Appeal against Singapore Horizon Towers sale dismissed

Appeal against Singapore Horizon Towers sale dismissed

High Court ruling clears the way for $500m collective sale that was inked 1-1/2 years ago

By Joyce Teo, Property Correspondent

LAST CASE: This is Mr Shanmugam’s last win as a litigator before becoming Law Minister.

THE drawn-out battle over the $500 million collective sale of Horizon Towers has moved one step closer to a conclusion after the High Court threw out an appeal by objecting owners.
Yesterday’s ruling means the sale of the Leonie Hill estate, first inked in January last year, can proceed - unless the objectors pursue one final possible avenue of appeal to the Court of Appeal. Some are considering this option.

The case marks a win for Mr K. Shanmugam in his final appearance as a litigator on April 30 before becoming Law Minister. He appeared before High Court Justice Choo Han Teck on behalf of the buyers, Hotel Properties (HPL) and its two partners.

HPL executive director Christopher Lim said: ‘We hope to move forward with it after 1-1/2 years of signing the agreement.’

They had inked a deal to buy the 99-year leasehold estate for less than $850 per sq ft of gross floor area, before prices shot up dramatically in last year’s bull market.

Some sellers were unhappy with what they regarded as a low price, particularly after a neighbouring development sold for more than double that price. Others, including the objectors, never wanted to sell from day one.

The objectors had argued, for example, that the sales committee had acted in bad faith in the way it handled an alternative offer of $510 million from another firm as well as the way it distributed the sale proceeds.

Justice Choo, in his judgment, dismissed the appeal saying there was no error of law to justify overturning a decision of the Strata Titles Board (STB) to allow the sale to go ahead. The STB had found that the sales committee had made a ‘judgment call’ to proceed with the offer.

The objectors did not prove the committee had acted in bad faith, he said. This was an issue of fact, not law, so it was within the purview of the STB, he said.

‘From the submissions and supporting documents, it appears that there may have been intrigue in the course of the en bloc sale from the day the SC (sales committee) was created to the proceedings before the STB,’ said Justice Choo.

‘It is questionable, however, whether the STB was the forum to resolve all questions arising from secret manoeuvres of the different factions among the subsidiary proprietors.’

The STB is not a court but a statutory tribunal, he added.

The Horizon Towers case was the first collective sale where the majority owners were slapped with a lawsuit for alleged breach of contract.

In late June, Justice Choo also dismissed an appeal by objecting owners of another large collective sale site - Gillman Heights. CapitaLand is the lead buyer of the $548 million site in Alexandra Road.

Source : Straits Times - 18 July 2008

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Singapore Prime residential rents could fall 4.5% by year end

Singapore Prime residential rents could fall 4.5% by year end

By Nicholas Fang

RESIDENTIAL rents in Singapore’s prime districts could drop by 4.5 per cent by year end, amid fears of a longer-than-expected downturn in the United States.
Property consultant Jones Lang LaSalle (JLL) said the high rentals seen in the Republic’s prime districts last year are now facing downward pressure.

Prime properties are typically located in districts nine to 11 with units ranging in size from 500 to 2,000 sq ft.

JLL South-east Asia and Singapore managing director Chris Fossick said in a press conference yesterday: ‘Expatriates with lower housing budgets are moving out to the non-prime market, causing typical prime rentals to ease marginally in the first half of this year.’

According to JLL, luxury prime property rentals softened by 1 per cent in the year-to-date while typical prime rents weakened by 2 per cent.

Said JLL: ‘With the US economy facing the potential of a longer downturn than expected due to the sub-prime woes, credit crunch and rising inflation, market sentiments continue to weaken in Singapore.

‘The level of residential collective sales has dropped to only two transactions worth $55.3 million in the first half of the year compared with51 transactions worth some $9.33 billion over the same period last year.’

JLL forecasts that average resale prices in the central district are expected to ease about 1 per cent year-on-year by next year while mass-market resale prices will most likely maintain current levels.

