Today’s Economic Shakers

Russia says it’s unlikely to cut oil production, casting doubt on OPEC outcome…

Tuesday morning saw crude oil prices slide lower at the news that the head of Russia’s state-run oil company, Rosneft, said it was unlikely that Russia would participate in any coordinated effort with OPEC to freeze prices or cut production.

The comment, made at an energy conference in Turkey late Monday, came not long after Russia’s president, Vladimir Putin said that he hoped the energy cartel would reach an agreement regarding the limiting of crude production.

Putin’s comments early yesterday sent the price of November crude futures contracts soaring to its highest levels in over 3 months, closing at over $51.50 per barrel.

Early morning trading saw the US benchmark US West Texas Intermediate crude drop by nearly 1%, trading as low as $50.84 per barrel. Brent crude, which serves as crude’’s international counterpart, dropped even lower, falling at one point by 1.1% to $52.55 a barrel.

Since that low point, however, oil has rebounded to close to flat, with the commodity’s volatility reflected the conflicting messages sent from out of Russia.

Russia is not a member of OPEC, which is the world’s largest oil cartel. However, the country does often participate in informal talks with the cartel.

Contributing to the drop was a recent report from the International Energy Agency, an independent industry organization. The report highlighted the fact that recent production reached new heights, revealing the daunting task that OPEC has before it.

The Hot Take-Away —

While the apparent conflict in message may be interpreted as a country that has internal conflict, there’s an equal chance that Russia’s key players are playing the market to their own advantage.

Such tactics would hardly be the first for Russia, which revels in its position as a key OPEC influencer.

A conflicting message from Russia could simply mean that it wants to stay relevant in setting the tone for any final agreement among OPEC members. Flexing its muscles and impacting the market helps to serve as reminder to OPEC of Russia’s ability to influence the future price of crude.

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Samsung’s woes increase as the company is forced to stop Note 7 production...

It seems like the death knell for Samsung’s latest smartphone, the Galaxy Note 7, has now been officially sounded, as the South Korean electronics giant has announced that it is stopping production of its beleaguered device.

The news comes on the heels of yesterday’s announcement that the company was putting on the brakes of any further sales of the smartphone.

The Galaxy Note 7 has had a strange and short journey, after being released with both great fanfare and reviews this summer. Since then, the company was forced to issue a recall for the new smartphone due to multiple reports of the phone catching fire.

Samsung said that they identified the problem as a faulty battery manufacturer, and shifted battery production elsewhere.

Samsung then sent out new phones, but the problems didn’t end there.

A new round of reports of the Note 7 bursting into flames almost immediately started to surface, and the company was forced to halt the sales of the device as a number of major carriers refused to sell the product.

The Hot Take-Away —

This is a major hit for the company, on both a financial and public relations level.

With estimates of losses estimated in the area of $17 billion, the company will undoubtedly suffer in the bottom line, near term. The greater consequence, however, could end up being to the company’s brand, as consumers will continue to make the association of the failed and dangerous device with the company for a long time to come.