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Weak Dollar slashes Oil Price to $55

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After the early slide, crude oil prices rebounded Thursday as dollar weakness and signs of production cuts by the world’s top crude exporter, Saudi Arabia, eased concerns about excess supply in the global market. The dollar was said to have added support as it slipped against a basket of currencies, making dollar-denominated oil cheaper for holders of other currencies.

Before yesterday’s swing in oil prices, President Donald Trump, on Wednesday took credit for driving down oil prices, saying the drop amounted to a tax cut for Americans.

“People see that gasoline (petrol) is way down and the reason it’s way down is that I called up some of the OPEC people,” Trump reportedly told reporters.

“I made calls, I said you better let that oil, that gasoline flow, and they did,” he added.

However, despite Trump’s intervention, the price of international benchmark crude, Brent crude futures rose by 94 cents at $55.85 per barrel, while the United States US West Texas Intermediate oil futures rose 65 cents to $47.19 a barrel.

The Organisation of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, alongside other producers led by Russia, agreed last year to rein in supplies starting from January after oil tumbled from above $86 on worries about surging output.

Before OPEC and other producers took a decision to lower output, Trump had made it clear that he did not want oil prices to rise.

Many analysts had thought Saudi Arabia was coming under US pressure to resist calls from other OPEC members for lower crude output.

Trump had praised Saudi Arabia for helping to lower oil prices as pressure intensified to impose tougher sanctions on the Middle East ally following the murder of Saudi journalist, Jamal Khashoggi.

In a tweet when oil price was $63, Trump had thanked Riyadh for the drop and called for prices to go even lower, likening it to “a big tax cut” that could boost the United States and global economies.

The swing in the oil price, which fell as much as two per cent in earlier trade, mirrored volatility in other markets after tech giant, Apple, cut its sales forecast, citing a slowdown in China.

This has added to concerns about a slowing global economy, which weighs on prospects for oil demand.

More broadly, oil markets have been sliding with rising production from top producers, the United States and Russia.

Supply from Iraq, the second biggest producer in OPEC, has also climbed, with December 2018 exports at 3.73 million bpd versus 3.37 million bpd in November.

Both Brent and US crude was down more than a third in the last quarter of 2018, the steepest decline since the fourth quarter of 2014.

However, for most of 2018, oil prices were on the rise, driven up by healthy demand and supply concerns, especially around the impact of renewed US sanctions against major producer Iran, which were introduced in early November.

Brent rose by almost a third between January and October 2018, to a high of $86.74 per barrel, the highest level since late 2014, the start of a deep market slump amid a bulging global oversupply.

Many leading analysts and traders at the time said they expected crude to hit $100 per barrel again by the end of 2018. Instead, Brent prices have wiped out all of 2018’s gains, plunging by almost 40 per cent from the $86 year’s high, in what has been one of the steepest oil market sell-offs of the past decades.

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World News

Oil prices rise to $62

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Oil prices rose, reversing earlier losses, as investors latched on to positive supply-side drivers for the market, although concern about the wider economy simmered in the background after data pointed to a slowdown in China.

Brent crude oil futures were up 11 cents at $62.81 a barrel. U.S. crude futures were up 14 cents at $53.94 a barrel.

The oil benchmark for Nigeria’s Budget 2019 is $60 per barrel.

Oil industry experts described the rise in crude prices as good for the local economy.

Analysts said a more robust backdrop for financial markets, together with the prospect of slower crude production growth, were the major drivers behind the rally in oil.

“The stock market performance is one of the reasons why oil keeps marching higher. There also seems to be a general belief that the agreed cut in Organisation of the Petroleum Exporting Countries (OPEC)+ production will be sufficient to balance the market,” PVM Oil Associates said in a note.

Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28-year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S.-China trade tensions.

But stocks are still up nearly 8 percent so far this month, which in turn has given oil investors more confidence to bet aggressively on a rise in crude prices.

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Politics

Theresa May survives no-confidence vote

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British Prime Minister Theresa May on Wednesday survived a no-confidence vote sparked by the crushing defeat of her Brexit deal just weeks before the UK leaves the European Union.

A stunning 24-hour span saw May on Tuesday dealt the heaviest drubbing by parliament in modern British political history — 432 votes to 202 — over the divorce terms she reached with Brussels.

The opposition Labour Party could try to oust her government again in the hope of triggering snap elections before Britain’s scheduled March 29 Brexit date. And May herself is working on the tightest-possible deadline as Britain prepares to leave the bloc that for half a century defined its economic and political relations with the rest of the world. She has promised to return to parliament on Monday with an alternative Brexit strategy devised through cross-party talks with the opposition.

There is now an assumption among many European diplomats that Brexit will have to be delayed to avoid a potentially catastrophic “no-deal” breakup. May notably refused to rule out the idea when quizzed about it in parliament earlier on Wednesday.

May survived Wednesday thanks to the support of members of her Conservative Party and ruling coalition Northern Irish allies in the Democratic Union Party. But more than a third of the Conservatives and all 10 DUP members of parliament voted against her Brexit arrangements on Tuesday — each for their own reason. May will thus tread carefully as she tries to win over opposition lawmakers — many of whom want to remain in the EU — while also attempting to appease more hardened Brexit-backing coalition partners.