Meanwhile, prices in the luxury prime market are expected to contract the most, falling some 11 to 13 per cent year-on-year next year.

However, Mr Fossick believes that once the US housing crisis passes, a recovery in this region will be swift given the sentiment-driven nature of the industry.

‘The uncertainty in the US is unlikely to clear up in the next six months, but if things begin to look up after that, we could see a rapid turnaround here as soon as early next year.’

Source : Straits Times - 18 July 2008

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Singapore Office space slump? 2 state-owned sites pull in strong bids

Singapore Office space slump? 2 state-owned sites pull in strong bids

By Fiona Chan, Property Reporter

THE former Ministry of Home Affairs complex at Phoenix Park is set to be transformed into an ‘iconic integrated office complex’ with restaurants and other facilities.
The plans were unveiled by LHN Facilities Management, which was awarded the right to lease the Tanglin Road site by the Singapore Land Authority (SLA) yesterday.

LHN’s managing director, Mr Kelvin Lim, added that perks like a shuttle service to the nearby Redhill MRT station would help to attract government agencies and private companies which need space outside the Central Business District. The property comprises 24 low-rise blocks.

LHN, which specialises in converting old properties for new uses, offered $368,888 a month - more than double the $165,000 guide rent. A total of 11 bids were received for the site.

Another state-owned site awarded for lease by the SLA, the former Monk’s Hill Secondary School at Winstedt Road, is also set for a makeover.

The top bid came in from marine engineering firm Allbest Equipments at $211,328 a month - 40 per cent more than the guide rent of $147,300.

Allbest is retaining only 5 to 10 per cent of the built-up space for its own office needs and will rent out the rest.

The company will spend about $4 million doing up the building and expects to lease space to medium-sized businesses at $8 to $10 per sq ft, said Mr Chan Cheong Hoy, general manager of Allbest.

The strong interest in the two state-owned sites shows that despite the torpor in the property market, demand for office space in the prime area appears to be going strong.

The two buildings pulled in offers that were well above their guide rents, SLA said.

Both companies plan to sub-lease most of the space in these buildings, believing that office demand will remain healthy.

These two properties are the first that SLA has leased out this year. The agency will put up another two sites, also for office use, in the coming months.

One is a former police post at 11 Kelantan Road, which has a gross floor area of 1,905 sq ft. The other is the former Pacific Can Building at Cecil Street, a vacant two-storey property with a total floor area of 19,482 sq ft.

Source : Straits Times - 18 July 2008

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Singapore Rents, prices in central, prime areas may drop

Singapore Rents, prices in central, prime areas may drop

JLL predicts up to 4.5% dip in typical prime district rents

By EMILYN YAP

RENTS and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL).

In the worst case scenario, the real estate consultancy firm projects a 3.5 to 4.5 per cent drop in rents in the typical prime districts by year-end. ‘Compared to recent rental rises, this remains a relatively small decline,’ said JLL’s managing director in South-east Asia and Singapore, Chris Fossick. The central districts could experience a bigger 5 to 7 per cent drop in rents in 2009.

The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease, as new islandwide supply is likely to surpass the average 10-year take up of 6,600-6,800 units, JLL said in a statement yesterday. Most completed supply could appear in the central districts.

Average resale prices in the central districts could ease about one per cent by 2009, while prices in the luxury prime districts could dive 11-13 per cent.

Mr Fossick referred to the forecasts as ‘more of a worst-case scenario’ should the US market not pick up soon. He said that sentiment will improve once US housing shows signs of recovery. Singapore’s fundamentals are attractive to investors and demand will return when uncertainty clears, he added.

Investors might then realise that ‘there is less supply now than we thought there was’ - and prices may rise again.

Taking a medium to longer-term view, Mr Fossick said: ‘We are seeing a dramatic fall in potential future supply in Singapore due to a stall in collective sales.’

JLL said that there were only two transactions worth $55.3 million in the first half of this year, compared with 51 deals worth $9.33 billion in the same period last year.

