US oil bounces after crash but Asia stocks suffer big losses

The COVID-19 pandemic has had a devastating impact on the oil markets.

US oil bounces after crash but Asia stocks suffer big losses

US crude prices bounced back into positive territory Tuesday, a day after crashing below $0.00 for the first time owing to crippled demand and a storage glut, while the commodity rout sent Asian equities sharply lower.

West Texas Intermediate for May delivery was changing hands at $1.10 a barrel after diving to an unprecedented low of -$37.63 in New York as the pandemic brings the global economy, transport and factory activity to a halt. 

The sell-off in May futures came because the contract expires later Tuesday, meaning traders needed to find buyers to take physical possession of the oil — a job made near-impossible as storage becomes scarce. 

However, focus is now on the June contract, which had trading volumes more than 30 times higher. That rose towards $21 a barrel, from $20.43 on Monday.

Brent crude oil at $25.75 for June delivery

Brent crude, the international benchmark, was changing hands at $25.75 for June delivery.

The collapse in WTI “was driven by a precipitous drop in demand caused by the market expectation that the US lockdown could continue into May”, said Tai Hui at JP Morgan Asset Management.

“This isn’t surprising, given flights are grounded and people are driving much less for work and leisure. If the economic reopening takes longer than expected, we could see pressure further out in the futures curve.”

He added that firms were still churning out oil because stopping output “is not feasible for some producers since it could permanently damage their oil fields. Hence, giving their oil away for one month could still make sense in the long run.”

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia. While the two have drawn a line under the dispute and agreed with other top producers to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand.

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

Tokyo ended the morning 1.6% lower, while Hong Kong, Sydney, Seoul, Taipei and Manila were also more than 1% lower.

Shanghai and Singapore both shed 0.8%, and there were also losses in Jakarta and Wellington.

The losses came despite signs that the virus, which has infected almost 2.5 million people and killed 170,000, is easing as global lockdowns begin to take effect, allowing some countries to slowly return to normality.

Analysts warned the drop in stocks could be an indication that the recent surge may have been too much too quick and another sell-off is possible.

The flight to safety was reflected in currency markets, where the dollar soared against high-yielding, riskier units. The South Korean won, Australian and New Zealand dollars and Russian ruble were all down more than 1%, while the Indonesian rupiah sank 0.9%.

Key figures around 02:30 GMT

West Texas Intermediate: UP at $1.62 from -$37.63 a barrel

Brent North Sea crude: UP at $25.75 from $25.57 per barrel

Tokyo – Nikkei 225: DOWN 1.6 percent at 19,358.77 (break)

Hong Kong – Hang Seng: DOWN 1.9 percent at 23,875.20

Shanghai – Composite: DOWN 0.8 percent at 2,830.35

Euro/dollar: DOWN at $1.0829 from $1.0863 at 2045 GMT

Dollar/yen: UP at 107.72 yen from 107.67 yen 

Pound/dollar: DOWN at $1.2399 from $1.2435 

Euro/pound: DOWN at 87.32 pence from 87.34 pence

New York – Dow: DOWN 2.4 percent at 23,650.44 (close)

London – FTSE 100: UP 0.5 percent at 5,812.83 (close)

By Agence France-Presse (AFP)

Source : The South African More   

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Kim Jong Un-well: Rumours of North Korean leader’s death spark panic

Reports of Kim Jong Un's ill health have sent financial markets into freefall. But senior experts have questioned where these rumours came from.

Kim Jong Un-well: Rumours of North Korean leader’s death spark panic

South Korea played down a report Tuesday that North Korea leader Kim Jong Un was being treated after surgery, as speculation mounted over his absence from a key anniversary.

Pyongyang marked the birthday of its late founder, Kim’s grandfather Kim Il Sung, on April 15 – by far the most important date in its annual political calendar – but Kim was not seen in attendance.

Where is Kim Jong Un, and is he still alive?

Daily NK, an online media outlet run mostly by North Korean defectors, said Kim had undergone a cardiovascular procedure earlier this month and was recovering at a villa in North Phyongan province.

“Excessive smoking, obesity, and fatigue were the direct causes of Kim’s urgent cardiovascular treatment,” it cited an unidentified source inside the country as saying. No confirmation of the report was immediately available”.

But it triggered widespread speculation, with CNN citing a US official saying that Washington was “monitoring intelligence” that Kim was in “grave danger after a surgery”. The report did not specify what the intelligence was. Some regional outlets had shared unconfirmed reports that Kim Jong Un had died – or suffered irreversible brain damage – during surgery.

North Korea: Rumours of leader’s death hit the stock market

The local stock market was also affected by the rumours: Japan’s benchmark Nikkei 225 index fell 1.97%, or 388.34 points, to close at 19,280.78, while the broader Topix Index was down 1.15%, or 16.52 points, to 1,415.89.

“The market reacted negatively to the CNN report on the health of North Korean leader Kim Jong Un,” said Yoshihiro Ito, chief strategist at Okasan Online Securities.

Reports of Kim Jong Un’s death are “unfounded”

In a statement, a spokesman for the South’s presidential Blue House said: “We have nothing to confirm and no special movement has been detected inside North Korea as of now.” Some South Korean officials raised doubts about the credibility of the sourcing.

Reporting from inside the isolated country is notoriously difficult, especially on anything to do with the North’s leadership, which is among its most closely-guarded secrets.

Both the unification ministry – which handles inter-Korean relations – and the defence ministry declined to comment. Moon Chung-in, the security adviser to South Korean President Moon Jae-in, told AFP that he had not heard anything on Kim’s health.

The North’s state media last reported on Kim’s activities on April 12, but previous absences on his part from the public eye have also prompted speculation about his health. Analysts expressed caution over the Daily NK report.

Ahn Chan-il, a defector-turned-researcher based in Seoul, said heart surgery required sophisticated medical equipment “only accessible in facilities in Pyongyang”, adding it was “unreasonable” to transport it elsewhere for the operation.

“Nothing is confirmed at this point, and it’s too early to make a conclusion about his condition,” he added.

Source : The South African More   

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