Oil hovers near 13-month highs as storm dents US output

Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weaker-than-expected supply response by US tight oil operators to higher prices. (Reuters )
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Updated 26 February 2021

Oil hovers near 13-month highs as storm dents US output

  • Severe winter storm in Texas caused US crude production to drop by more than 10 percent

LONDON: Oil prices extended gains for a fourth session on Thursday to reach the highest levels in more than 13 months, underpinned by an assurance that US interest rates will stay low, and a sharp drop in US crude output last week due to the storm in Texas.

Brent crude futures for April gained 33 cents, 0.49 percent, to $67.37 a barrel by 0925 GMT, while US West Texas Intermediate crude for April was at $63.45 a barrel, up 23 cents, 0.36 percent.

Both contracts hit their highest since Jan. 8, 2020, earlier in the session with Brent at $67.70 and WTI at $63.79. The April Brent contract expires on Friday.

An assurance from the US Federal Reserve that interest rates would stay low for a while weakened the US dollar, while boosting investors’ risk appetite and global equity markets.

A severe winter storm in Texas has caused US crude production to drop by more than 10 percent, or 1 million barrels per day (bpd) last week, the Energy Information Administration said on Wednesday.

“Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA said.

Combined with a dovish Jerome Powell and an already tight physical market, oil prices exploded higher.

Jeffrey Halle, senior market analyst at OANDA

Fuel supplies in the world’s largest oil consumer could also tighten as its refinery crude inputs had dropped to the lowest since September 2008, EIA’s data showed.

ING analysts said US crude stocks could rise in weeks ahead as production has recovered fairly quickly while refinery capacity is expected to take longer to return to normal.

Barclays, which raised its oil price forecasts on Thursday, said it is seeing staying power in the recent oil price rally on a weaker-than-expected supply response by US tight oil operators to higher prices.

“However, we remain cautious over the near term on easing OPEC+ support, risks from more transmissible COVID-19 variants and elevated positioning,” Barclays said.

The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet on March 4.

The group will discuss a modest easing of oil supply curbs from April given a recovery in prices, OPEC+ sources said, although some suggest holding steady for now given the risk of new setbacks in the battle against the pandemic.

Extra voluntary cuts by Saudi Arabia in February and March have tightened global supplies and supported prices.


Bahrain’s Gulf Air makes progress in delaying jet deliveries

Updated 37 min 26 sec ago

Bahrain’s Gulf Air makes progress in delaying jet deliveries

  • Operating at 50-60% of pre-pandemic levels
  • Seeks delays in some Boeing and Airbus planes

DUBAI: Bahrain’s Gulf Air has made good progress in its efforts to delay some Airbus and Boeing aircraft deliveries, its acting chief executive said on Wednesday.
The state-owned carrier has been seeking to push back the delivery schedule of some new jets amid a slump in global travel due to the coronavirus pandemic.
“We had to go renegotiate the delivery dates. We haven’t canceled anything,” Acting CEO Waleed Abdulhameed Al-Alawi told an online event organized by aviation consultancy CAPA.
“We have actually negotiated with the main suppliers Boeing and Airbus and we’ve got good progress with these two scenarios.”
Al-Alawi told Reuters in January the airline would receive some aircraft this year but was seeking delays in Airbus A320neo and Boeing 787 Dreamliner deliveries.
“At the moment no airline would be keen on receiving aircraft or accepting delivery flights to park these airplanes because of costs,” he told the CAPA event.
The state-owned carrier was currently operating at about 50 percent or 60 percent of its pre-pandemic levels, he said.


IEA: Goodbye oil glut thanks to OPEC+ and recovery

Updated 14 April 2021

IEA: Goodbye oil glut thanks to OPEC+ and recovery

  • OPEC also raised its 2021 demand forecast
  • now expects oil demand to rise by 5.7 million barrels per day

