German Economy Will Hardly Grow In 2025, Says Bundesbank

Source: Euronews

Source: AP

Oil prices edged higher on Friday and were on track to record their first weekly gain in three weeks, as the possibility of additional sanctions on Iran and Russia raised supply concerns. However, the potential for an oil market glut next year capped the gains.

Brent, the benchmark for two thirds of the world’s oil, was trading 0.08 per cent higher at $73.54 a barrel at 1.06pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.23 per cent at $70.18 a barrel.

The Biden administration in the US is reportedly considering stricter sanctions on Russia’s profitable oil trade, aiming to further pressure the Kremlin’s war efforts just weeks ahead of Donald Trump’s return to the White House.

Details of the possible new measures are still being worked out, but President Joe Biden’s team is considering restrictions that might target some Russian oil exports, Bloomberg reported on Wednesday, citing sources.

Meanwhile, the EU has approved a 15th sanctions package, targeting Russia’s shadow tanker fleet and Chinese companies supplying drones to Moscow.

Western countries have also threatened to slap further sanctions against Iran, one of the world’s largest oil producers, over its expanding nuclear programme.

Pressure on Iran has increased, and its influence in the Middle East has weakened, particularly due to recent setbacks faced by its proxy groups, Hamas and Hezbollah, as well as the ouster of Syrian dictator and key ally Bashar Al Assad.

Oil prices have dropped in the second half of this year as traders focus on demand from China and the possibility of a supply surplus in 2025.

"The general market consensus is for a strongly oversupplied oil market in 2025, which is likely the reason why market positioning is so low and prices are trading at the lower end of the 2024 trading range," Giovanni Staunovo, strategist at UBS said in a research note on Wednesday.

The International Energy Agency has revised its oil demand forecast for next year upwards, citing the impact of China's stimulus measures, but noted that the growth rate is likely to remain modest.

The Paris-based agency expects global crude demand to grow by 1.1 million barrels per day in 2025, up from its previous forecast of a growth of 990,000 bpd.

The IEA said that oil supply will grow by 1.9 million bpd next year, even without the unwinding of Opec+ production cuts.

Last month, the alliance of oil-producing countries announced that it will extend its voluntary output cuts of 2.2 million bpd until the end of March next year.

After that, the supply curbs will be gradually phased out on a monthly basis until the end of September 2026 to "support market stability", the group said following its December 5 meeting.

Opec+ also extended its oil production cuts of 2 million bpd and 1.65 million bpd by a year to the end of 2026.

On Wednesday, Opec reduced its global oil demand growth forecast for 2024 for the fifth consecutive month, marking the largest downgrade so far, citing weaker-than-expected demand in the third quarter across many regions.

The group now expects oil consumption to rise by 1.61 million bpd this year, down from its previous estimate of an increase of 1.82 million bpd.

Source: THENATIONALNEWS

"The UK economy shrinks for second month in a row which will be a big disappointment for Rachel Reeves. But she should not be surprised after talking the economy down through the summer and hitting businesses with a big tax grab in her autumn Budget!" says Andrew Sentance, an economist who formerly sat on the Bank of England's MPC.

Above: There was a clear FX market reaction to the GDP release.

Source: Poundsterlinglive

(Dec 13): Chinese shares declined as authorities again left investors guessing on the specifics of a fiscal stimulus even as their key policy meeting vowed to boost consumption.

The CSI 300 onshore benchmark closed down 2.4%, its worst day in three weeks. Friday’s drop led to a weekly loss of 1%, snapping a two-week winning streak spurred by optimism about potent stimulus. A gauge of Hong Kong-listed Chinese stocks fell over 2%.

In global markets, commodities from iron ore to copper that depends heavily on Chinese demand also slumped. Meanwhile, benchmark yields on Chinese government bonds sank to a fresh record low after authorities vowed to ease monetary policy further.

The subdued appetite for risk assets shows investors are still awaiting detailed measures following repeated, broad pledges by top leaders in recent months to reinvigorate the economy. While some economists say that Beijing may be deliberately holding back policy details before tensions rise under the second Donald Trump presidency, the market’s reaction is a reminder of authorities’ challenges to restore investor confidence after several similar false dawns.

“More government borrowings, tolerance for a larger fiscal deficit and more monetary easing into next year have been the takeaways, but policy specifics remain lacking for now, which may still limit market gains,” according to Jun Rong Yeap, a market strategist at IG Asia Pte Ltd. “Chinese authorities have been stuck in a more reactionary policy mode, as the uncertainty of US tariff plans makes it difficult for policymakers to make any commitment just yet.”

Top officials led by President Xi Jinping pledged to raise China’s fiscal deficit target next year, following the annual Central Economic Work Conference that ended on Thursday. For only the second time in at least a decade, they made “lifting consumption vigorously” and stimulating overall domestic demand their top priority. Officials also vowed to strengthen the social safety net, with broad promises to bolster healthcare and pensions.

The December meeting traditionally offers only broad strokes of policy focus and direction without revealing much detail. Specifics such as the growth target or the budget will be unveiled in March during the annual legislative sessions.

Behind the latest sell-off was onshore investors’ decision to take profit after the recent rebound, given the likelihood of a three-month absence of fresh policy catalysts until the National People’s Congress’ annual meetings. Meanwhile, there won’t be further clarity about corporate earnings before the next reporting season starts in January.

Beijing is faced with rising challenges to impress investors after several episodes of policy disappointment. A rally that began in late September following a central bank-led stimulus blitz didn’t take long to lose steam due to a lack of follow-up measures. The CSI 300 remains more than 7% down from an October peak after gaining over 30% in less than a month.

In March, “one should not be surprised to see the fiscal deficit raised to 4% and above”, Hao Hong, the chief economist of Grow Investment Group, told Bloomberg TV. “There will be specific guidance on special-purpose Treasury bond issuance and also ultra-long Treasury bond issuance. So all in all, the budget deficit in the broader sense will be over 10%.”

Source: Theedgemarkets

Crude oil prices were set for their first weekly gain since late November on news that the U.S. was considering additional sanctions against Russia and Iran. The potential of such a move disrupting the supply balance lent upward momentum to prices.

The latest report of fresh China stimulus measures meanwhile continued to support the benchmarks despite the lack of details about what the measures would entail specifically.

At the time of writing, Brent crude was trading at $73.67 per barrel, with West Texas Intermediate at $70.34 per barrel, after Reuters quoted Treasury Secretary Janet Yellen as saying the oil market looked well supplied and with weak demand, which could be an opportune time for Washington to try to reduce Russia’s oil revenues once again.

“Now what's unusual about this moment is that the oil market seems to be well supplied,” Yellen said earlier in the week. “Prices are relatively low. Global demand is down, and there really has been an increase in supply.”

“So the global oil market is softer, and that creates, possibly, an opportunity to take some further action,” she said, without elaborating on the details of that further action.

Separately, traders anticipate a Trump presidency to step up the sanction pressure on Iran, which would inevitably mean sanctions on the country’s oil industry as the biggest and most obvious target for such action.

Meanwhile, the International Energy Agency has once again predicted that the oil market will be in a surplus next year, thanks to production growth in non-OPEC countries, including Guyana, Argentina, Brazil, Canada, and the United States. These, the IEA said this week, will add some 1.5 million bpd to global supply, and the 2.2-million bpd that OPEC+ is withholding will apparently not be enough to swing the market into a deficit. Interestingly, the agency revised up its demand growth projection, from 990,000 bpd to 1.1 million bpd next year.

Source: OILPRICE