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Oil prices slides 3% as US-China trade war escalates

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NEW YORK — Oil prices fell on Friday after China unveiled retaliatory tariffs against about $75 billion worth of U.S. goods including crude oil, another escalation of a protracted trade dispute between the world’s two largest economies.

Brent crude futures fell 58 cents, or 1%, to settle at $59.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.18, or 2.1%, to settle at $54.17 a barrel. WTI lost 1.3% for the week, while Brent rose 1.2% during the week.

China’s commerce ministry said it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including crude oil, agricultural products such as soybeans, and small aircraft.

In retaliation, U.S. President Donald Trump said he was ordering U.S. companies to look at ways to close operations in China and make products in the United States.

“We still view the U.S.-Chinese trade standoff as a major bearish consideration that will likely be requiring additional downward oil demand adjustments as this year proceeds,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Investors also focused on a speech by U.S. Federal Reserve chair Jerome Powell at an annual economic symposium in Jackson Hole, Wyoming.

The U.S. economy is in a “favorable place” and the Federal Reserve will “act as appropriate” to keep the current economic expansion on track, Powell said.

The remarks gave few clues about whether the central bank will cut interest rates at its next meeting.

St. Louis Federal Reserve Bank President James Bullard said policymakers will have a “robust debate” about cutting U.S. interest rates by half a percentage point at their next policy meeting in September.

Exacerbating concern over the possibility of recession, U.S. manufacturing industries registered their first month of contraction in almost a decade.

“Some have blamed the hesitant tone (for oil prices) on an end-of-summer lull. Yet, in truth, the sense of unease stems from ongoing worries about the global economy,” said Stephen Brennock of oil broker PVM.

Tensions in the Middle East have kept investors on edge as well. Iran’s foreign minister said talks held on Friday with French President Emmanuel Macron about a landmark 2015 nuclear deal were “productive.”

Iran has said it will scale back compliance with the pact unless the Europeans find a solution enabling Tehran to sell its oil despite U.S. sanctions.

U.S. energy firms this week cut the most oil rigs in about four months, with the rig count falling to the lowest since January 2018, as producers cut spending on new drilling and completions.

Hedge funds and other money managers raised their bullish wagers on U.S. crude to a three-month high in the latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.

The speculator group raise its combined futures and options position in New York and London by 17,541 contracts to 217,104 during the week ended Aug. 20.

 

 

 

 

 

 

Business

Zomato acquires UberEats India for nearly Rs 2,500 crore

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New Delhi: Zomato on Tuesday announced that it has acquired Uber’s Food Delivery Business in India in an all-stock deal and Uber will have 9.99 per cent stake in the Deepinder Goyal-led food delivery platform.

According to sources close to the deal, it is in the range of over $350 million or nearly Rs 2,500 crore.

Uber Eats in India will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective from Tuesday.

“We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category,” said Goyal, Founder and CEO, Zomato.

According to company sources, for the first three quarters of 2019, “our Uber Eats business comprised 3 per cent of our global Eats gross bookings, but was more than 25 per cent of our global Eats Segment Adjusted EBITDA losses”.

Uber started its food delivery service in India around mid-2017, but has not been able to scale up in the face of big players like Zomato and Swiggy.

It currently has nearly 26,000 restuarants listed on its platform from over 40 cities.

The market is piping hot as according to a recent study by business consultancy firm Market Research Future, the online food ordering market in India is likely to grow at over 16 per cent annually to touch $17.02 billion by 2023.

Uber CEO Dara Khosrowshahi said that the Uber Eats team in India has achieved an incredible amount over the last two years.

“India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader,” said Khosrowshahi.

“We have been very impressed by Zomato’s ability to grow rapidly in a capital-efficient manner and we wish them continued success,” he added.

On January 10, Zomato had announced that it has secured $150 million in fresh funding from Ant Financial, a subsidiary of China-based giant Alibaba.

The latest round of funding in Zomato, which currently value the company at $3 billion, is part of $600 million funding round announced by Zomato CEO Goyal at a Delhi event last December.

The deal comes in the wake of merger talks between Zomato and Swiggy, whoch both the companies have denied to date.

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