High energy prices threaten UK hospital services

LONDON — UK hospitals bosses on Thursday warned that patient care may have to be cut to offset huge increases in energy bills over the winter months.

Most hospital groups contacted by medical journal the BMJ said they expected bills to at least double, as the price hikes kicked in.

The NHS Confederation, which represents health providers in the publicly funded National Health Service, said there would be a knock-on effect.

"The gap in funding from rising inflation will either have to be made up by fewer staff being employed, longer waiting times for care or other areas of patient care being cut back," the group's senior acute lead, Rory Deighton, told the BMJ.

"A failure to properly compensate the NHS for inflation will only heighten pressure on our health service as we move towards a winter that we know will be particularly challenging this year."

UK inflation is at a 40-year high of 10.1 percent with dire predictions that rates could climb to 18 percent or more next year.

Last week households were told that their gas and electricity bills would go up by 80 percent from October, with further rises set for next year.

But non-domestic customers are not covered by the energy price cap, making them more vulnerable to the surge in wholesale prices.

Businesses across the board have warned the huge increases could force many to close if the government does nothing to help.

The BMJ said bosses at Great Ormond Street Children's Hospital in London told it that they expected an energy bill of about £650,000 a month in January and February next year.

At the same time last year, it was about £350,000.

Sheffield Children's Hospital in northern England has anticipated a rise of nearly 130 percent in its total bill for 2022-23.

But Nottingham University Hospital in central England has budgeted for a 214-percent rise in gas and electricity this year, it added.

NHS England set aside £1.5 billion to cover an expected £485-million increase in energy bills. But the estimate was made in May and prices have risen again, prompting concern it may not be enough.

'BREAKING POINT'

The situation only adds to a growing catalogue of problems faced by the publicly funded National Health Service.

The NHS, created in 1948 to provide free healthcare and paid out of general taxation, is a cherished British institution.

But the system, which costs £190 billion a year to run and employs some 1.2 million people in England alone, has long faced significant under-funding.

The NHS Confederation's Deighton said the UK's new prime minister, to be installed next week, needs to act immediately to offset cost of living increases.

"The NHS needs at least £3.4 billion to make up for inflation during this year alone, and that is before we face a winter of even higher wholesale energy prices," he added.

Deighton's boss, chief executive Matthew Taylor, told The Guardian this week that the NHS was "in its worst state in living memory".

Problems include chronic staff shortages, overcrowded accident and emergency departments, ambulance delays and lengthy waiting lists for treatment.

One experienced A&E doctor wrote on the UnHerd website this month that the service was "at breaking point", with patients at risk.

Health experts say the crisis is decades in the making but has been exacerbated by squeezed budgets over the last 12 years of Conservative government, Brexit and the coronavirus pandemic.

Nurses and junior doctors are currently being balloted for strike action as part of widespread industrial action over below-inflation pay offers.

NHS health and social care workers were hailed as heroes during the pandemic but in a sign of the crisis, some hospitals have set up food banks for staff struggling with the rising cost of living.

One NHS manager told LBC radio on Tuesday he was planning to convert spare hospital space into "warm rooms" for employees unable to afford winter heating at home.

Agence France-Presse

Oil stays above $120 per barrel ahead of NATO Russia-Ukraine summit

LONDON - World share markets were choppy on Thursday as the Russia-Ukraine war kept oil above $120 a barrel, while "stagflation" worries rose on renewed talk of aggressive US interest rates hikes and slowing growth.

Europe's main stock indexes barely budged and government bond yields edged up toward multi-year highs hit earlier in the week as March PMI data came in reassuringly robust. 

Focus was otherwise on a Thursday special NATO summit in Brussels, which US President Joe Biden will attend, to discuss further responses to Russia's month-old invasion of Ukraine, which Moscow calls a "special military operation". 

Rabobank's head of macro strategy, Elwin de Groot, said markets would be watching what emerges closely, especially how unified NATO members remain and what Biden can offer European countries to help wean themselves off Russian gas.

"The NATO meeting is certainly important," de Groot said. "At the minimum you would expect the members to come up with preparations for a possible further escalation in the Ukraine war."

Wall Street futures were up a solid 0.6 percent ahead of trading there, but the mood seemed changeable.

MSCI's broadest index of Asia-Pacific shares outside Japan recouped some of its early losses overnight but ended down 0.6 percent after more falls in China and Hong Kong.

Japan's Nikkei bucked the trend, rising 0.25 percent to a nine-week high as its exporters cheered the yen falling to its lowest against the dollar since 2015. 

At 1000 GMT, the dollar was up 0.4 percent versus the yen, at 121.65, with expectations that the Bank of Japan will be far behind other top central banks in raising interest rates.

HAWKISH

Driving some of the volatility, Federal Reserve policymakers on Wednesday signaled they stood ready to take more aggressive action to bring down decades-high inflation, including a possible half-percentage-point rate hike at the next policy meeting in May. 

Those signals pushed all three main US share benchmarks 1 percent lower overnight. 

"The sharp hawkish repricing of Fed rate hike expectations has mainly benefited the US dollar against low yielding currencies whose own domestic central banks are expected to lag well behind the Fed in tightening policy," MUFG currency analyst Lee Hardman wrote in a note to clients.

Oil and gas markets also remained hot amid the geopolitical uncertainty.

Russian President Vladimir Putin said on Wednesday that Moscow would seek payment in roubles for gas sold to "unfriendly" countries, jolting energy markets, although Italy's President Mario Draghi said it planned to keep paying in euros. 

Brent futures were little changed at $121.67 a barrel and US West Texas Intermediate futures fell 41 cents, or 0.35 percent, to $114.5 a barrel

The bond market was starting to shift again with the yield on benchmark 10-year Treasury notes up at 2.37 percent and German bunds creeping over 0.52 percent.

"Inflation is really the big driver," Rabobank's de Groot said, adding that it was also behind falling consumer confidence.

EU leaders are expected to agree at a two-day summit starting on Thursday to jointly buy gas, as they seek to cut reliance on Russian fuels and build a buffer against supply shocks. But the bloc remains unlikely to sanction Russian oil and gas. 

Gold was slightly lower at $1,942.9 per ounce.

(Reporting by Marc Jones; Editing by William Mallard)

-reuters-

Moscow warns: Ban on Russian oil will have ‘catastrophic consequences’

Russian Deputy Prime Minister Alexander Novak warned Monday that a ban on Russian oil imports would have "catastrophic" consequences, as Western allies considered further sanctions on Moscow over Ukraine.

"A ban on Russian oil will lead to catastrophic consequences for the global market. The surge in prices will be unpredictable — more than $300 per barrel, if not more," Novak said in remarks carried by Russian news agencies. 