PARIS: A glut in global oil markets is being worked off as the world economy begins to recover from the COVID-19 pandemic and as OPEC and its allies restrain production, the IEA said Wednesday.
The International Energy Agency raised its expectations for the recovery in oil demand after the International Monetary Fund increased its forecasts for global growth this year.
“This improved outlook, along with stronger prompt indicators, has led us to revise up our 2021 global oil demand growth forecast,” said the Paris-based body with advised oil consuming nations.
It now expects world oil demand to rise by 5.7 million barrels per day (bbd) to 96.7 million bbd, following last year’s drop of 8.7 million bpd.
OPEC on Tuesday also raised its 2021 demand forecast to 96.5 million bbd.
Oil demand was hammered last year as many countries shut down swathes of their economies in a bid to slow the spread of COVID-19.
That caused a glut in supplies, but the so-called OPEC+ group that includes heavyweight producer Russia, sharply cut output last year to reduce that and counter the plunge in prices that briefly saw some turn negative as storage ran short.
That glut appears to have been largely worked off.
The IEA said preliminary data suggest that OECD oil stocks held largely steady in March, following seven consecutive months of draws, and were heading close to their five-year average.
OPEC+ has been slowly increasing output since the beginning of the year and at the beginning of April signalled it would lift output by more than 2 million bpd in the coming three months in the face of an expected rise in demand.
While the first quarter was somewhat disappointing as many European and several major emerging economies saw a resurgence of COVID-19, global growth is expected to pick up as vaccination campaigns begin to have an impact.
IEA sees the global oil market changing “dramatically in the latter half of this year as nearly 2 million bbd of extra supply may be required to meet expected demand growth.”
But with OPEC+ still having plenty of additional production capacity that it can bring back on line, the IEA does not see a supply crunch developing.
“The bloc’s monthly calibration of supply may give it the flexibility to meet incremental demand by ramping up swiftly or adjusting output lower should the demand recovery fail to keep pace,” it said.


UAE partners with Japan’s iSpace to send rover to the moon in 2022

Updated 14 April 2021

UAE partners with Japan’s iSpace to send rover to the moon in 2022

  • SpaceX rocket will deliver an iSpace lander to the moon’s orbit
  • UAE had originally intended to send it into space by 2024

DUBAI: Lunar exploration company iSpace will transport a United Arab Emirates rover to the moon in 2022, the company said on Wednesday, as the UAE pushes for rapid expansion in the space exploration business to diversify its economy.
The UAE is using its space program to develop its scientific and technological capabilities and reduce its reliance on oil.
The Gulf state’s, and the Arab world’s, first interplanetary probe entered Mars’ orbit in February. It is now sending data about the Martian atmosphere and climate.
The Rashid lunar rover will be designed entirely by Emiratis. The UAE had originally intended to send it into space by 2024.
Japanese company iSpace, founded in 2010, aims to provide commercial transportation to the moon with a wider mission to ultimately incorporate the moon into the earth’s economy.
The 2022 launch will be iSpace’s first mission of this kind and will use a Falcon 9 rocket from Elon Musk’s SpaceX, to be launched from Florida.
Dubai’s Mohammed Bin Rashid Space Center (MBRSC) will build the Rashid lunar rover. It will remain on the moon after data collection is completed, said Emirates Lunar Mission manager Hamad Al-Marzooqi.
The SpaceX rocket will deliver an iSpace lander to the moon’s orbit. The lander will propel itself to the moon’s surface and the UAE rover will then emerge from the lander and drive off to explore, said iSpace Founder and CEO Takeshi Hakamada.
The lander will also be carrying a solid-state battery designed by Japanese company NGK Spark Plug to be tested in the lunar environment.
The lunar mission is part of the Gulf state’s broader vision for a Mars settlement by 2117.
Under the agreement, iSpace said it would also provide the Emirates Lunar Mission with wired communication and power during the cruise phase and wireless communication on the moon.
The UAE launched a National Space Programme in 2017 to develop local expertise. Its population of 9.4 million, most of whom are foreign workers, lacks the scientific and industrial base of the major countries which have space programs.
Hazza Al-Mansouri became the first Emirati in space in 2019 when he flew to the International Space Station. This week the UAE selected the first Arab woman to train as an astronaut.


Foreign firms vie to rebuild ravaged Beirut port

Updated 14 April 2021

Foreign firms vie to rebuild ravaged Beirut port

  • A German delegation last Friday unveiled a spectacular $30-billion project to rebuild the port and adjacent areas
  • Former colonial power France has also been positioning itself to take on the port’s reconstruction

