering details of the SoftBank sale announced on Tuesday.

Alibaba purchased $2 billion of its own stock at the same price, in a move which would add to earnings, Executive Vice Chairman Joe Tsai told analysts on a call.

Members of the Alibaba Partnership of senior executives and founders purchased another $400 million, as expected, at the $74 per share price, he added.

SoftBank also offered $5.5 billion in debt securities, which can be exchanged for Alibaba stock in three years, Tsai said.

SoftBank Group said on Tuesday it would sell at least $7.9 billion of shares in Alibaba to cut the Japanese company’s debt. It said it would remain Alibaba’s largest shareholder after the sale.

Shares of Alibaba fell about 6.5 percent to close at $76.69.

(Reporting by Parikshit Mishra in Bengaluru; Editing by Richard Chang)


Source: R-Business

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