Mr Fossick said that there is also less supply from the confirmed list of the Government Land Sales Programme for the second half of the year.

Prime districts are already seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell one per cent and typical prime rents dropped 2 per cent.

Properties in the central districts in turn became more popular for leasing. Average rents there rose 11 per cent and surpassed those of typical prime properties for the first time in H1 this year.

JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 per cent to $2,595 per square foot (psf) in the first half of the year, while central district prices eased 0.5 per cent to $1,020 psf.

The shift of rental demand from the prime to central districts has sustained investor interest in central district property, according to JLL.

The mass market stood out with 3 per cent growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.

Source : Business Times - 18 July 2008

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Singapore Tanglin Road site goes at 124% above guide rent

Singapore Tanglin Road site goes at 124% above guide rent

By ARTHUR SIM

THE former Ministry of Home Affairs complex at Phoenix Park, off Tanglin Road, has been awarded to LHN Group for $368,888 a month - a huge 124 per cent more than the guide rent of $165,000 a month.

Phoenix Park: LHN, which won the site, plans to configure it into separate tenant clusters
The site, with a gross floor area of 143,195.4 sq ft, is managed by the Singapore Land Authority (SLA). The tender attracted 11 bids - 10 of them at or above the guide rent.

Bidders included United Engineers Developments (UE) which put in the second-highest offer of $315,033 per month.

Teo Cher Hian, director of land lease (private) with SLA’s land operations group, said LHN offered the ‘best value for the state’ based on allowable uses, business concept, track record and corporate financial health.

LHN plans to configure the site into separate tenant clusters, he said. The adjacent former Education Ministry headquarters now houses the Youth Olympic Games headquarters. And with more office set-ups pending, Phoenix Park ‘completes the area as an office hub’, said Mr Teo.

LHN is the master tenant for other state properties, including the former Gan Eng Seng School and CID Training Centre.

LHN managing director Kelvin Lim said the investment cost at Phoenix Park is expected to be about $4 million. He estimates that rents could be around $6 psf per month when it opens at the year-end.

Rising office rents are forcing more businesses to consider alternative office space like Phoenix Park. UE, for instance, had intended to use most of the space to house its own engineering operations, and to lease the rest to other tenants. ‘The existing structures and layout would also allow rather quick occupation with minimal works,’ a UE spokesman said.

Marine engineering firm Allbest Equipments, which was awarded the former Monk’s Hill Secondary School site by SLA, also expects to relocate its corporate offices there.

Allbest put in the highest bid of $211,328 per month for the site, which has a GFA of 83,889.5 sq ft.

Seven bids were received, with Allbest’s 43 per cent higher than the guide rent of $147,300.

Allbest general manager Chan Cheong Hoy said it will lease the remaining space at $7.50-$10 psf a month and expects to complete the first phase of renovations within four months.

Cushman and Wakefield managing director Donald Han said that as well as getting such properties ready to let as quickly as possible, developers have to keep construction costs under tight control to ensure their projects are feasible.

Mr Han says that in the Newton area transitional office space is going for $7.50-$8 psf a month, while the former Gan Eng Seng School could achieve $4.50-$5 psf a month.

Source : Business Times - 18 July 2008

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$1.99b loan for Farrer Rd condo

$1.99b loan for Farrer Rd condo

It’s S’pore’s biggest syndicated loan for a residential project, says CapitaLand

By LYNETTE KHOO

THE en-bloc purchase of Farrer Court site - which has made many of the sellers millionaires - has achieved many superlatives, the latest being the $1.996 billion loan raised by the CapitaLand-led consortium that is re-developing the land into a high-rise condominium.

Making waves: Ms Patricia Chia, CEO, CapitaLand Residential S’pore, Mr Liew (centre) and Mr Ong. The Farrer Rd condo will have 1,500 homes in 36-storey blocks
The loan involving 10 local and international banks to fund the acquisition of the Farrer Court site and its redevelopment is the largest syndicated residential project loan ever arranged in Singapore, said CapitaLand’s president and CEO Liew Mun Leong yesterday. He was speaking at the loan-signing ceremony at the Four Seasons Hotel.

