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Daily Agenda: Saudi Arabia Uncommitted on Oil Caps

Oil markets unconvinced on talk at G-20; GE buys two 3-D printing companies; the Philippines tries to allay Duterte flap with U.S..

At the Group of 20 summit held in Hangzhou, China over the weekend, the U.S. and China used the opportunity to announce the adoption of the Paris climate change agreement. Yet a discussion between Russian and Saudi Arabian leaders over oil affected markets far more. Alexander Novak and Khalid Al-Falih, energy ministers for Russia and Saudi Arabia, respectively, sent ripples through crude markets with their comments regarding a possible cap on production. Brent-grade futures contracts for near-month delivery rose by more than 5 percent initially, before paring gains as Saudi officials remained non-committal about a significant freeze. The dynamic in energy markets is currently dominated by two overlapping narratives: Saudi Arabia’s commitment to keeping production levels high to combat U.S. and Canadian competitors and separately, desperation by less well-managed petro states to have the Saudis curb output to help them support their own failing economies.

GE to acquire 3-D printing firms. Yesterday General Electric announced two acquisitions of European-based 3-D printing technology companies for a combined deal size of more than $1.4 billion. Both Swedish Arcam and German SLM Solutions will help propel the conglomerate, which has been aggressively abandoning its banking and financial services segments, into the bourgeoning market for real-time fabrication.

Duterte attempts to control damage. Inflammatory comments made by newly installed Philippines President Rodrigo Duterte directed to President Barack Obama ahead of the Laos summit of the Association of Southeast Asian Nations have resulted in the U.S. government canceling a bilateral meeting between officials from the two nations. The heated comments came after criticism from international agencies and Western governments over Duterte’s anti-drug campaign which, within weeks, has racked up an estimated 2,400 extrajudicial killings. Official statements issued by the Filipino government apologized for Duterte’s remarks and expressed hope that the two nations could continue to work together.

Aussie central bank keeps rates unchanged. In line with consensus forecasts, the Reserve Bank of Australia left benchmark rates unchanged during the monthly policy meeting today. Critically, the bank’s board refrained from making explicit guidance in the accompanying statement. The meeting was the final one with Governor Glenn Stevens at the helm.

Bayer raises bid for Monsanto. In the third time in a year, German drug and chemical company Bayer issued an offer to acquire St. Louis-based agrichemical company Monsanto with a fresh bid totaling $56 billion. The offer of $127.50 per share, made yesterday, comes after months of negotiations between the two firms. Monsanto’s board has been receptive to the merger in concept while rejecting earlier valuations.

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