23/06/2017 World Business Report

Crude is down some 20% this year, despite OPEC's attempt

On edge over Brexit: Germany's industrial giants fear

for the future of their multi-billion dollar UK market.

We report from the port city of Bremen.

Welcome to World Business Report. I am Rachel Horne. We also have the

story on the excessive borrowing by China's biggest companies.

We start with the price of oil, because, once again,

despite the best efforts of the oil producing nations to prop it up,

Let's show you what's been happening.

This week the talk's all been about this guy

Traders refer to a "bear market" when the price of an asset falls 20%

It often signals a loss of confidence and further falls

It is down over 20%. It was $56 per barrel in January, and is now below

$45 in the middle of this week. of the Oil Producing Countries -

OPEC - together with 11 other countries - agreed a landmark deal

to restrict oil output to try Between them they are supposed to be

cutting production by 1.8 million Although there are questions

about whether everyone And last month, they agreed

to continue that policy for another But there's still too

much oil around. US shale producers were were hit

hard when oil prices But this year, thanks to OPEC's

action to boost prices - as you can see here -

the number of active US oil rigs has That's just added to

the global glut of oil. David Hunter is an energy analyst at

Schneider Electric. He joins us from a Edinburgh studio. They you for

joining us. We were saying there that oil is hitting a bear market.

Once you get into that, it can be difficult to get out, can't it? That

is right. History shows that when an asset of all is by 20% over a

relatively short period, that they can be further falls. The of crude

oil is very unclear at this point. oil is very unclear at this point.

For some of the reasons that you have mentioned. -- the future. Some

people are severely solution to low oil prices is low oil prices, big as

any to keep the prices low, or the US shell producers will come back

online. That is right. And that has been a big concern from the

perspective of OPEC, who have seen that these oil producers have been

robust and have become more efficient and cost-effective at low

oil prices than OPEC expected. So the producers were kind of thought

to be leading the market well before we got up to $45 a barrel, but what

we have seen over the last 22 weeks, now, is the week on week increase in

US drilling activity. And that is keeping a lid on prices by

postponing the time that it takes for the market to get to demand and

so I balance. David, we talk about these low oil prices and a bear

market, but what is the problem with oil prices being low? For consumers,

that must be a good thing. Is a sword. The major G7 economies are

thought to... This is thought to be of benefit to them. -- this is a

double-edged sword. This means lower cost for industry and for

trepidation as well. But not good news for oil producers, from the way

that he can hit countries like Russia, Iran, and others,

particularly hard. -- and fought transportation as well. But if oil

falls really far in value, then they can also be endemic of, all, sorry,

representative of concerns in the wider economy. -- or. Oil is not a

proxy for the economy, but if demand is growing, that would suggest a

healthy oil price. If it is not growing, people might look for wider

reasons as to why. Just briefly, David, when you think the price will

go in the next six Gotze? That is the $6 million question. I think

that some people believe that it could well be range bound for a

while. As we move into next year, there are some analysts indicating

that the supply will come into balance. But what I would say is

that certainly over the last month or so, a number of analysts have

reduced their immediate horizon expectations for the price. So don't

expect a big bout soon. David Hunter from Schneider Electric. Thank you

for joining us. We are also in the German

port city of Bremen - exactly a year on from Britain's

vote to leave the European Union. Bremen's manufacturers export goods

all over the world - including 2.6 billion euros worth

to the UK every year. That's why local businessespeople

are on edge about the future of a trading relationship that

goes back centuries. They are some of the most

recognisable landmarks. -- Miller. But the specialist material that

just one company in the German city just one company in the German city

of Bremen. And for its manager, Brexit is a headache. This is one of

the ongoing products, projects we have in the UK. We have discussed

Brexit. It was a lot more of a hassle on the product. If we had

closed borders and had to adhere to strict trade and customs policies.

It is not just high-tech materials that make their way from Bremen to

Britain. Although the bulk of the 95,000 cars in this terminal I

headed to the US and Asia, some 2.6 billion euros worth of goods make

their way to Britain every single year. Much of that comes from the

local Airbus and Daimler plans. And there is a concern that a Brexit

that leaves Britain outside of the single market could harm them and

many local businesses that rely on them. For one company, it is the

movement of personnel, as will the shipping containers, that is vital

to their business. We have a fleet of up to 100 chips. When this free

flow of people who work in the flow of people who work in the

London office all come to Bremen from the UK, and with a hard Brexit,

it has a massive impact on our business, at least the way we are

doing it at the moment. The relationship between Bremen and

London goes back centuries, to when local traders were granted a licence

to sell their wares in Bremen's capital. And the representative here

says the goodwill will outlast Brexit. The people of Bremen take

out their umbrellas for London's rain. They are very pro- British.

Whatever the legal framework will be, everybody will adjust to the

situation. Local attitudes are one thing, but businesses he ultimately

know that Brexit will be decided in know that Brexit will be decided in

Brussels, and they can only hope that EU negotiators share their

enthusiasm for all things British. And the Industrial and

Commercial Bank of China - known as ICBC - has moved to calm

fears about the health of loans to some of the country's

biggest companies. On Thursday the shares of several

well-known Chinese firms were hit after reports of an investigation

into excessive borrowing to fund Sharanjit Leyl is looking into this

in simple. What do you tell us? Well, that is right. -- is looking

into this and Singapore. Following the reports that Chinese regulators

might be cracking down on the big spending sprees, ICBC, one of the

exposure to these companies, they exposure to these companies, they

have said that this is all routine. It is a big deal. They basically

checks of loans to companies that checks of loans to companies that

invested overseas is just routine. And a handful of the deal makers

that have been on those overseas buying sprees, they were also

targeted, they saw their shares fall after the matter, in fact one fell

about 10% before their shares were suspended, but some of the shares

are up-to-date. They are rebounding, particularly a couple. Others

continue to be sold. Sharanjit Leyl might think you for joining us. In

other news:, and is very new ?18 billion nuclear power station has

come under fire from public auditors, who called it a risky and

expensive project. The report describes the case for the Hinkley

Point seaplanes as marginal. -- C Plant.

It says the deal with state-controlled French energy firm

EDF and Chinese company CGN to build the plant is "not value for money".

The 34 largest banks in the US have enough money on hand to withstand

a severe recession, according to the US central bank.

The finding comes from an annual "stress test" conducted

The tests were put in place after the financial crisis

to strengthen financial capacity in the event of a downturn.

Banks have been pushing to relax those rules.

Some said Thursday's results could make it easier to convince

American Airlines has received an "unsolicited" approach

from Qatar Airways which wants to acquire 10% of the US carrier.

In a regulatory filing, American Airlines said Qatar

intended to buy at least $808 million of its shares -

and it would respond "in due course".

Analysts say Qatar could be trying to strengthen its relations

with the US amid the diplomatic crisis with its Gulf neighbours -

and complaints from US airlines over alleged unfair government subsidies

Let's take a look at the markets as they are going so far. You can see

the markets in Asia, they are ever so slightly. In fact, this week, the

Nikkei has touched heights it has not seen since 2015. Brent crude, we

have been talking about oil, you can see that even though it has entered

this bear market, it has come up a little and perhaps stabilise. Let's

move on. We can see how America closed last night. Not a great

session on the rack and markets. The Dow and the SNP are down. Keep an

eye on that healthcare bill next week. Any turmoil can affect the

markets. -- the American markets. There's a warning the government's

deal for a new nuclear power plant at Hinkley Point is

"risky and expensive".