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Oil prices perk up on Trump-Xi agreement, coming Opec decision
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RALLY in oil prices after a two-month slide indicates traders are betting that Opec and its allies including Russia will agree to produce less crude. Representatives of oil-producing nations will hold a highly anticipated meeting on Thursday in Vienna, with analysts predicting that they will agree on a cut of at least 1 million barrels a day in an effort to bolster prices. Russian President Vladimir Putin boosted expectations for a deal when he said at the G-20 summit over last weekend that Russia and Saudi Arabia have agreed to extend an attempt by Opec to balance oil supply and demand—although he provided no figures. Crude prices began falling in October and continued to plunge last month due to oversupply and fears that weaker global economic growth would dampen energy demand. The price of both benchmark US crude and the standard for internationally traded oil fell 22 percent in November. On Monday, however, West Texas intermediate rose $2.02, or 4 percent, to settle at $52.95 a barrel, and Brent international crude climbed $2.23, or nearly 4 percent, to close at $61.69 a barrel in London. Analysts attribute the turnaround to a truce in the escalating trade dispute between the United States and China. That has raised hopes that, with a cessation in further tit-for-tat tariffs, short-term economic growth and energy demand might be stronger than feared. Also, the Alberta premier announced that the Canadian province will trim production by 8.7 percent because a shortage of pipeline capacity has caused a glut of Canadian crude. Canada is the largest source of oil imported by the US. Finally, the small but wealthy Persian Gulf nation of Qatar said on Monday that it will leave Opec in January. Qatar has been feuding with Saudi Arabia and three other Arab nations that accuse it of financing terrorism. Qatar is one of the smallest oil producers in Opec, so its departure will have only a marginal impact on the cartel’s share of the world’s supply. Still, the surprising announcement by Qatar’s energy minister underscores the political tension within Opec,
“which doesn’t necessarily make it easier to come to a decision” on cutting production, said JBC Energy analyst David Wech. Some analysts expect Opec and Russia will agree to even larger cuts, about 1.5 million barrels a day. Anything less, they say, could set the stage for continued global oversupply next year and send oil prices lower. Opec must produce “a credible agreement” to cut output by about 1.5 million barrels a day for oil prices to recover their recent losses, Credit Suisse analyst William Featherston wrote in a note on Monday. The Saudis, he said, will have to bear the largest share of cuts. Saudi Arabia seems eager to reduce supply, Featherston said, but the kingdom’s decision is complicated by President Donald J. Trump’s desire for lower prices and the Saudis’ wish to improve relations with the US after the murder of journalist and US resident Jamal Khashoggi. Trump blamed Opec and Saudi Arabia earlier this year for high oil prices. When US crude skidded to $54 on November 21, he tweeted, “Thank you to Saudi Arabia, but let’s go lower!” Trump might complain about cuts designed to send prices higher. US producers have benefited from higher prices. American output has soared since the price bust of 2014 to 2015, and the US Energy Information Administration estimates that the US has eclipsed Russia and Saudi Arabia to become the world ’s biggest producer. (Saudi Arabia remains the top exporter.) Much of that new US production is coming out of shale formations that lie underneath West Texas and New Mexico. Executives of some companies that operate there, including Trump supporter Harold Hamm, the chairman and CEO of Continental Resources Inc., have said recently that they might cut back on production if oil falls below $50 a barrel, which it barely avoided in late November. “I think [Trump] is starting to realize that if oil prices continue to fall, it might have a negative effect for US producers,” said Phil Flynn, a prominent oil analyst. “I think he has heard from a couple of them, ‘Hey, you don’t want to crash this thing too hard.’” AP
Case accusing Trump of profiting off the presidency moves ahead
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A S H I N G TO N —Th e at to r n e y s general of the District of Columbia and Maryland said they are moving forward with subpoenas for records in their case accusing President Donald J. Trump of profiting off the presidency. US District Court Judge Peter J. Messitte approved the legal discovery schedule in an order on Monday. Such information would likely provide the first clear picture of the finances of Trump’s Washington D.C., hotel. Trump’s Justice Department lawyers filed a notice to the court on Friday that appeared to challenge the Maryland judge’s decision to allow the case to move forward. The president’s notice that he may seek a writ of mandamus—to have the appeal heard by a higher court—is considered an “extraordinary remedy” that’s hard to prove and partly rests on showing Messitte’s decisions to be clearly wrong. The Justice Department declined to comment. “We’ve got the discovery ready to go,” said Maryland Attorney General Brian Frosh. “Their objective at this point is just to keep the doors shut, they don’t want any of this information out in public and they don’t want our case to move forward. So they’re going to be obstructing as much as they can.” District of Columbia Attorney General Karl A. Racine said in a statement that the subpoenas would go out to third-party organizations and federal agencies “to gather the necessary evidence to prove that President Trump is violating the
Constitution’s emoluments clauses—our nation’s original anti-corruption laws.” Trump has been fighting multiple lawsuits that argue foreign representatives’ spending money at the Trump International Hotel are violations of the Constitution’s emoluments clause, which bans federal officials from accepting benefits from foreign or state governments without congressional approval. A clue as to what entities may receive subpoenas can be found in preservation subpoenas filed more than a year ago with 23 Trump-related entities, including The Donald J. Trump Revocable Trust, The Trump Organization, the Mar-a-Lago Club Inc. and entities related to his D.C. hotel and its management, among others. The subpoena requires the majority of documents to be preserved from January 1, 2015, on an ongoing basis. The court filings cite document categories for preservation, including those from November 8, 2016, onward concerning “marketing to foreign or domestic governments, including members of the diplomatic community.” Other noted categories for preservation include documents that would identify guests of the hotel and those who have rented event space, details on all finances, and “operating leases, permits, licenses, tax payments or credits to or from foreign or domestic governments.” According to the agreed-upon schedule, if there are no delays, legal discovery would conclude in early August. AP