Novak added that it would be "impossible" to quickly replace Russian oil on the European market. 

"It will take more than one year and it will be much more expensive for European consumers," he said. 

"European politicians should then honestly warn their citizens, consumers what awaits them and that prices at gas stations, for electricity, for heating will skyrocket," he said. 

Novak said talks of an embargo on Russian oil creates "instability and leads to significant harm for consumers". 

He added that in retaliation for the halt on the Nord Stream 2 pipeline project, Russia could stop supplies via the Nord Stream 1 pipeline. 

"So far we have not made this decision. Nobody will benefit from this," Novak said. 

"Although European politicians are pushing us to this with their statements and accusations against Russia," he added. 

Agence France-Presse

Oil price spikes to $139 on talks about Russia oil ban, Iran deal delay

LONDON - Oil prices spiked to their highest levels since 2008 on Monday amid market supply fears as the United States and European allies considered banning Russian oil imports and prospects for a swift return of Iranian crude to global markets receded.

In the first few minutes of trade Brent crude reached $139.13 a barrel and US West Texas Intermediate (WTI) hit $130.50, both benchmarks striking their highest since July 2008.

By 1204 GMT, prices had eased back, with Brent up 6.3 percent at $125.55 per and WTI up 6.7 percent at $123.37.

Global oil prices have spiked more than 60 percent since the start of 2022, along with other commodities, raising concerns about world economic growth and stagflation. China, the world's No. 2 economy, is already targeting slower growth of 5.5 percent this year. 

US Secretary of State Antony Blinken said on Sunday said the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with Congressional committees to move forward with a US ban. 

"We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period," UBS commodity analyst Giovanni Staunovo said.

A prolonged war could see Brent moving above the $150 per barrel mark, he said.

Analysts at Bank of America said if most of Russia's oil exports were cut off, there could be a 5 million barrel per day (bpd) or larger shortfall, pushing prices as high as $200.

JP Morgan analysts said oil could soar to $185 this year, and analysts at Mitsubishi UFJ Financial Group Inc (MUFG) said oil may rise to $180 and cause a global recession.

Russia is the world's top exporter of crude and oil products combined, with exports at around 7 million bpd, or 7 percent of global supply. Some volumes of Kazakhstan's oil exports from Russian ports have also faced complications.

The head of Japan's largest business lobby said the country's imports of Russian crude could not be replaced immediately. Russia is Japan's fifth-biggest supplier of crude oil and liquefied natural gas (LNG).

Meanwhile, talks to revive Iran's 2015 nuclear deal with world powers were mired in uncertainty after Russia demanded a US guarantee that sanctions it faces over the Ukraine conflict would not hurt its trade with Tehran. China also raised new demands, sources said. 

France told Russia on Monday not to resort to blackmail over efforts to revive the nuclear deal, while Iran's top security official said the outlook for the talks "remains unclear". 

"Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long," said Amrita Sen, co-founder of Energy Aspects, a think tank.

Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said. 

Separately, US and Venezuelan officials discussed the possibility of easing oil sanctions on Venezuela but made scant progress toward a deal in their first high-level bilateral talks in years, five sources familiar with the matter said, as Washington seeks to separate Russia from one of its key allies. 

(Reporting by Bozorgmehr Sharafedin in London and and Scott DiSavino in New York, additional reporting by Florence Tan in Singapore; Editing by Jason Neely and Edmund Blair)

-reuters

Oil, wheat and aluminum jump as sanctions on Russia bite

LONDON - Brent crude jumped to near eight-year highs, wheat to 14-year peaks and aluminum hit a record as the Russian attack on Ukraine intensified and Western sanctions disrupted air and sea transport of commodities exported by Russia.

Russian forces were attempting to subdue Ukrainian cities, seven days into an invasion that has sparked massive sanctions, pushing international companies to halt sales, cut ties and dump billions of dollars' worth of investments. 

Brent climbed above $113 a barrel to its highest since June 2014, a gain of more than 40 percent so far this year. 

"Oil has been pushing higher on growing perceptions that Russian oil is unable to be "transacted"," ED&F Man Capital Markets analyst Edward Meir.

"Although oil is not technically under sanction, traders are understandably nervous about taking delivery of Russian crude, let alone storing, shipping and ultimately selling it."

Russia accounts for about 10 percent of global oil supplies. Russia and Ukraine account for about 29 percent of wheat exports. Wheat prices hit $10.59 a bushel, the highest since March 2008.

Corn prices rose to $7.47-3/4 a bushel, the highest since Dec. 2012. 

"Global buyers of grains have been increasingly turning to the US, Europe or South America to secure supplies in the immediate term, given the ongoing conflict," ING said in a note.

"Moreover, demand for stockpiling has also increased due to current uncertainty."

Dutch gas prices hit an all-time high of 185 euros a MWh after the UK ordered its ports to deny entry to Russian-owned ships and European Union countries considered a similar ban after a halt on air traffic. 

Russia supplies the European Union with 40 percent of its gas needs. It accounts for 40 percent of global mined palladium output, 10 percent of nickel supplies and 6 percent of global aluminum production. 

Palladium prices around $2,610 an ounce were trading near the seven month peak hit on Tuesday, aluminum hit a record high at $3,552 a tonne and nickel at $25,530 a tonne, close to the 11-year high hit last week.

"Supply outages from Russia are now but a question of time," Commerzbank analysts said in a note.

"Depending on how long they last, they could cause turmoil – in which case prices would rise significantly further."

Malaysian palm oil futures rose past 7,000 ringgit a tonne to hit a record high, on the prospect of rising demand as the closure of Ukrainian ports hits supplies of sunoil from the Black Sea region. 

Newcastle coal futures jumped to records above $300 a tonne as buyers scrambled to find alternatives to supplies from Russia, the third largest exporter after Indonesia and Australia.

(Reporting by Pratima Desai; additional reporting by Nigel Hunt, Susanna Twidale and Gavin Maguire; editing by Jon Boyle)

-reuters

Oil majors face backlash as era of big profits returns

PARIS, France — Soaring energy prices have brought massive profits to oil majors -- along with fierce criticism from environmentalists and politicians at a time when consumers are left with rising bills.

US firm ExxonMobil, France's TotalEnergies, and UK giants Shell and BP announced in the past week 2021 profits totalling a whopping $66.7 billion.

It marked a huge turnaround from 2020, when they posted losses as the pandemic emerged, prompting lockdowns that brought the world economy to a grinding halt and caused crude prices to collapse.

But oil and gas prices rallied big time last year, surging to $70 per barrel after briefly sinking into negative territory in 2020.

