The news that Repsol YPF has been approached by Chinese companies seeking to buy or take interests in the majority of its upstream assets is something of a mixed blessing for the Spanish group.
On the one hand, Repsol has been trying for years to extract itself from the horrible mess of Argentine politics that embroils YPF, and the prospect of a well-funded buyer that is not too concerned about short-term returns coming along to pay a good price for the unwanted business seems like a godsend.
On the other hand, YPF provides about 60 per cent of Repsol’s production. The parallel approach from CNOOC, if consummated, would presumably mean surrendering even more control over oil and gas reserves.
So what would the future for Repsol look like without YPF?
Oil slipped further on Friday amid light trading as bleak US jobs data continued to weigh on the market.
Crude dropped almost 4 per cent on Thursday after closely watched non-farm payrolls data showed the jobless rate in the world’s largest economy hit a 26-year high, dashing latent hopes that commodities would continue to rally on the back of a sharp global economy.
The US Independence Day holiday meant the US market was closed and volumes of West Texas Intermediate trades were at a minute fraction of their normal level.
“We have repeatedly warned that the bullish market sentiment was overdone,” analysts at Commerzbank said. “We also believe that the market needs to be positively surprised, in order to maintain current price levels”.
Nymex WTI for August delivery fell 25 cents to $66.48 a barrel, meaning the US benchmark has now fallen almost 10 per cent since rising to an eight month high overnight on Tuesday. ICE August Brent shed 23 cents to $66.38.
Base metals also dropped, with copper losing 1 per cent to $4,985 per tonne, and aluminium falling 0.3 per cent to $1,634 per tonne.
Gold however recovered a small amount of ground, rising 0.2 per cent to $934.3 a troy ounce, as the US dollar weakened slightly, thus boosting the appeal of the dollar denominated yellow metal.
The International Atomic Energy Authority (IAEA) has appopinted a new director-general, Yukiya Amano of Japan, to replace Mohamed ElBaradei.
The decision marks the end of an era. Mr ElBaradei, who steps down at the end of November, has been in office since 1997, having been re-appointed in 2001 and 2005, in spite of frequent criticism from countries including the US and Britain.
Mr Amano’s public statements do not suggest he will take a very different line from Mr ElBaradei, however. And while the face may be different, the challenges are very much the same.
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