WEEKLY ENERGY RECAP: Crude oil prices deteriorated sharply

Because of copious US shale oil supplies, the West African crude oil market continues to struggle with the ripple effects of the Atlantic basin being awash in crude oil availability. (File/AP)
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Updated 26 January 2020

WEEKLY ENERGY RECAP: Crude oil prices deteriorated sharply

Crude oil prices deteriorated sharply over the week, with Brent crude falling to $60.69 per barrel, the lowest in nearly two months. 

WTI dropped to $54.19 per barrel the lowest since October 2019. Pessimism seems to be back after fears that China’s coronavirus outbreak may dent crude oil demand. Still, China crude oil imports are increasing and the crude price encourages more buying to build up Chinese inventories.

Libyan supply interruptions are also affecting the market, where a similar type of light sweet oil to West African crude is made.

Traders have largely ignored Libyan supply issues because the market has become used to supply outages since 2011.

West African crude oil has usually stepped in to the fill the gap in European and the Mediterranean markets. At the same time the US shale oil revolution of the last six years has meant that less of this type of crude from West Africa has been sent to the US.

If the Libyan oil was a medium sour crude grade like the Arabian Gulf crude oil grades, the market situation would be different as this type of oil cannot be easily replaced.

Because of copious US shale oil supplies, the West African crude oil market continues to struggle with the ripple effects of the Atlantic basin being awash in crude oil availability. 

Over the longer term, prospects look bleak for European refinvers and Nigerian crude sales by implication. 

Big new refineries in Asia are posing stronger competition to Europe’s products market, as are US oil product exports which have been made cheaper and more plentiful by the growth of shale oil. Noticeably, shale oil has already displaced West African barrels from the US market. 

Today, the marginal barrel of crude oil has become extremely light, starving sophisticated refiners of heavy crude oil and thereby narrowing light/heavy differentials. 

This has meant heavier crude grades have been outperforming lighter sweet crude grades in recent years, so the loss of Libyan crude did not have a major impact.


NMC Health removes CEO amid investigation of UAE firm’s finances

Updated 27 February 2020

NMC Health removes CEO amid investigation of UAE firm’s finances

  • Chief Executive Prasanth Manghat was dismissed with immediate effect
  • Chief Operating Officer Michael Davis was appointed as interim CEO

NMC Health has removed Chief Executive Prasanth Manghat with immediate effect and granted its finance chief extended sick leave, as more details emerge from an investigation into the UAE health care firm’s finances.
Abu-Dhabi based NMC said after Wednesday’s market close that it had appointed Chief Operating Officer Michael Davis as interim CEO to succeed Manghat and said Chief Financial Officer Prashanth Shenoy had been placed on longer leave.
Manghat had been with NMC for about 10 years in various roles, including deputy CEO and CFO, and had seen the company through its 2012 listing on the London Stock Exchange.
The moves are the latest blow for the firm whose shares have lost about two thirds of their value since US-based short-seller Muddy Waters late last year questioned its financial statements.
NMC had said at the time that the report was “false and misleading,” but had opened its own investigation into company finances. The review is being led by Louis Freeh, who was director of the Federal Bureau of Investigation in the United States from 1993 to mid-2001.
NMC on Wednesday said the investigation committee had identified supply chain financing arrangements that were entered into by the company and “which are understood to have been used” by entities controlled by founder BR Shetty and former vice-chair Khaleefa Butti Omair Yousif Ahmed Al Muhairi.
Reuters was unable to reach Manghat, Shetty and Muhairi for comment outside business hours on NMC’s latest statement.
The company, which operates clinics and hospitals, specialized maternity and fertility clinics, and long-term care homes in 19 countries, said the committee was reviewing a drawdown of its facilities that had not been disclosed or approved by the board.
Its shares closed 6.6% higher before Wednesday’s statement.
NMC also said it had suspended a member of its treasury team over possible discrepancies in its bank statements and ledger entries, and said it would be unable to publish its annual results till at least the end of April.
Indian billionaire Shetty resigned as NMC’s co-chairman this month, after British regulators said they were looking into NMC following a disclosure that he had misstated the size of his stake.
Shetty had said this month that his NMC shareholdings were under a legal review looking into a large portion of his shares signed to two of NMC’s top investors in 2017, while some of his other stock had been pledged as security against loans.