BEIRUT: Eight months after a massive blast ripped through Beirut port and nearby districts of the Lebanese capital, a host of foreign companies with different national interests are competing to rebuild it.
“Everyone has their eyes on the port: the Russians, the Chinese, the Turks, the French and now the Germans,” interim port director Bassem Al-Kaissi said.
“But for the moment these are only declarations of intent.”
The August 4 explosion of hundreds of tons of ill-stored fertilizers devastated the dockside and large swathes of the capital, killing more than 200 people.
A German delegation last Friday unveiled a spectacular $30-billion project to rebuild the port and adjacent areas, in the presence of their ambassador.
The ambitious plan, drawn up by companies including Hamburg Port Consulting, seeks to move the port east, and remodel the nearby area to include social housing, a “central park” and even beaches.
Former colonial power France has also been positioning itself to take on the port’s reconstruction.
When French President Emmanuel Macron made a second visit to Beirut in September after the monster explosion, the Lebanese-born head of French shipping giant CMA-CGM, Rodolphe Saade, was in his delegation.
During the trip, his company presented Lebanon with a three-phase project to rebuild, expand and modernize the seaside location to become a “smart port,” its regional director Joe Dakkak told AFP.
The first two phases would cost between $400 million to $600 million and the firm would fund half, while around 50 companies and international organizations had also shown interest in participating, he said.
CMA-CGM has already obtained a concession to run the container terminal in Lebanon’s second city Tripoli until 2041, and hopes to soon win a bid for container operations in Beirut.
Beyond the commercial interests, political analyst Imad Salamey says geopolitical influence is also at play.
The appeal includes ongoing “offshore gas exploration in the Mediterranean,” “Russian expansionism” in the region, and “future economic collaboration between Israel and Arab countries” in the wake of several normalization accords, he said.
In 2018, Lebanon signed its first contract for offshore oil and gas drilling in two blocks with a consortium comprising French, Italian and Russian energy giants, Total, ENI and Novatek, respectively.
And further north, Damascus ally Russia has started drilling off the coast of war-torn Syria, Salamey said.
The port is likely small fry for China, Salamey said.
But it could attract the Chinese “to strengthen their alliance with the Iranians,” who hold sway in Syria and Lebanon, where it sponsors the powerful Hezbollah movement.
The former US envoy for Near Eastern affairs, David Schenker, has warned against China winning the bid.
“Beijing’s aversion to transparency and its ambivalence toward Hezbollah would make a Chinese role in reconstruction a worst-case outcome,” he wrote.
He said Washington should work closely with whichever country wins the port bid to ensure the project is “bound to the principle of reform.”
The international community is insisting on sweeping reforms, including at the port, before pumping in foreign aid to rescue the country from its worst economic crisis in decades.
But for eight months, deeply divided politicians have failed to agree on a new cabinet to launch them.
Despite this, Kaissi said port authorities were working on an action plan to reconstruct and revamp the facility, to be submitted to any new government.
There is an obstacle to the German proposal.
Lebanese activists fear its plan for a park and beaches could spell a repeat of the Beirut center’s post-war transformation.
The neighborhood was once a historic and vibrant commercial center where people of all social and religious backgrounds mixed.
But Lebanese company Solidere privatised downtown Beirut, converting it into grandiose real estate unaffordable to the average Lebanese.
“We will not accept a new Solidere with a foreign touch,” civil society group Nahnoo has said.
Economist Jad Chaaban said that any project as huge as the port would require “national consultation.”
“Foreign companies alone should not decide. Neither should the Lebanese state.”


OPEC raises 2021 oil demand growth forecast on hope pandemic wanes

Updated 13 April 2021

OPEC raises 2021 oil demand growth forecast on hope pandemic wanes

  • Upward revision by the oil producers’ alliance marks a change of tone from previous months

LONDON: OPEC on Tuesday raised its forecast for growth in world oil demand this year on expectations the pandemic will subside, providing help for the group and its allies in their efforts to support the market.

Demand will rise by 5.95 million barrels per day (bpd) in 2021, or 6.6 percent, the Organization of the Petroleum Exporting Countries forecast in its monthly report. That is up 70,000 bpd from last month.

“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programs, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.

The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts because of continued lockdowns. A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts.

Oil gained further toward $64 a barrel after the report was released on Tuesday. Prices have risen to pre-pandemic highs above $70 this year, boosted by anticipation of economic recovery and OPEC+ supply restraint.

OPEC made a small upward revision in its 2021 demand projection last month, but it has steadily lowered the forecast from 7 million bpd expected in July 2020.

The group raised its forecast of 2021 world economic growth to 5.4 percent from 5.1 percent, assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.

“The global economic recovery continues, significantly supported by unprecedented monetary and fiscal stimulus,” OPEC said. “The recovery is very much leaning toward the second half of 2021.”

OPEC+ agreed on April 1 to ease oil output cuts gradually from May. The report also showed higher OPEC oil output already as Iran, exempt from making voluntary cuts because of US sanctions, pumped more in March, driving a 200,000 bpd rise in the group’s output to 25.04 million bpd.

OPEC+ cut supply by a record 9.7 million bpd last year to support the market as demand collapsed. Most of those curbs remain in place even after the April 1 decision. OPEC+ holds its next policy meeting on April 28. Rival producers are also boosting supply, although OPEC left its forecast of non-OPEC output growth in 2021 steady at almost 1 million bpd and still sees US shale output, which often recovers in response to higher prices, declining.

With higher demand and steady non-OPEC supply, OPEC raised its estimate of global demand for its crude to 27.4 million bpd this year, up 200,000 bpd from last month and allowing for higher average OPEC production in 2021.