This loan comprises a $1.362 billion term loan and a $500 million revolving credit facility with a tenor of five years, and $133.93 million bank guarantee facilities with a six-year tenor. A joint statement by the consortium partners said the loan will be used to partially refinance the acquisition costs and to part-finance the construction and development.

The consortium, Morganite Pte Ltd - whose partners are CapitaLand Residential (with a 35 per cent stake), Ong Beng Seng-controlled Hotel Properties Ltd (22.5 per cent), Morgan Stanley Real Estate Special Situations Fund III LP (22.5 per cent) and US-based Wachovia Development Corporation (20 per cent) - bought the site in June last year for $1.3388 billion, making it the largest collective sale transaction in Singapore. The transaction was completed in March this year.

The privatised HUDC estate of area 77,898 sq m (838,488 sq ft) will be re-developed into 36-storey condominium consisting of 1,500 homes.

This is the only private residential site in the Farrer Road and Holland Road area to be accorded a high plot ratio of 2.8 and a maximum height of 36 storeys.

‘The project will cost us about $3 billion, including land price,’ said Mr Liew. This $3 billion tag makes it the largest value residential project in Singapore.

‘It’s during such difficult times that developers, businesses and partners can pool together and seek partnership strengths with healthy financial standing to exploit opportunities,’ Mr Liew added. Despite the weakness seen in new home purchases this year, Mr Liew believes that the demand here remains strong.

He is hence confident of attracting the right buyers for this project given its design by renowned architect Zaha Hadid and its good District 10 location, as well as support from the ‘blue chip’ partners.

‘The demand is still holding (up) and there are still people buying,’ Mr Liew said. ‘If you look at people buying Nassim Park for over $3,000…and that’s exceeding pre-Asian crisis (levels).’

Speaking on the sidelines, Hotel Properties executive director Christopher Lim concurred that current market weakness points to the issue of timing rather than a fall in demand.

‘The demand is there but people are just waiting,’ Mr Lim said. ‘If they believe that price is not going to drop, they will come back to the market again.’

The 99-year leasehold project is slated to be launched in the first half of 2009 and its pricing will be determined at that time. Its breakeven pricing is in the region of $1,350 to $1,450 per square foot.

Mr Liew added that the group is ready to hold back the launch to achieve a desirable pricing as profitability remains the key focus for all its projects. ‘We are a company that can hold on,’ he said. ‘Our balance sheet is not under pressure.’

The mandated lead arrangers and bookrunners of the loan are DBS Bank, UOB Asia, Standard Chartered Bank, OCBC and Royal Bank of Scotland plc.

Source : Business Times - 18 July 2008

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It takes more than salary to be the most admired firm

It takes more than salary to be the most admired firm

Career progression policies, bonus and brand matter more

By LEE U-WEN

ONE would think that the globe’s best companies to work for would naturally be paying top dollar for the best talent to join them.

Not so, it seems.

A new study by global management consultancy Hay Group has found that firms ranked in Fortune magazine’s latest ‘World’s Most Admired Companies’ list pay their managers and professionals about 5 per cent less in base salary, compared with companies that did not make the list.

But while some may regard this as counter-intuitive, these top companies likely pay less because of stronger programmes already in place to develop talent from within, said the study.

The processes that help to source internal candidates mean that there is less of a need to hire from outside sources which typically causes wages to be inflated, it added.

‘Those companies with strong, corporate brands usually will have less difficulty attracting good employees,’ Hay Group Singapore general manager Andrew How told BT yesterday.

‘We’re not saying that pay is not important, or you have to pay less. But you don’t have to pay more if you have proper career progression and retention policies, and, of course, a good brand.’

But while the Most Admired Companies, or MACs, generally pay less, they are ahead of their peers in giving annual bonuses.

