Oil slips as focus shifts from Saudi supply to global demand concerns

Workers start clearing up the damaged facilities at Saudi Aramco’s site in Abqaiq. (Reuters)
Updated 24 September 2019

Oil slips as focus shifts from Saudi supply to global demand concerns

  • ‘The demand side of the equation is back in focus’
  • Saudi Arabia has restored more than 75 percent of crude output lost after the attacks on its facilities

SINGAPORE: Oil prices eased on Tuesday as weak manufacturing data from Europe and Japan focused market attention on the gloomy outlook for demand and away from uncertainty around supply disruptions in Saudi Arabia.
Brent crude futures fell 35 cents to $64.42 a barrel by 0408 GMT, while US West Texas Intermediate (WTI) futures were at $58.36, down 28 cents.
“The demand side of the equation is back in focus,” said Michael McCarthy, senior market analyst at CMC Markets in Sydney, pointing to sluggish manufacturing numbers in leading economies in Europe as well as Japan.
“That’s why we’re seeing a little bit more (downward) pressure on Brent than West Texas at the moment.”
Still, oil prices remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia’s largest oil processing facility that halved output in the world’s top oil exporter.
Reuters reported that Saudi Arabia has restored more than 75 percent of crude output lost after the attacks on its facilities and will return to full volumes by early next week. But the Wall Street Journal reported on Monday that repairs at the plants could take months longer than anticipated.
“Nine days after the oil facility attack in Saudi Arabia (SA), we still see divergent market views on when the damaged supplies will be restored,” analysts at Nomura said in a note.
“While the damaged plants may be repaired in the next couple of weeks, increasing actual oil supplies may require monitoring.”
European powers — Britain, Germany and France — backed the United States in blaming Iran for the Saudi oil attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programs and regional security issues.
Meanwhile a preliminary Reuters poll found on Monday that US crude oil and distillate stockpiles were expected to have dropped last week.
Seven analysts polled by Reuters estimated, on average, that crude inventories fell 800,000 barrels in the week to Sept. 20.
The poll was conducted ahead of key reports from the American Petroleum Institute, an industry group, to be released on Tuesday and from the Energy Information Administration on Wednesday.


Sales of grounded Boeing jets lift off at Dubai Airshow

Updated 30 min 50 sec ago

Sales of grounded Boeing jets lift off at Dubai Airshow

  • Saudi Arabian budget airline Flynas confirms deal to buy ten long-range Airbus narrow-body planes

DUBAI: Boeing’s 737 MAX took center stage at the Dubai Airshow on Tuesday as airlines announced plans to order up to 50 of the jets worth $6 billion at list prices despite a global grounding in place since March.

Kazakhstan flag carrier Air Astana said it had signed a letter of intent to order 30 Boeing 737 MAX 8 jets for its Fly Arystana subsidiary.

Air Astana, which operates Airbus and Embraer jets in its main network, said it was confident in Boeing’s ability to resolve problems with the MAX.

Global regulators banned commercial flights of Boeing’s fastest-selling jet in March after two fatal accidents.

Plans for the jet’s return to commercial service have been pushed back to early 2020 as Boeing finalizes software and training revisions that need regulatory approval.

“We are making flying affordable for the people of Kazakhstan,” Air Astana Chief Planning Officer Alma Aliguzhinova said, adding that budget carrier Fly Arystana would start taking the jets in late 2021.

The airline plans to hold 15 aircraft directly and may finance the rest through a lease transaction, she said, adding that Air Astana would not change the composition of its main fleet.

Separately, another airline signed a firm order for 10 Boeing 737 MAX 7 and 10 Boeing MAX 10 jets, a person familiar with the matter said. The airline’s name was not disclosed.

Boeing has used the past two major industry events to try to secure market momentum for the grounded MAX, which is seen as key to the planemaker’s financial health over the coming decade.

A letter of intent between Boeing and British Airways owner IAG for 200 jets, which grabbed the spotlight at the Paris Airshow in June, has yet to be finalized as the European holding company discusses the fleet change with subsidiaries that use Airbus for medium-haul operations.

In other business coinciding with the largest Middle East air show on Tuesday, Saudi budget airline Flynas agreed to buy 10 long-range Airbus A321XLR jets.

The airline’s chief executive had said on Monday that Flynas was in talks to exercise purchasing options for some or all of 40 Airbus A320neo narrow-body jets.. Airbus unveiled a provisional order in Dubai for eight of its small A220 jets from Air Senegal. Britain’s easyJet exercised options for 12 more Airbus A320neo aircraft.

Also coinciding with the show, leasing giant GECAS was expected to confirm an order for 25 Airbus planes, including 12 A330neo jets powered by engines from Rolls-Royce, a competitor to GECAS parent company General Electric.

However, there were no immediate signs that Dubai’s Emirates was ready to finalize a provisional order for 40 Boeing 787 Dreamliners.