BusinessMirror
Wednesday, December 5, 2018
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White House hails China trade truce as skeptics raise doubts
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ASHINGTON—The Trump administration is celebrating the 90-day truce it reached in its trade war with China as a significant breakthrough despite scant details, a hazy timetable and widespread skepticism that Beijing will yield to US demands anytime soon. “ This is just an enormous, enormous event,” Larry Kudlow, President Donald J. Trump’s top economic adviser, said on Monday of the cease-fire that Trump and President Xi Jingping reached over the weekend on the sidelines of an international economic summit in Buenos Aires, Argentina. “This one covers so much ground in some detail, we’ve never seen this before.” Yet many economists raised doubts that much had been— or would be—achieved within three months. “The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note. During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in US tariffs on many Chinese goods, from 10 percent to 25 percent, that had been set to take effect January 1. Instead, the two sides are to negotiate over US complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology. These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market. In return for the postponement
in the higher US tariffs, China agreed to step up its purchases of US farm, energy and industrial goods, the White House said. Most economists noted that the two countries remain far apart on the biggest areas of d isag reement, whic h inc lude Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft. “Ninety days is very little time to fix these perennial issues,” said Bill Adams, senior economist at PNC. Complicating the challenge, Trump’s complaints strike at the heart of the Communist Party’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields. “It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing. At the same time, analysts said they were relieved that the Trump-Xi meeting at least pressed the “pause” button on tariff hikes. Besides escalating existing tariffs, Trump had threatened to impose import taxes on the remaining $267 billion of US goods from China. This would have raised
prices in the United States on many consumer items, including smartphones, clothes and toys. Fears of a hotter trade war had sent financial markets tumbling in October and November. But they jumped on Monday in response to Saturday’s truce. The Dow Jones industrial average closed up 288 points, a gain of 1.1 percent. Megan Greene, chief economist at Manulife, said the market’s recent decline had likely contributed to Trump’s willingness to reach a truce. “We are no longer in the same buoyant economic or markets environment that we enjoyed earlier this year when threats of tariffs against China were first made,” she said. In the meantime, the outlines of the agreement remain hazy and in some cases, confusing. Trump tweeted late Sunday that China had agreed to “reduce and remove” its 40 percent tariff on cars imported from the US. Treasury Secretary Steven Mnuchin said on Monday that there was a “specific agreement” on the auto tariffs. Yet Kudlow said later that there was no “specific agreement” regarding auto trade, though he added, “We expect those tariffs to go to zero.” Shares of US and overseas auto companies rose on the announcement, though it’s unclear how much companies like GM or Ford will actually benefit. Nearly all the cars they sell in China are made there. Det a i l s rega rd i ng C h i n a’s pledge to buy more American products—one that it has made before—remain scant. Mnuchin said on Monday morning on CNBC that China had offered to buy up to $1.2 trillion of additional US goods, even while the “details of that still need to be negotiated.” But Kudlow said the ultimate amount will depend on market prices and the health of China’s
economy. “I would think of that as a broad goal,” he said. State-run Chinese media has described the agreement very differently from how the Trump administration has. It has made no mention of any changes to its auto tariffs. And it has said nothing about a 90-day deadline for the talks. Greene said this might simply reflect China’s communications strategy. Or it might illustrate China’s weak commitment to the deal. China agreed to eliminate the retaliator y tariffs it had placed on US soybeans, according to the W hite House, which also said Beijing had agreed to buy an unspecified but “ver y substantial ” amount of agricultural and other products. That left some US farmers cautiously hopeful on Monday. “This is the first positive news we’ve seen after months of downturned prices and halted shipments,” said John Heisdorffer, a farmer in Keota, Iowa, who is president of the American Soybean Association. “If this suspension of tariff increases leads to a longer-term agreement, it will be extremely positive for the soy industry.” Kevin Scott, who farms near Valley Springs, South Dakota, and serves on the American Soybean Association, said the news provides hope for farmers who are storing their crops while awaiting better prices. But he cautioned “it’s going to take a little more to move more beans.” Among the skeptics is Scott Gauslow, who grows soybeans and corn near Colfax in eastern North Dakota’s Red River Valley. He noted the lack of specifics in the White House announcement. “What if China calls tomorrow and says, ‘We changed our mind’?” Gauslow said. “There was nothing in writing, which scares me a little bit.” AP
U.S.-APPOINTED LAW FIRM DETAILS EVIDENCE OF ROHINGYA GENOCIDE
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LAW firm tasked by the US State Depar tment to probe Myanmar ’s treatment of the Rohingya ethnic minority said it found evidence of genocide, crimes against humanity and war crimes. The Public International Law and Policy Group called for an “accountability
mechanism” to be set up urgently, or for the situation to be referred to the International Criminal Court. The Washington-based group found evidence of violations, including murders, willful killings, enslavement, rapes, torture, looting and destruction of civilian property.
More than 700,000 Rohingya fled their homes for refugee camps in Bangladesh after Myanmar security forces last year started what they called “clearance operations” in response to militant attacks. The United Nations has previously said the operations involved systematic murder, torture and rape, as well
as the enslavement of civilian members of the minority. The crackdown led to global criticism of Myanmar’s de facto leader Aung San Suu Kyi, a Nobel Peace Prize winner who was held under house arrest for more than a decade before her release and election victory in 2015. Bloomberg News