Business News

CCTV Script 23/05/18


— This is the script of CNBC's news report for China's CCTV on May 23, 2018, Wednesday.

US Stocks had a good trend on opening session in overnight trading. 3 stock indexes opened high amid China reduced import tariffs, however, the US stocks fell then, especially on the closing session, the US stocks slumped, causing Dow & Jones industry index fell more than 200 points, with a 0.72% decline. The S&P 500 Index lost 0.31%, while the Nasdaq Composite Index was off 0.21%. It is Trump's position that triggers the US stock market opened higher yet closed lower, His meeting with North Korea's supreme leader Kim Jong-un may be postponed. And US also set "requirements" for this meeting, if the requirements can't be fulfilled, then this meeting will not be held. In addition, the development of Iran Nuclear Deal is also one of the factors affecting overnight US stocks.

US Secretary of State Pompeo said in interview that US hopes the Iran Nuclear Deal can be " amended significantly" , otherwise, US may implement the most strict sanction in history. However, because Iran president Rouhani resolutely rejected it and EU said they will still commit to fully implement the Iran Nuclear Deal, so markets believe that the relations between the US and Iran will be increasingly tense in the near future, and that will warm up the geopolitical instability in the Middle East. Apart from the impact on US stocks, re-sanction will definitely affect global oil price significantly as Iran accounting for 4% of global crude supplies. And the recent elections in Venezuela triggered dispute in Western; the market worried that the US will implement a new round sanction against Iran, suppressing the supply of crude oil. Currently, the production of crude oil in Venezuela has fell to its lowest level in 10 years due to political unrest and economic crisis.

So we see that Brent crude oil futures once again reached at 80 US dollars per barrel overnight, while WTI futures hit a new peak of half and 3 years in intra-day trading . However, news from OPEC making the oil price fell back, with Brent futures declined from 80 dollars quickly.

According to the news, OPEC may decide to increase the production of crude oil as early in June due to the influence of the situation in Iran and Venezuela. At present, there are reports said OPEC members are carrying the negotiations forward to discuss the how to cool down the market by increasing the production of crude oil when the oil price rise above $80 dollars per barrel. Among them, another approach may be to relax production cuts. The latest news show that the total production cuts of OPEC hit a new record, with 166%, so relax the requirements will cause the production cuts decrease; thus, reduce production.

However, some analysts think, OPEC decides to slow down the production though, the impact on supply may not cause oil price goes down, that means, OPEC is still studying solutions under different circumstance, and even though OPEC makes its decision in June, it will take 3 to 4 months to implement the decision. Therefore, the situation in Iran and Venezuela will continue to affect OPEC's final decision, and the oil price may experience turbulence recently, we will keep an eye on this issue.