Over at the MACs, junior-level employees typically get paid above-average bonuses in their first few years of service. This, said Mr How, is a signal to them that the company values them and wants them to stay for the long term.

After which comes the crucial stage of an employee’s career, when he is closely assessed whether he is suitable to fill key positions within the company in future. This is where attrition is at its highest, with many people battling for few key positions, said Mr How.

However, once an employee makes it to senior management, the big money starts rolling in, with bonuses at MACs far ahead of other companies.

‘These are people who have proven themselves. They have delivered, the company has spent years grooming them, and wants to reward them for their loyalty. The message is clear that the company is willing to pay for results, and the variable is much higher,’ said Mr How.

Other areas that make MACs stand out from the competition is to communicate their reward system effectively and regularly to staff, and the ability to transform business strategies into measurable results.

But money alone is not good enough to hold on to talent, no matter how much is on the table, said Richard Wong, vice-president of human resources (Asia) at electronics company Flextronics.

Flextronics is one of just two Singapore-based companies to make the coveted Fortune list, with Singapore Airlines being the other.

Looking ahead, Mr How said he hopes more local companies here can make the Fortune list in the coming years.

‘First, there’s your brand, to position yourself to be more global. The key challenge is to start attracting the right talent and developing them. The potential for Singapore companies is there, but the talent pool here is small, so companies must figure out how to get the brightest to work for them instead of going to places like Shanghai or the US,’ said Mr How.

The Hay Group study, now into its 11th year in partnership with Fortune magazine, polled more than 160 companies that were placed in this year’s most admired companies rankings.

Source : Business Times - 18 July 2008

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Innovate like Bizfile, Singapore PM Lee tells public sector

Innovate like Bizfile, Singapore PM Lee tells public sector

He wants the sector to take risks because the benefits are worth it

By OH BOON PING

(SINGAPORE) Singapore’s public sector should embrace an entrepreneurial culture and experiment with new ways of delivering public services, Prime Minister Lee Hsien Loong said yesterday.

Strong turnout: PM Lee addressing the more than 500 entrepreneurs, financiers and representatives of SMEs at the opening of the ACE BlueSky Conference yesterday.
‘Public sector entrepreneurship requires officers to take risks, since new methods and technologies may fail to work. But when they do, they bring significant benefits to Singapore,’ Mr Lee said at the opening of the ACE BlueSky Conference.

The event, at the Raffles City Convention Centre, was attended by more than 500 entrepreneurs, financiers and representatives of small and medium-size enterprises (SMEs).

In his speech, Mr Lee cited Bizfile - an initiative by Accounting & Corporate Regulatory Authority (ACRA) - as a shining example of public sector innovation.

Bizfile - an Internet-based business registration, filing, and information retrieval system - ‘has cut the time taken to register a new business from 24 hours to 15 minutes, and the time taken to incorporate a company from five days to 15 minutes. Costs are down too - incorporation used to cost more than $1,200 but now costs just $315.’

The World Bank commended the initiative in its publication Celebrating Reform 2008 in a move to share ACRA’s experience with other countries, Mr Lee said.

He also emphasised the importance of attracting international talent to establish Singapore as an entrepreneurial hub.

‘We need a critical mass for innovation and enterprise,’ he said. ‘Local entrepreneurs will also benefit because they will be exposed to global competition early and so will be more prepared to take on the world.’

The enterprise scene in Singapore is growing in vibrancy, with many home-grown companies carving out niches locally and abroad. They include Charles & Keith, Thai Express, Dian Xiao Er and 77th Street.

Speaking at a discussion panel later, YCH Group chief executive Robert Yap urged entrepreneurs to adopt a ’single-minded focus on your goals’.

‘That drive is important in keeping us going,’ he said, adding that most people often give up too easily before reaping the fruits of their efforts.

Mr Yap also emphasised the importance of marketing to compete with global players. ‘A lot of Asian companies are shy in that aspect,’ he said. ‘But in a global environment, you will be at a disadvantage if you don’t market your products or services.’