The main international and US contracts rose to seven-year highs in January and now sit at around $90. Gas prices, meanwhile, hit records in Europe.

"Oil companies benefited from an extraordinary alignment of the planets," said Moez Ajmi, oil industry expert at EY consultancy.

In addition to higher energy prices, energy firms "cleaned up" their assets to only keep the most profitable ones, Ajmi said.

The companies also strengthened their cost-cutting policies which started in a previous price slump in 2014.

A gradual increase in output by OPEC and its allies has also helped.

ExxonMobil went from a $22.4 billion loss in 2020 to a $23 billion profit in 2021. 

Shell was $20.1 billion in the green last year after a $21.7 billion loss in 2020. 

TotalEnergies went from a historic $7.2 billion loss to a 15-year high profit of $16 billion.

BP's recovery was not as big, going from $20.3 billion in the red to $7.6 billion in the green.

Prices at the pump and utility bills, meanwhile, have gone up for consumers.

'Slap in the face'

BP said the result would allow it to accelerate "the greening" of the company.

But the performances at the companies triggered calls for a windfall tax on the profits of energy firms in the UK.

"These profits are a slap in the face to the millions of people dreading their next energy bill," Greenpeace UK's head of climate Kate Blagojevic said in a statement.

"BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favourable tax regimes in the world for offshore drillers," she said.

"And these are the same companies responsible for pushing our world closer to catastrophic climate change."

Seeking to head off a political storm, the government of Prime Minister Boris Johnson announced last week a package of financial support after the state energy regulator lifted prices.

The opposition Labour Party said it was not enough.

Finance minister Rishi Sunak's "energy plans last week left families more worried than ever," tweeted Labour shadow minister Rachel Reeves after the oil companies published their results.

"It's time for Labour's plan for a one-off windfall tax on oil & gas producers to cut bills."

Sunak rejected the tax idea.

More profits

With a presidential election looming in France in April, Green candidate Yannick Jadot spoke out against profits made "on the back of French men and women" while "gas and petrol bills rise for the benefit of shareholders".

TotalEnergies CEO Patrick Pouyanne said that if the company paid more to governments, "it would be at the expense of investments, workers or shareholders".

But in apparent move to fend off criticism, TotalEnergies announced this week a discount at the pump in rural areas of France along with a 100-euro voucher for people struggling to pay their gas bills.

Oil majors, however, could be in for another banner year for their bottom lines as analysts forecast prices climbing to $100 per barrel.

"The health crisis appears to be ending, the economic recoveries in China, the United States and Europe don't appear to be flagging, supply continues to be limited due to a lack of oil investments in the past two years and environmental pressure," Ajmi said.

"So, yes, the profit rebound of the oil majors could continue in 2022."

Agence France-Presse

Fossil fuel power demand has 'peaked worldwide': analysis

PARIS - Electricity generation from fossil fuel has peaked worldwide as emerging markets opt for cheaper renewable technology as part of a global shift to cleaner energy, analysis showed Wednesday.

Renewable options such as solar and wind are already the cheapest source of new power generation in 90 percent of the world's markets, meaning developing nations can avoid oil and gas as they seek to meet growing electricity demand.

New research from India's Council on Energy, Environment and Water (CEEW) and the financial think tank Carbon Tracker showed how emerging markets are already "leapfrogging" fossil fuel infrastructure and heading straight for green power generation.

These same markets account for nearly 90 percent of future electricity demand, the analysis found.

It also showed that fossil fuel demand has already peaked in nearly all emerging markets, barring China. 

But with solar and wind capacity growing rapidly in the world's most-polluting nation, fossil fuel demand there is predicted to peak within five years.

And, as demand plateaus, the study found that continuing to build fossil fuel-powered infrastructure could cost governments billions in stranded assets.

China stands to lose up to $16 billion by 2030 if it pushes ahead with its new planned coal plants, for example. 

"Emerging markets are about to generate all the growth in their electricity supply from renewables," said Kingsmill Bond, Carbon Tracker energy strategist and report co-author. 

"The move will cut the costs of their fossil fuel imports, create jobs in domestic clean power industries, and save millions of lives lost to fossil fuel pollutants."

Impediments' 

The analysis used the example of India -- a major polluter and also a main driver of electricity demand growth -- to show how power systems might be rapidly decarbonised with the right economic conditions.

Since 2010, India’s solar capacity has increased nearly five-fold from 20 to 96 gigawatts. 

Including generation from large hydropower projects, renewables now account for 37 percent of India's energy production, the analysis said.

Demand for fossil fuel generation "reached a plateau in 2018, and fell in 2019 and 2020".

Arunabha Ghosh, CEO of CEEW and report co-author, said the international community had a "moral obligation" to help developing nations green their grids.

"Around 770 million people still lack access to electricity," said Ghosh. "They are a small share of forecast growth in electricity demand."

The report authors acknowledged that there were "vested interests" slowing down the green energy transition worldwide.

These include fossil fuel subsidies, which run into the trillions of dollars each year, by some estimates. 

Bond said he expected subsidies to fall over time due to falling fossil fuel demand.

"It causes additional burdens to emerging market governments," he told AFP. 

"And the need to reduce those subsidies is one of a number of reasons why over time fossil fuel importer countries will reduce their fossil fuel imports."

Agence France-Presse

Death of diesel looms as carmakers accelerate to electric future

PARIS - The world's biggest diesel engine factory in Tremery, eastern France, is undergoing a radical overhaul - it's switching to make electric motors.

From less than 10% of output in 2020, electric motor production at Tremery will double to around 180,000 in 2021, and is planned to reach 900,000 a year - or more than half the plant's peak pre-pandemic output - by 2025.

The shift is testament to a car industry in flux. Demand for diesel cars has slumped since a 2015 pollution scandal, while tough new EU regulations, which fine carmakers for exceeding emissions limits, are pushing them to make more electric models.

So, in the midst of a pandemic and with the level of consumer demand for battery-driven cars still uncertain, automakers from Volkswagen to Nissan are ditching diesel models and ramping up output of electric drives.

"2021 is going to be a pivotal year, the first real transition towards the world of electric models," said Laetitia Uzan, a representative for the CFTC union at Tremery.

But for Tremery's 3,000 workers, and the wider car industry, there's an added complication.

Electric motors only have a fifth of the parts of a traditional diesel engine, putting a question mark over jobs.

Uzan acknowledged a risk that fewer staff may be needed, but was optimistic that could happen "quite naturally" as workers retire without being replaced.

Tremery's owner Stellantis - newly created from the merger of Peugeot maker PSA and Fiat Chrysler to help tackle the industry changes - has said it won't close factories and will seek to protect jobs.

