Attack on Saudi Refinery and Oil Field Sends Price of Oil Up Nearly 10%

September 16, 2019

More than 15 drone and cruise missile attacks against the largest oil refinery and an oil field in Saudi Arabia on Saturday is likely to impede over half that country’s production. The attack is believed to have been orchestrated by Iran or perhaps Iraq, but culpability hasn’t been firmly established. U.S. President Trump has threatened retaliation when blame is assuredly known.

WTI oil leaped 9.6%. Gold firmed 0.8%. Ten-year sovereign debt yields have dropped 5 basis points in the United States, 4 bps in the U.K., and 3 bps in Germany. Japanese markets were closed for Respect for the Aged Day. Mexican markets will be shut for Independence Day.

Share prices slumped 1.8% in Indonesia, 0.8% in Hong Kong, 0.7% in India and Taiwan, but hardly at all in China despite disappointing data reported there today. Stock markets in Europe are down 1.0% in Italy, 0.7% in France and Spain, and 0.5% in Switzerland and Germany.

The dollar climbed 0.4% overnight against sterling and the euro, 0.2% relative to the Australian dollar and 0.1% versus the peso and Swiss franc. The dollar alternatively fell by 0.3% relative to the yen and 0.2% vis-a-vis the loonie and yuan.

On-year growth in Chinese retail sales and industrial production slowed to 7.5% and 4.4% in August from 7.6% and 4.8% in July. Fixed asset investment in January-August grew 5.5%, down from an increase of 5.8% in the first half of 2019 alone. Each of these results was weaker than forecast, and their impact on sentiment outweighed news of a 2-month low in unemployment of 5.2% after 5.3% the month before.

Italian CPI inflation slid 0.1 percentage point to a 33-month low of 0.4% in August.

Indian wholesale price inflation in August matched July’s 1.08% and was only half as much as in June.

The British Rightmove house price index slid 0.2% on month and posted a year-on-year increase of only 0.2% this month, a full percentage point less than seen in August.

Turkish retail sales dropped 1.5% on month and by 3.7% on year in June, marking the 11th straight 12-month decline. Turkish unemployment rose to a 2-month high of 13.0% in June from 12.8% in May but compared favorably with 14.7% in January-February.

In Norway, an oil exporter, the trade surplus of NOK 6.674 billion in August was only about a fifth of its size a year earlier due to a 24.5% plunge in exports juxtaposed against a 4.6% rise in imports.

Indonesia’s January-August trade deficit of $1.81 billion 56% narrower than a year earlier.

New Zealand’s service sector purchasing managers index edged 0.2 index points lower to 54.6 in August but was above each of the five previous readings.

The U.S. monthly Empire State manufacturing index and Canadian existing home sales data will be reported shortly.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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