Another panel member, Ong Peng Tsin, chairman of Infocomm Investments, encouraged firms to scout around for value investments in the light of volatile market conditions.

Source : Business Times - 18 July 2008

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Another door closes on Singapore Horizon minorities

Another door closes on Singapore Horizon minorities

High Court dismisses appeal, says there’s no proof that sale was in bad faith
By MICHELLE QUAH
(SINGAPORE) Minority owners seeking to stop the en bloc sale of Horizon Towers have been defeated yet again. Singapore’s High Court yesterday dismissed their appeal, on the grounds that they failed to prove the sale was done in bad faith and prejudiced their rights.
 
They will soon be meeting to decide if they will take the matter to the Court of Appeal, or start a civil suit to claim for any financial loss - which will be their final recourse.
 
 
 
This decision, coming on the heels of the High Court’s dismissal of an appeal against the sale of Gillman Heights Condominium, marks the second major defeat for minorities here.

The minority owners of Horizon Towers whom BT spoke to said they were still considering their options at this time. But they will soon be meeting to decide if they will take the matter to the Court of Appeal, or start a civil suit to claim for any financial loss - which will be their final recourse.

If they decide not to appeal further, the $500 million sale of the Leonie Hill development to a consortium led by Hotel Properties Ltd (HPL) will go through. It will also mean that the closely watched saga - which has been playing out in the public eye for more than a year - will finally come to a close.

HPL group executive director Chris Lim told BT: ‘We are pleased with the High Court judgment and hope to move forward with the deal as it’s been one-and-a-half years since the sale agreement was inked.’

 
 
Justice Choo Han Teck, who presided over the minorities’ appeal, said in his judgment yesterday that the minorities had failed to show that the Strata Titles Board (STB) erred in law in its decision to approve the en bloc sale in December.

The High Court only has powers to consider questions of law on appeal.

The minorities had argued that the sale had been conducted in bad faith. They claimed a better sale price might have been achieved if the sales committee had pursued a second offer from a party called Vineyard, which had reportedly offered $510 million. The minorities claimed the sales committee did not pursue the offer - and even concealed it - because the development’s sales agent, First Tree, was getting a higher sales commission from the HPL consortium.

But Justice Choo said the minorities failed to prove bad faith, as their argument was essentially concerned with whether the eventual sale price was fair - which is ‘a question of fact’ for the STB to decide, and not a question of law for the court to deliberate on.

Justice Choo said, if the minorities feel the sales committee had deliberately or negligently not pursued the Vineyard offer, they can pursue a civil claim for the purported financial loss.

He also ruled that the minorities had failed to prove there was a lack of good faith in the way the sales proceeds were to be distributed amongst the various owners. The minorities argued the apportionment method used was unfair because it resulted in penthouse owners getting about 16 per cent less on a per- square-metre basis, compared to non-penthouse owners.

Justice Choo said there can’t be a lack of good faith in the selection of the apportionment method just because it was the only one considered or it led to some owners getting more than others. He noted that the STB had considered the evidence of several experts and it seemed no one method would satisfy everyone.

He added that, even if the STB had deemed the chosen method inappropriate, it would be an error of fact and not an error of law.

He also dismissed the minorities’ arguments that the en bloc sale was unconstitutional, and that the sale agreement had lapsed by the time the STB approved the sale.

Justice Choo also noted the ‘intrigue’ that has surrounded the en bloc sale of Horizon Towers. There have been numerous accusations on the conduct of the various parties involved - ranging from whether the sales committee should have worked harder to get a better sale price, to whether the minorities were only against the sale because the price was too low.