But some industry researchers warn Europe's car manufacturers, already suffering from overcapacity, will have to make big cuts in order to deliver the investments needed to catch up with U.S. electric car pioneer Tesla.

French car lobby group PFA estimates 15,000 jobs linked to diesel are at risk in France, out of 400,000 employed by the industry as a whole.

IAB, a German labour research institute, calculates the arrival of electric vehicles could threaten 100,000 jobs in Germany, or about one in eight German auto industry jobs.

'UNPRECEDENTED YEAR'

The transition from diesel is particularly marked in Europe, where sales of diesel vehicles made up at least 50% of the total as recently as 2015, according to data from research group JATO Dynamics, far higher than in both North America and Asia.

At least 20 car models will no longer offer diesel versions in 2021, from Volkswagen's Polo and Renault's Scenic to Nissan's Micra and Honda's Civic, according to researchers IHS Markit, which says 2021 will be "an unprecedented year" in the shift away from diesel.

Meanwhile, a slew of new electric models will hit showrooms.

The Society of Motor Manufacturers and Traders, Britain's car lobby group, expects 29 new fully-electric and seven plug-in hybrid models will be launched in the country this year, compared with 26 internal combustion engine models - only 14 of which will have diesel variants.

There are encouraging signs that consumer interest in electric vehicles is picking up.

In September, EU registrations of electrified vehicles - fully electric, plug-in hybrid or hybrid - overtook diesel registrations for the first time, according to JATO data.

EU sales of fully-electric and plug-in hybrid vehicles surged 122% in the first nine months of 2020, at a time when overall vehicle sales fell 29% due to the pandemic.

But they still only accounted for around 8% of total sales, with some drivers put off by the limited availability of charging points and higher cost of many electrified models.

At Renault's Cleon plant near the northern French coast, the switch from diesel is well under way, with only half a building housing the assembly lines for diesel motors while hybrid and electric motors are spread over two whole buildings.

"If an employee came back after several years away, they wouldn’t recognize the place," said Lionel Anglais, a union representative with oversight of manufacturing at Renault.

-reuters

Gas boom risks 'perfect storm' for climate, economy: report

PARIS, France — Global natural gas capacity under construction has doubled in a year according to new analysis that warned Tuesday the investment boom in the world's fastest-growing fuel risks a "perfect storm" of climate chaos and stranded assets.

Capital expenditure on liquefied natural gas (LNG) facilities has surged from $82.8 billion to $196.1 billion over the last 12 months, according to a report by Global Energy Monitor.

Following a string of divestments from high-profile LNG funders, the report warned that at least two dozen projects were recently cancelled or are in serious financial difficulty.

"LNG was once considered a safe bet for investors," said Greg Aitken, research analyst at Global Energy Monitor.

"Not only was it considered a climate-friendly fuel, but there was substantial governmental support to make sure that these mega-projects were shepherded to completion with all the billions they needed.

"Suddenly the industry is beset with problems," Aitken said.

As the coronavirus pandemic squeezes investors and a growing social movement against new gas projects gathers pace, the report said troubled projects were facing a range of difficulties in sustaining finance.

In the past year Berkshire Hathaway and the governments of Sweden and Ireland were among financiers to drop several billion dollars worth of gas project funding, it noted.

'Economically unsound decision'
While its proponents push LNG as a "bridge fuel" because it is less polluting than coal, a new gas-fired power plant has roughly the same environmental impact as a new coal plant, given the leakage of methane throughout the supply line.

Methane is dozens of times more potent a greenhouse gas than carbon dioxide over a 100-year time scale.

The landmark 2015 Paris climate deal enjoined nations to limit global temperature rises to "well below" two degrees Celsius (3.6 Fahrenheit) over pre-Industrial Revolution levels.

The accord also commits countries to work towards a safer warming cap of 1.5 degrees Celsius.

According to the Intergovernmental Panel on Climate Change (IPCC), the safest and surest way to reach the 1.5 degrees Celsius goal would require a 15 percent decline in gas use by 2030 and a fall of 43 percent by 2040.

Global Energy Monitor said that any new gas infrastructure "directly contradicts the Paris climate goals".

The European Investment Bank (EIB) — the world's largest multilateral lender — said last year it was ceasing funding for nearly all new fossil fuel projects.

EIB vice-president Andrew McDowell said investing in new LNG capacity "is increasingly an economically unsound decision".

"We need to take advantage of opportunities that put us firmly on the path to reaching net-zero by 2050 whilst securing more jobs in the short and long term," he told AFP.

"This will undoubtedly be challenging, and it can't be instant. But it must happen."

Agence France-Presse

Continued oil market turmoil weighs on global stocks

Oil-price turmoil gripped markets once more Tuesday, a day after US crude futures crashed below zero for the first time as the coronavirus crisis crippled global energy demand and worsened a supply glut.

The commodity rout also sent world equity markets spiraling lower, as investors fretted it could compound an expected deep global economic downturn.

The benchmark WTI price collapsed Monday to an unprecedented low of minus $40.32. Negative prices mean traders must pay to find buyers to take physical possession of the oil -- a job made difficult with the world's storage capacity at bursting point.

A day after its historic slide into negative territory amid a supply glut, US oil futures finished in positive territory.

But the market remained under heavy pressure due to the oversupply as coronavirus shutdowns constrain global growth.

Storage is a particularly big problem in the US where WTI oil is delivered at a single, inland point.

In Europe, where Brent is the benchmark, there are several delivery sites and their proximity to the sea allows some of it to be stored on tankers.

"Players are now paying buyers to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar," said Rystad Energy analyst Louise Dickson.

This week's massive sell-off came just ahead of Tuesday's expiration of the May contract. Most trading has now moved to the June contract, and May WTI was back in positive territory by the close of New York trading.

- 'Slice of pizza' -

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia.

"Ever thought that it could be imaginable to see the price of US oil valued at less than a pizza? Or even a slice of pizza? How about for it to actually cost (money) to sell US crude?" said Jameel Ahmad, head of currency strategy and market research at FXTM.

While the two big oil-producing nations have drawn a line under the dispute and agreed with other countries to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand and prices have remained low.

European benchmark Brent North Sea oil for June delivery tumbled to an 18-year low, before coming off worse levels in volatile deals.

- Stock markets sink -

Equity markets were meanwhile also deep in the red on Tuesday, having enjoyed a healthy couple of weeks thanks to massive stimulus measures and signs of an easing in the rate of new infections globally.

Key eurozone stocks markets closed with declines of up to four percent, while London did a little better thanks to a weaker pound.