May repeated two key principles — limiting migration and pursuing an independent trade policy — which would rule out Labour hopes of membership of an EU customs union or its single market. But she also hinted at the possibility of delaying Brexit.

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World News

Historical defeat: British lawmakers defeats May over Brexit deal

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British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin on Tuesday, triggering political upheaval that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.

Parliament voted 432-202 against her deal, the worst parliamentary defeat for a government in recent British history. Scores of her own MPs – both Brexiteers and supporters of EU membership – joined forces to vote down the deal.

Opposition Labour leader Jeremy Corbyn promptly called a vote of no confidence in May’s government, to be held within 24 hours.

With the clock ticking down to March 29, the date set in law for Brexit, the United Kingdom is now ensnared in the deepest political crisis in half a century as it grapples with how, or even whether, to exit the European project that it joined in 1973.

May’s crushing loss, the first British parliamentary defeat of a treaty since 1864, marks the collapse of her two-year strategy of forging an amicable divorce with close ties to the EU after the March 29 exit.

“It is clear that the House does not support this deal, but tonight’s vote tells us nothing about what it does support,” May told parliament, moments after the result was announced.

“We need to confirm whether this government still enjoys the confidence of this House,” May said.

May said parliament had spoken and the government had listened. The small Northern Irish DUP party, which props up her minority government and had said it would oppose the deal, said it would still back May in the no confidence vote.

The EU said the Brexit deal remained the best and only way to ensure an orderly withdrawal from the EU.

“The Brexit deal is basically dead,” said Anand Menon, professor of European politics and foreign affairs at King’s College London.

Ever since Britain voted by 52-48 percent to leave the EU in a referendum in June 2016, the political class has been debating how to leave the European project forged by France and Germany after the devastation of World War Two.

While the country is divided over EU membership, most agree that the world’s fifth largest economy is at a crossroads and that its choices over Brexit will shape the prosperity of future generations.

Before the vote, May had warned pro-Brexit MPs that if her plan was rejected, it was more likely that Britain would not leave the EU at all than that it would leave without a deal.

She has also warned fellow Conservatives not to let the opposition Labour Party seize control of Brexit.

Supporters of EU membership cast Brexit as a gigantic mistake that will undermine the West, smash Britain’s reputation as a stable destination for investment and slowly weaken London’s position as a global capital.

Many opponents of Brexit hope May’s defeat will ultimately lead to another referendum on EU membership, though Brexiteers say that thwarting the will of the 17.4 million who voted for Brexit could radicalise much of the electorate.

Brexit supporters cast leaving as a way to break free from a Union they see as overly bureaucratic and fast falling behind the leading economic powers of the 21st century, the United States and China.

Reuters

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SECURITY

Kenya: Somali Islamists, al Shabaab bombs hotel, attack workers

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Gunmen blasted their way into a hotel and office complex in the Kenyan capital on Tuesday, sending workers fleeing for their lives as others cowered under their desks from an attack claimed by Somali Islamists al Shabaab.

At least one person was killed and eight wounded, hospital officials said. Police warned the “terror attack” may still be ongoing, with the assailants still inside the upscale 14 Riverside Drive complex.

“The main door of the hotel was blown open and there was a human arm in the street severed from the shoulder,” said Serge Medic, the Swiss owner of a security company who ran to the scene to help civilians when he heard of the attack from his taxi driver.

Medic, who was armed, entered the building with a policeman and two soldiers, he said, but they came under fire and retreated. An unexploded grenade lay in the lobby, he said.

“One man said he saw two armed men with scarves on their head and bandoliers of bullets,” Medic told Reuters, as gunfire echoed in the background, more than two hours after the attack began.

A woman shot in the leg was carried out and three men emerged covered in blood. Some office workers climbed out of windows. Many told Reuters that they had had to leave colleagues behind, still huddled under their desks.

“There’s a grenade in the bathroom,” one officer yelled as police rushed out from one building.

“We heard a loud bang from something that was thrown inside. Then I saw shattered glass,” Geoffrey Otieno, who works at a beauty salon in the complex, told Reuters. “We hid until we were rescued.”

Kenya has often been targeted by al Shabaab, who killed dozens of people in a shopping centre in 2013 and nearly 150 students at a university in 2015.

“We are behind the attack in Nairobi. The operation is going on,” said Abdiasis Abu Musab, the group’s military operations spokesman.

According to its website, 14 Riverside is home to the local offices of international companies including BASF, Colgate Palmolive, Reckitt Benckiser, Pernod Ricard, Dow Chemical and SAP, as well as the dusitD2 hotel, part of the Thai hotel group Dusit Thani.

The Australia embassy is across the road from the compound. Kenya is an expatriate hub for diplomats, aid workers, businessmen and others operating around east Africa.

“I just started hearing gunshots, and then started seeing people running away raising their hands up and some were entering the bank to hide for their lives,” a woman working in a bank in the complex said, adding she had heard two explosions.

Kenyan television featured appeals for blood from local hospitals and showed police cordoning off the route to ensure vehicles could move quickly. Red Cross ambulances ferried victims away.

Al Shabaab says its attacks in Kenya are revenge for Kenyan troops stationed inside Somalia which has been riven by civil war since 1991.

The Kenyan troops, concentrated in the south, originally went into Somalia to try to create a buffer zone along the border. They are now part of an African Union peacekeeping force supporting the weak U.N.-backed central government.

Reuters

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