‘The STB was not bound to examine the rights and preferences of each individual subsidiary proprietor and it was not the forum to inquire into the conduct of individual members of the SC (sales committee), or even the SC as a whole,’ Justice Choo said. ‘If the STB were to embark on the kind of inquiry and make the findings the appellants say it ought to have done, the STB would never get its job done within the time limited.’
Source : Business Times - 18 July 2008

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Oil prices retreat, but fears of rebound remain

Oil prices retreat, but fears of rebound remain

Respite may be temporary, some say; pump prices in S’pore trimmed again
By RONNIE LIM

(SINGAPORE) After shooting up at blinding speed, the price of crude oil has come down even faster - plunging US$10.50 a barrel in just two days. This reversal and a quick rally late yesterday following a Nigerian pipeline explosion have got the market confused.
‘It’s anybody’s guess where prices will head next,’ one trader said, while another economist believes that this is just a temporary respite and ‘not a tipping point yet’.

After hitting an all-time high of over US$147 a barrel just last Friday - and threatening to breach US$150 - crude oil had slipped to just over US$134 in Asian trade yesterday afternoon, following the slide in New York on Tuesday and Wednesday.

This meant relief for some and fresh worries for others. Singapore Airlines’ stocks gained 38 cents or 2.6 per cent from the latest oil price fall to close at S$15.06. Meanwhile, the stocks of alternative energy players were hit. Biofuel/palm oil stock Wilmar fell 23 cents to S$4.31, while Straits Asia, which has coal mine assets, closed at S$2.78, down 15 cents.

In London, oil rose above US$136 a barrel yesterday as investors resumed buying after the recent sharp drop and boosted by fresh cuts to Nigerian oil output.

A Reuters News Agency report said an attack on an oil pipeline in Nigeria, the world’s eighth-biggest oil exporter, shut 20,000 barrels per day of crude oil production.

 
 
Italian oil company Eni was quoted as saying that it had temporarily shut down production of 47,000 barrels of oil a day there because of loss of pressure in pipeline.

US crude rose US$1.70 to US$136.30 a barrel at 1450 GMT, recovering from lows of US$133.02 while London Brent crude for September was $1.54 up at US$137.35.

Meanwhile, Singapore Petroleum Company and Caltex cut their pump prices yesterday afternoon, making it the second trim this month - after an earlier relentless climb in pump prices over the past 18 months.

The catalyst for the earlier stumble in oil prices was a rise in US crude and gasoline inventories - reflecting what most saw as a slowdown in US energy demand because of the economic downturn there.

Brazilian production was also reportedly back at full capacity, while a cut in Opec’s forecast of global oil demand growth in 2009 also weighed on prices.

The New York Times reported that there was also fresh evidence from the Automobile Association that Americans were driving less because of rising gasoline prices which had hit a record US$4.11 a gallon.

In Singapore, SPC and Caltex cut petrol pump prices by four Singapore cents per litre and diesel by two cents. This brought their premium 98 octane petrol to S$2.28 a litre and diesel to S$2.013. SPC fell eight cents to S$6.99.

BT understands from oil industry sources that petrol and diesel consumption in Singapore in the first half has clearly fallen - although they could not specify by exactly how much - as the higher pump prices here have started to bite.

It has become a simple issue of either driving less or paying more. ‘I used to pay S$150-180 a month, and I pay more than double now, or about S$400,’ complained one oil broker, who said he doesn’t really drive much.

Earlier this month, on July 9, oil companies made their first pump price cut here following a US$10 crude price drop, as political tension between Israel and Iran eased.

Chua Hak Bin, Asian strategist for Deutsche Private Wealth Management, told BT that he doesn’t reckon that oil prices have reached tipping point yet.

‘Prices are likely to stay elevated and volatile,’ he said, adding that ‘the fundamental drivers, like market demand, are still very much there.’

Besides, geopolitical risks in the Middle East still remain, he said.

Over in the US, there are also concerns about upcoming hurricanes and their possible impact on oil platforms in the Gulf of Mexico.

One oil broker thinks that the fall in oil prices is just temporary, and that prices will start moving up again in August. The latest fall simply reflects players selling down to make a profit, he said.

Source : Business Times - 18 July 2008

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