On Wall Street, the Dow finished down more than 630 points, or 2.7 percent.

"Continued dysfunction in the crude oil markets" was the main factor behind the decline, analysts at Charles Schwab said, "while the Street continues to assess the timing of when the US economy may be able to reopen."

Analysts warned the drop in stock markets could be an indication that the recent surge may have been hasty, and that another prolonged sell-off is possible.

- Key figures around 2030 GMT -

West Texas Intermediate (May delivery): UP at $10.01 per barrel

West Texas Intermediate (June delivery): DOWN 43 percent at $11.57 per barrel

Brent North Sea crude (May delivery): DOWN 22.1 percent at $19.93

Brent North Sea crude (June delivery): DOWN 24.4 percent at $19.33

New York - Dow: DOWN 2.7 percent at 23,018.88 (close)

New York - S&P 500: DOWN 3.1 percent at 2,736.56 (close)

New York - Nasdaq: DOWN 3.5 percent at 8,263.23 (close)

London - FTSE 100: DOWN 3.0 percent at 5,641,03 points (close)

Frankfurt - DAX 30: DOWN 4.0 percent at 10,249.85 (close)

Paris - CAC 40: DOWN 3.8 percent at 4,357.46 (close)

EURO STOXX 50: DOWN 4.1 percent at 2,791.34 (close)

Tokyo - Nikkei 225: DOWN 2.0 percent at 19,280.78 (close)

Hong Kong - Hang Seng: DOWN 2.2 percent at 23,793.55 (close)

Shanghai - Composite: DOWN 0.9 percent at 2,827.01 (close)

Euro/dollar: DOWN at $1.0859 from $1.0862 at 2100 GMT

Dollar/yen: UP at 107.77 yen from 107.62

Pound/dollar: DOWN at $1.2301 from $1.2442

Euro/pound: UP at 88.27 pence from 87.30

burs-jmb/cs

Agence France-Presse

Saudis take 'big hit' as OPEC seals first joint oil cut with Russia since 2001

VIENNA -- OPEC agreed on Wednesday its first oil output cuts since 2008 after Saudi Arabia accepted "a big hit" on its production and dropped its demand on arch-rival Iran to slash output.

Non-OPEC Russia will also join output reductions for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up oil prices.

Brent crude jumped over 9 percent to more than $50 a barrel as Riyadh reached a compromise with Iran and after fast-growing producer Iraq also agreed to curtail its booming output.

"OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut," said OPEC watcher Amrita Sen from consultancy Energy Aspects.

Iran and Russia are effectively fighting two proxy wars against Saudi Arabia, in Yemen and Syria, and many sceptics had said the countries would struggle to find a compromise amid frosty political relations.

Saudi Energy Minister Khalid al-Falih said ahead of the meeting that the kingdom was prepared to accept "a big hit" on production to get a deal done.

"I think it is a good day for the oil markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

OPEC produces a third of global oil, or around 33.6 million barrels per day, and under the Wednesday deal it would reduce output by around 1.2 million bpd from January 2017.

Saudi Arabia will take the lion's share of cuts by reducing output by almost 0.5 million bpd to 10.06 million bpd. Its Gulf OPEC allies -- the United Arab Emirates, Kuwait and Qatar -- would cut by a total 0.3 million bpd.

Iraq, which had insisted on higher output quotas to fund its fight against Islamic State militants, unexpectedly agreed to reduce production -- by 0.2 million bpd.

Iran was allowed to boost production slightly from its October level -- a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.

Clashes between Saudi Arabia and Iran dominated many previous OPEC meetings.

"If you get this deal done, it would be huge. You remove a lot of oil from the market and you get the Russian participation," said veteran OPEC watcher and founder of Pira consultancy Gary Ross.

He said oil could rise to $55 per barrel.

Will OPEC comply?

Falih had long insisted OPEC would do an output-limiting deal only if non-OPEC producers contributed.

OPEC president Qatar said non-OPEC producers had agreed to reduce output by a further 0.6 million bpd, of which Russia would contribute some 0.3 million.

Russia, which had long resisted cutting output, pushed its production to new record highs in recent months.

"Russia will gradually cut output in the first half of 2017 by up to 300,000 barrels per day, on a tight schedule as technical capabilities allow,” Russian Energy Minister Alexander Novak told a briefing in Moscow.

Novak, who spoke an hour after OPEC announced its deal, did not say from which output levels Russia would cut.

A combined output reduction of 1.8 million bpd by OPEC and non-OPEC represents almost 2 percent of global output and would help the market clear a stocks overhang, which had sent prices crashing from levels as high as $115 a barrel seen in mid-2014.

Non-OPEC Azerbaijan and Kazakhstan have said they might also cut.

OPEC suspended Indonesia's membership on Wednesday since the country, a net importer, could not cut output, Qatar said.

The move will not affect OPEC's overall reduction as Indonesia's share of cuts will be redistributed among other members.

Bob McNally, president of Washington-based consultancy Rapidan group, said on Twitter that compliance with cuts would be key: "In deals with Russia, OPEC is like (the late US) President (Ronald) Reagan used to say: 'Trust but verify'."

OPEC will hold talks with non-OPEC producers on December 9. The organization will also have its next meeting on May 25 to monitor the deal and could extend it for six months, Qatar said.

source: interaksyon.com

World oil prices edge higher on OPEC remarks

LONDON - The oil market drifted higher Thursday as investors digested an upbeat demand forecast from the head of the OPEC crude producers' cartel.

Brent North Sea crude for delivery in November added seven cents to stand at $51.40 per barrel just after midday in London.

US benchmark West Texas Intermediate for delivery in November won eight cents to $47.89 per barrel compared with Wednesday's close.

"Oil prices are... recouping some of the losses they suffered yesterday," said Commerzbank analyst Carsten Fritsch.

"The optimistic remarks made about oil demand by OPEC Secretary General El-Badri still appear to be having after-effects," he added.

Traders were mulling remarks by Abdalla Salem El-Badri, secretary-general of the Organization of the Petroleum Exporting Countries, who stated that demand will rise more than projected this year.

"World oil demand is estimated to increase by 1.5 million barrels per day in 2015, higher than the initial projection," El-Badri said in a statement to the International Monetary Fund (IMF).

"In 2016, improvement in global economic activities is anticipated to support world oil demand to grow by 1.3 million barrels per day."

Prices had tumbled Wednesday after a US Department of Energy report showed commercial crude stockpiles rose more than expected in the week ending October 2, indicating softer demand in the world's top oil consuming nation.

Stockpiles rose by 3.1 million barrels, more than the market estimate of 2.25 million barrels. That brought inventories to 461.0 million barrels, more than 27 percent higher than a year ago.

