Oil prices fell on Friday, settling at a three-week low, on dented optimism over US trade talks leading to deals with its key partners before a deadline on August 1 next week.
Brent, the benchmark for two thirds of the world's oil, dropped 1.07 per cent on Friday to settle at $68.44 a barrel, while West Texas Intermediate, the gauge that tracks US crude, closed 1.32 per cent down at $65.16 a barrel.
For the week, Brent was down about 1 per cent, with WTI down about 3 per cent.
US President Donald Trump said on Friday that the US has a 50-50 chance of reaching a trade deal with Europe, in contrast to the optimism the bloc’s diplomats expressed during the week.
"Advancing talks between Washington and the European Union raise hopes of further trade easing, potentially strengthening expectations around demand for crude. Yet, lingering uncertainties around the scope and timing of these agreements could moderate enthusiasm, suggesting limited near-term upside," Osama Al Saifi, managing director for Mena at Traze, said.
The EU is seeking to sign a deal with the US involving a baseline 15 per cent tariff on imports from the bloc and other possible exemptions, according to media reports on Friday.
EU chief Ursula von der Leyen and Mr Trump said on Friday they would meet in Scotland this weekend to tackle a months-long transatlantic trade standoff.
"We'll see if we make a deal," Mr Trump said, adding that the chance of a deal was "50-50", with sticking points remaining on "maybe 20 different things."
"But we're meeting ... with the European Union. And that would be, actually, the biggest deal of them all, if we make it," he said.
Earlier in the week, the US, the world’s largest economy, and Japan struck what Mr Trump claimed was the “largest trade deal in history”.
Japan will now pay 15 per cent tariffs on exports to the US, as opposed to the 25 per cent threatened by the Trump administration previously. That is in addition to other concessions that would address the US trade deficit with Japan.
Indian officials have also expressed confidence in reaching a trade deal with the US before the August 1 deadline. Brazil and Mexico also indicated interest in strengthening commercial ties, according to Soojin Kim, research analyst at MUFG Bank.
Oil prices fell on Friday's market close, reversing gains earlier in the day.
“Oil prices are back on the rise on optimism about the global economy as the Trump administration takes action to win the artificial intelligence race and may be close to getting to secure favourable trade deals with the European Union and with China,” said Phil Flynn, senior analyst with Price Futures Group.
Mr Trump unveiled a three-pillared AI strategy on Wednesday as the country focuses on becoming a dominant player in the field.
The strategy includes accelerating artificial intelligence innovation as well as building AI infrastructure in the US that is expected to boost demand for energy.
However, broader crude market fundamentals “remain under pressure as rising Opec+ output stokes fears of oversupply”, Ms Kim said.
“With summer demand expected to ease and production likely to stay high, inventories may build sharply in the coming months, potentially driving Brent prices down towards $60 per barrel.”
Opec+ countries including Saudi Arabia, Russia and other producers, have been easing cuts and boosting output since April in anticipation of higher demand.
The group will boost production by 548,000 bpd for August, it said this month, after increasing output by 411,000 bpd for each of May, June and July. The group also approved an increase of 138,000 bpd in April.
The Opec+ group’s next policy meeting is scheduled for August 3.
Oil prices have remained volatile this year as they have been affected by a number of factors including Iran nuclear talks, Trump tariffs, crude oil increases from Opec+ and geopolitical tensions between Iran and Israel.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
INDIA SQUADS
India squad for third Test against Sri Lanka
Virat Kohli (capt), Murali Vijay, Lokesh Rahul, Shikhar Dhawan, Cheteshwar Pujara, Ajinkya Rahane, Rohit Sharma, Wriddhiman Saha, Ravichandran Ashwin, Ravindra Jadeja, Kuldeep Yadav, Mohammed Shami, Umesh Yadav, Ishant Sharma, Vijay Shankar
India squad for ODI series against Sri Lanka
Rohit Sharma (capt), Shikhar Dhawan, Ajinkya Rahane, Shreyas Iyer, Manish Pandey, Kedar Jadhav, Dinesh Karthik, Mahendra Singh Dhoni, Hardik Pandya, Axar Patel, Kuldeep Yadav, Yuzvendra Chahal, Jasprit Bumrah, Bhuvneshwar Kumar, Siddarth Kaul
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Wayne Rooney's career
Everton (2002-2004)
- Appearances: 48
- Goals: 17
Manchester United (2004-2017)
- Appearances: 496
- Goals: 253
England (2003-)
- Appearances: 119
- Goals: 53
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