Oil world cautious on Trump’s next move

Signs have begun to emerge that traders are depleting storage levels that soared while oil prices were weak. (Reuters)
Updated 25 February 2017
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Oil world cautious on Trump’s next move

LONDON: Oil bigwigs are trying to figure out strategies to deal with the impact that President Donald Trump’s blizzard of plans to boost the US industry will have on the world market.
If Trump keeps his promises on lower corporation tax, oil sector deregulation and tax incentives on exports, it could lead to an influx of US crude oil — something, which may challenge the price rises of the last six months after two years of weakness.
At the International Petroleum Week conference in London, the new US administration’s policies were cited as one of the most influential factors on oil in 2017, along with growth of the Asian market and tensions in the Middle East.
Abhishek Deshpande, an analyst at French corporate and investment bank Natixis, told AFP that even if Trump’s policies were imposed, they would not necessarily be favorable to the US petrol industry.
“The oil producers may look at it positively, as it will make the US crude oil jump higher. But for the rest of the US, the refiners would feel the pain, and possibly pass on the impact to the public,” he said.
“For the rest of the world, the Middle East would have to find new markets, which means more crude to sell,” potentially lowering the price, he added.
Energy Security Analysis, Inc. (ESAI) President Sarah Emerson also warned that Trump’s ideas could be difficult to implement.
“All of that is working against the huge question about deficit, and some Republicans and all the Democrats would have to object,” she said during a speech at IP Week.
She said political change in the US “could bring about a marginal deterioration in our market.”
Trump could also tackle deregulation in the energy sector, wiping out the regulations put in place by his predecessor Barack Obama, without a vote in Congress.
Last but not least, oil industry insiders said Trump’s unpredictability in geopolitics could give rise to dramatic swings in the market.
“The most significant problem would be the tense relationship with Iran, but there is also Mexico,” Deshpande said.
The uncertainties surrounding the new US president did not seem to trouble Mohammed Barkindo, secretary-general of the Organization of the Petroleum Exporting Countries (OPEC).
“Republicans tend to like the oil industry. We welcome the new Republican administration,” he said, reminding his audience that the US is OPEC’s most important export market.
Oil prices
Oil prices fell on Friday after US crude inventories rose for a seventh week, showing that the market is still struggling to ease oversupply despite many producers’ efforts to rein in production.
US crude stocks rose by 564,000 barrels in the week to Feb. 17, the Energy Information Adminis-tration (EIA) said, though the increase was less than the 3.5 million barrels expected by analysts.
The continued rise in US inventories comes as members of OPEC and other producers have cut output.
Benchmark Brent crude oil was down 30 cents at $56.28 a barrel by 1149 GMT, while US West Texas Intermediate dropped by 26 cents to $54.19.
Signs have begun to emerge that traders are depleting storage levels that soared while oil prices were weak.
In the US, traders are draining the priciest storage tanks as strengthening markets make it unprofitable to store for future sale and as cuts in global production open export opportunities.


Egypt inks deal with Cyprus for power link to Europe

Updated 14 min 2 sec ago
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Egypt inks deal with Cyprus for power link to Europe

  • It is estimated the project will take 36 months to implement from the start of construction, with the lowest point 3,000 meters below sea-level
  • Phase 1 will see the interconnector carry a capacity of 1,000 MW which can be upgraded to 2,000 MW at a later stage

NICOSIA: Egypt has signed a deal with a Cypriot firm to lay a 310-kilometer (195-mile) cable under the Mediterranean to export electricity to Europe, the company said on Thursday.
Nicosia-based EuroAfrica described the deal, worth an estimated two billion euros, as a “landmark.”
“Cyprus now becomes a major hub for the transmission of electricity from Africa to Europe,” said company chairman Ioannis Kasoulides.
It is estimated the project will take 36 months to implement from the start of construction, with the lowest point 3,000 meters below sea-level.
Phase 1 will see the interconnector carry a capacity of 1,000 MW which can be upgraded to 2,000 MW at a later stage.
“The national electricity grid of Egypt will be linked to the European electricity system through Cyprus and will contribute to energy security,” Kasoulides said.
Following the crises in Crimea and eastern Ukraine, the EU has been keen to develop alternative sources of energy to reduce its dependence on imports from Russia.
In the past year, gas has started flowing from four major new fields off Egypt’s Mediterranean coast, and output is already sufficient to meet domestic needs.
The Arab world’s most populous country is now seeking to develop the infrastructure to export its newfound energy wealth, both as liquefied natural gas and as electricity.
Egypt is also seeking to import gas from fields off Cyprus and Israel to boost the profitability of the new liquefaction and export facilities it is developing on its Mediterranean coast.
In September, Egypt signed a deal with Cyprus to build an undersea pipeline to pump Cypriot offshore gas to Egypt for processing for export to Europe.
The plans have led to closer eastern Mediterranean ties, with Cyprus, Egypt, Greece and Israel holding regular high-level meetings.