US production, which had fallen by 40,000 barrels per day in the previous week, unexpectedly surged by 76,000 barrels per day, dousing hopes of an easing in the global crude oversupply.

Sanjeev Gupta, who heads the Asia Pacific oil and gas practice at professional services firm EY, added that traders were waiting for Thursday's release of minutes of the last meeting of the Federal Reserve for further clues on the health of the US economy.

source: interaksyon.com

FEATURE | Turning cow poo into power is profitable for US farm

PLYMOUTH, United States - For most farms, manure is a pungent problem. At Homestead Dairy, it smells like money.

The family-run American farm invested in a biogas recovery system which transforms cow poo and other waste into electricity.

Enough electricity, in fact, to power 1,000 homes, a service which the local utility company pays for handsomely.

But that's just a side benefit.

"It works economically, but one of the main reasons we did it was to try to help take care of the odor control for the neighbors," said Floyd Houin, whose family has owned the farm in Plymouth, Indiana since 1945.

"The land's important to us also because we produce a crop for feeding cows. So we want to do everything we can to take care of the land and the water. We drink the same water as everyone else."

Livestock farms typically store their effluent in open lagoons and the stench does not make them very popular with the neighbors.

The lagoons also have a significant environmental impact because they emit methane and carbon dioxide -- major contributors to climate change -- and can sully the groundwater if they leak or overflow during heavy rains.

Setting up an anaerobic digester -- essentially a giant shed that uses heat to speed up decomposition -- captures both the smell and the greenhouse gases.

Power one million homes

The Environmental Protection Agency estimates that more than three million tons of greenhouse gas emissions were eliminated last year by Homestead and the 246 other US livestock farms which have installed biogas recovery systems.

That's equivalent to taking more than 630,000 cars off the road.

There are about 8,000 dairy and hog farms in the United States which are large enough to make a biogas recovery system viable.

The EPA estimates they could generate enough electricity to power over a million homes and cut emissions by the equivalent of taking nearly four million cars off the road.

Biogas recovery is also being used to capture methane from landfills and sewage treatment plants and even at craft beer companies.

"The federal government is really committed to seeing progress in this sector," said Allison Costa, program manager for the EPA's AgStar unit.

"Widespread investment and adoption could help us make significant inroads in helping us address some of our environmental and energy challenges."

The problem is the financing, Costa said. There's a huge upfront cost and most utility companies in the United States won't pay enough for the electricity to make the project appealing to a bank loan officer.

It also requires a lot of maintenance, which many farms don't have the manpower to manage. But when it works, Costa said, it really works.

"We've seen a lot of farms expand and build a second one," she told AFP.

"You just have to have someone willing to love that digester and take care of it."

Ryan Rogers, 31, loves his digester.

"There's so many (good) things, you forget them all," said Rogers, who married into the Homestead family and spends about four hours a day on digester maintenance and management.

Controlling the smell from the 70,000 gallons of manure and urine produced every day by the dairy's 3,400 cows clearly tops the list.

Then of course, there's the crops. The digester does a much better job of turning the manure into fertilizer, which means a better yield from the farm's 4,500 acres of corn.

Once that nutrient-rich liquid fertilizer is extracted, what's left makes for some nice soft bedding for the cows.

And instead of spending money to manage the manure, soon they'll be making money off it.

Recover cost in five years

The family managed to get a grant to help cover some of the cost of the facility and a favorable contact with the local power company which was looking to expand its renewable energy supplies.

They bring in extra income -- and fuel for the generators -- by charging restaurants and food processing plants a lower rate to dump their waste than the local landfill.

It will probably only take about five years until the initial investment is fully paid off, Rogers said. And it's working so well they're planning to build a second facility.

"It's definitely a growing field within the United States," said Mike Fenton of Michigan CAT, which sold the Caterpillar generators used by Homestead and helps them to maintain the system.

The European market is much more advanced because there are so many more subsidies available and the cost of electricity is so much higher, he said.

While US farmers may balk at the initial cost -- a system like the one at Homestead would run around $6 million -- Fenton said it's a good investment. Most farms can pay it off and start making a profit within three to five years.

"It's a proven technology that works really well," he told AFP.

source: interaksyon.com

Oil prices little changed as U.S. oil stocks data disappoints

SINGAPORE - Oil prices were little changed in early Asian trade on Thursday as an unexpected build in U.S. gasoline inventories offset a higher than forecast draw in U.S. crude inventories, while Brent was supported by buoyant manufacturing figures from Europe.

Brent crude for August delivery rose 10 cents to $63.59 a barrel by 0130 GMT (0930 EDT), after settling down 96 cents, or 1.5 percent, in the previous session.

U.S. crude for August delivery shed 9 cents to $60.18 a barrel, after ending the previous session down 74 cents, or 1.2 percent.

"The market is disappointed with last night's numbers," said Mike McCarthy, chief market strategist at Sydney's CMC Markets.

"The spread (between Brent and U.S. crude) had narrowed so it's not surprising it's diverging," McCarthy said.

The spread between Brent and West Texas Intermediate had narrowed towards $3 in trading on Wednesday but was widening in early trade on Thursday.

He said Brent was being supported by strong data from the Euro zone earlier this week which showed private businesses expanded at their fastest pace in four years this month.

But U.S. crude was down due to the larger than expected build in gasoline inventories after the U.S. Department of Energy's Energy Information Administration released oil stocks data on Wednesday.

The build in gasoline stocks came despite U.S. gasoline demand in the week to June 19 being at highest level for the period since 1991.

U.S. gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19, compared with a Reuters poll which expected a 304,000-barrel drop, EIA data showed.

That was despite a larger than expected fall in U.S. crude inventories, which fell for the eighth straight week, by 4.9 million barrels to 462.99 million, in the week ending June 19, compared with analyst expectations of a 2.1 million barrel draw, the EIA said.

source: interaksyon.com

World's largest oil trade show sees more Chinese presence

HOUSTON -- The world's largest oil and natural gas trade show, the Offshore Technology Conference (OTC), kicked off in the US energy hub of Houston on Monday with a visible presence of emerging Chinese companies.

The annual event, a conference and exhibition, was unveiled Monday morning in the cavernous complex of NRG Park near downtown Houston. Thousands of professionals from around the world braved the Texas heat to attend the industry gala.

The show has apparently felt the pinch from the plunging oil prices as quite a few OTC veterans told Xinhua they saw less visitors and exhibitors coming this year.

OTC Chairman Ed Stokes, however, remained optimistic, saying though he did not have the attendance number right now but this year's exhibition floors are the largest ever -- enough to cover around 12 American football fields.

"The drop in oil price may have some impact (on OTC), but it doesn't affect the quality of the programs we have. The people here to speak are top class and the equipment and technologies on display are top notch," Stokes said.

Stokes noticed the increasing number of Chinese companies coming to the show. Among some 2,700 exhibitors, about one tenth are from China.

"We have more than 130 countries represented here. China is the second largest economy in the world and also a big player in oil industry," said Stokes. "So it's very important for Chinese companies to be here to advertise themselves and network with others."

Cao Minghui, an operation director with Sinopec Oilfield Services Corporation, admitted to Xinhua that as a latecomer in the industry, China still lags behind in many areas, especially in core technologies, but "we boast some leading stuff too."

"We are here to show our strength," Cao said while pointing to several simulated models of rig platforms, "we are eager to expand our overseas market."

Yang Yun, executive vice president of China Offshore Oil Engineering Co., was more ambitious. "During previous years, we were here more to learn from others, but this year we are more focused on marketing our own products and landing overseas clients," he said.

The four-day-long show includes exhibitions, panel discussions by high-profile speakers, and technical sessions. Started in 1969, it showcases leading-edge technology for offshore drilling, exploration, production, and environmental protection.

source: interaksyon.com

Oil up from early sell-off as Brent sets 2015 high

NEW YORK - Oil closed up after a weak start on Tuesday, with Brent crude rising to a 2015 high of $63 a barrel as short-covering returned to a market depressed earlier by worries about euro zone stability.

Threats to Middle East crude production and the falling U.S. oil rig count seemed to spur market bulls despite global inventory data suggesting an oversupply of up to 2 million barrels per day, analysts and traders said.

"We're in this mode where the market continues to discount bearish news," said Dominick Chirichella, senior partner at the Energy Management Institute in New York. "Certainly there is some positive news out there about Libya and rest of the Middle East, but I don't see anything that's overly bullish."

Options for the front-month March contract in U.S. crude oil also expired on Tuesday, possibly adding to the rebound, brokers said. A similar upward move was observed a month ago when options expired in the previous front-month contract for U.S. crude.

Brent oil's front-month contract for April delivery settled up $1.13 at $62.53 a barrel, rebounding from the day's low of $60.27. The session peak of $63 was the highest since Dec. 18.

U.S. crude futures for March CLc1 closed up 75 cents at $53.53, versus an intraday low at $50.81.

Oil prices slumped about 60 percent between June and January on fears of a supply glut. Since February began, they have rebounded more than 10 percent on short-covering spurred by speculation that the market had hit bottom and concerns about fighting in the Middle East.

Violence in Libya has shut all major ports and oil exports from the country have collapsed to just a trickle.

Iraq's semi-autonomous Kurdistan Regional Government has threatened to withhold oil exports if Baghdad failed to send its share of the budget.

The International Energy Agency's chief economist Fatih Birol said on Tuesday the rise of Islamic State presented a major challenge for the investment necessary to prevent an oil shortage in the next decade.

Market bears, meanwhile, point to a Reuters poll that shows U.S. commercial crude oil stockpiles likely rose again in the week ended Feb. 13 to record highs above 420 million barrels.

Oil was down earlier in the day after Greece rejected an international bailout plan. In east Ukraine, pro-Russian rebels and government forces fought street-to-street, further dampening hopes that a European-brokered peace deal will end the conflict.

source: interaksyon.com

Fed looks past a world in turmoil, confident in U.S. recovery

WASHINGTON - U.S. central bankers have looked beyond a global deflation threat, fear of energy-sector bond defaults, and a surge of oil patch layoffs to reach what appears to be a firm conclusion: the U.S. recovery is here to stay.

New trade data released on Wednesday and signs of ever-stronger consumer spending confirmed the United States remains the bright spot in a global economy plagued by uncertainty.

The trade deficit shrank in November to less than $40 billion, providing a boost to growth as Americans spent less on imported oil.

Meanwhile, the first corporate reports from the Christmas season showed at least some of that money trickling into stores as J.C. Penney Co Inc. said same-store sales rose 3.7 percent in November and December, pushing the company's stock up nearly 20 percent.

At its December policy-setting meeting, according to minutes released on Wednesday, the Federal Reserve took close stock of plunging world oil prices and turmoil in Europe and decided that those negative trends would not undo that underlying strength.

"Several participants ... suggested that the real economy may end up showing more momentum than anticipated, while a few others thought that the boost to domestic spending coming from lower energy prices could turn out to be quite large."

The minutes set the stage for what could be a key economic theme this year: how the global system will react as Fed policy diverges from that of other major central banks.

The European Central Bank and the Bank of Japan are expected to further loosen monetary conditions in coming weeks or months, while the luster has fallen from emerging markets that had been attracting record levels of investment in recent years.

"These minutes defined the environment post-tapering," said Robert Tipp, chief investment strategist at Prudential Fixed Income in New Jersey. "If the Fed moves aggressively it would suck up capital from emerging markets."

Global conditions have arguably weakened since the Fed's Dec. 16-17 meeting, and the minutes note that the United States would not be immune if the world economy turns sharply down.

There is already fallout. Credit analysts have honed in on the debts of companies involved in oil and gas exploration and production, with Standard & Poor's downgrading half a dozen firms at the end of 2014 and concluding the entire sector will be under pressure if prices remain so low.

Workers have taken a hit not just directly among energy firms but in affiliated industries. U.S. Steel announced this week it was laying off 756 workers due to weakening demand for steel pipe and other products used by energy firms.

But the positive impulse from cheap oil is only beginning, according to analysts, and is expected to keep the Fed firmly on track even if it pushes inflation further from the central bank's target in coming months.

The narrowing trade deficit prompted analysts to up their estimates for 2014 economic growth.

The fall in oil prices also was putting hundreds of billions of dollars in the pockets of consumers, a trend that started to show up in earnest in November's retails sales. The December numbers are expected to be strong as well, with the National Retail Federation forecasting 4.1 percent overall growth over the year before.

Falling yields

Even the steady drop in U.S. bond yields says less about expectations for future interest rates than it does about the oil-driven path of inflation and its longer-term impact on the economy, Cornerstone Macro economist Roberto Perli said in a recent analysis.

Bond yields were dropping, he said, in part because the amount investors demanded to offset inflation was falling faster even as expectations for economic growth continued to increase.

"Investors might be tempted to assume that the bond market is sending a very bearish message about the U.S. economy, but in reality the bond market is saying exactly the opposite," Perli wrote.

"Growth expectations embedded in the 10-year yield have actually improved this month, and have been doing so ever since oil prices started to drop in the summer. The bond market shares our view that the drop in oil prices is a good thing for the aggregate U.S. economy."

source: interaksyon.com

Oil, stocks go their separate ways

NEW YORK - Investors have wrung their hands over the last several weeks over the effect of lower oil prices on the broader S&P 500, but the relationship between the two is actually starting to break down.

Crude prices had dropped more than 10 percent in the trading week ended Dec. 12. That was largely responsible for a 3.5 percent drop in the S&P 500, as investors fled stocks over concerns about energy-sector bonds, corporate earnings, and expectations for world economic demand.

That seemed to change Thursday. The S&P 500 surged while oil fell, a potential change in sentiment among investors looking to focus on sectors that may benefit from an accelerating U.S. economy.

"The proof is that oil turned down and the market said, 'Oh, that was yesterday's news, today we're moving ahead,'" said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

Bank of America Merrill Lynch credit strategist Hans Mikkelsen credited the decoupling partly to Fed Chair Janet Yellen's Wednesday news conference.

"She explained how declining oil prices are expected to be a net positive for the U.S. economy. Furthermore, she went out of her way to dismiss any downward pressure on inflation as transitory."

Investors may have already priced in the effect of cheaper oil on energy-sector earnings and are now starting to weigh the positives for other sectors.

In its 2015 global outlook, fund manager Pimco said the fall in energy costs, because it is largely supply-driven, should ultimately help growth in major economies, including the United States, Japan, and the euro zone.

Fourth-quarter energy-sector earnings are expected to decline 19.2 percent from a year ago; on October 1, growth of 6.6 percent was expected.

"You will see some pain in the short term because of fourth quarter earnings," said James Liu, global market strategist at JPMorgan Funds in Chicago. "So the broad S&P 500 will take a hit based on that, but over the next several quarters it is clearly going to be a good thing."

As recently as Tuesday, the 10-day correlation between the S&P 500 and Brent crude stood at 0.97, meaning each moved in almost perfect sync with the other. The correlation has been breaking down and last stood at 0.42, with Brent stumbling 3.1 percent, while the S&P 500 surged 2.4 percent, on Thursday.

According to data from S&P, energy has fallen to a market share representation of 8.31 percent, from 9.7 percent at the end of the third quarter, as names such as Denbury Resources, Nabors Industries and Halliburton have each tumbled more than 35 percent.

With investors hoping oil prices have at least stabilized as Brent hovers around the $60 mark, selling pressure could resume on equities if the downward march for oil begins again, weighing on the broader S&P index and tightening the correlation.

source: interaksyon.com

Oil slump leads Wall Street to worst week in 2-1/2 years

NEW YORK - U.S. stocks fell sharply on Friday, leaving the benchmark S&P 500 with its worst weekly performance since May 2012, as investors pulled back from the markets in response to oil's free-fall and more weak data out of China.

Oil's declines have underscored concerns about global demand, and with the S&P 500 having hit a record high only last week, investors were loath to fight the downward pressure on stocks, which accelerated in the final minutes of trading. The S&P dropped 3.5 percent on the week after seven straight weeks of gains.

The S&P energy sector .SPNY was down 2.2 percent on the day. It is down 16.5 percent this year, the worst performing of 10 S&P sectors. Dow components Exxon Mobil and Chevron Corp both hit 52-week lows as U.S. crude oil fell below $58 a barrel, hitting five-year lows, on expectations of reduced worldwide energy demand.

"Certainly as midday came the market did not stabilize at all, so sellers knew that," said Kenny Polcari, director of the NYSE floor division at O’Neil Securities in New York. "Energy is at the top of the list in terms of the names getting crushed."

The Dow Jones industrial average fell 315.51 points, or 1.79 percent, to 17,280.83, the S&P 500 lost 33 points, or 1.62 percent, to 2,002.33 and the Nasdaq Composite dropped 54.57 points, or 1.16 percent, to 4,653.60.

Disappointing data that suggested China's economy softened in November pushed the materials sector  down 2.9 percent, making it the worst-performing S&P sector on the day.

The drop in oil and weakness in China overshadowed strong U.S. consumer sentiment, which hit an eight-year high.

Some investors hope declining gas prices will boost consumer spending enough to offset the energy sector's woes.

However, there is concern that rising volatility in the energy market will migrate to equities as investors worry about slack demand worldwide. The CBOE Volatility Index rose 5 percent to 21.08 on Friday as investors paid up to hedge against losses.

Polcari, however, noted that the S&P 500's declines came to within a whisper of the 50-day moving average at 2,000, where he expects to see buyers emerge next week.

Adobe Systems rose 9 percent to $76.02, making it the biggest gainer on the S&P 500 after it announced plans to buy stock photography company Fotolia, along with a stronger quarterly report.

Declining issues outnumbered advancing ones on the NYSE by 2,468 to 647, for a 3.81-to-1 ratio on the downside; on the Nasdaq, 1,949 issues fell and 790 advanced for a 2.47-to-1 ratio favoring decliners.

The broad S&P 500 index posted 15 new 52-week highs and 35 new lows; the Nasdaq Composite recorded 52 new highs and 160 new lows.

About 7.6 billion shares were traded on U.S. exchanges on Friday, compared to the 6.9 billion daily average so far this month, according to BATS Global Markets data.

source: interaksyon.com

Oil prices rise ahead of US jobs report

SINGAPORE, October 3, 2014 (AFP) - The cost of oil rose in Asia Friday ahead of the latest US jobs report and after hitting multi-month lows a day earlier in response to key exporter Saudi Arabia cutting prices.

US benchmark West Texas Intermediate (WTI) for November delivery rose 16 cents to $91.17 while Brent crude for November gained 11 cents to $93.53 in mid-morning trade.

Singapore's United Overseas Bank (UOB) said investors are keenly eyeing the release of the September US jobs report later Friday.

"For the September non-farm payrolls, markets are looking at a job creation of 215,000, up from 142,000 in August, while unemployment is expected to stay unchanged at 6.1 percent," UOB said.

US jobs figures are closely watched by crude investors for clues on the state of economic recovery and demand in the world's top oil consumer.

The gains on Friday come after WTI prices tumbled below $90 in New York intra-day trade following Riyadh's announcement of lower prices for the fourth straight month.

WTI retreated to $88.18 -- a level last seen on April 23, 2013 -- before recovering to $91.01.

In London, Brent dropped to $91.55 a barrel, last hit in June 2012, but later rebounded to $93.42 at the close.

Analysts say the move by Saudi Arabia, OPEC's biggest producer, signals its focus on maintaining market share amid a broader increase in production by rivals.

source: interaksyon.com