US crude output to overtake Saudi Arabia “very soon”
US crude output to overtake Saudi Arabia “very soon”
With Venezuelan output plummeting amid political and economic turmoil, the IEA indicated the Kingdom could lose its number two position in 2018.
“Very soon US crude production may overtake that of Saudi Arabia and also rival Russia’s,” it said.
The backdrop is a tightening market amid a significant fall in Venezuelan production, geopolitical uncertainty, continuing falls in inventory levels and OPEC/Russia supply cuts.
But the upshot, said the agency, is likely to be a sizeable pick-up in non-OPEC production. After adding in barrels from Brazil, Canada and other growth countries, and allowing for falls in Mexico, China and elsewhere, total non-OPEC production will increase by 1.7 million barrels per day (bpd), IEA said in its latest world oil market report.
The agency said: “This represents, after the downturn in 2016 and the steady recovery in 2017, a return to the heady days of 2013-2015 when US-led growth averaged 1.9 million bpd.
The factors contributing to investor interest in oil include the possible unraveling of the Iran nuclear deal and recent demonstrations in the country, disruption to the industry in Libya, and the closure of the Forties pipeline system.
Although these factors might have faded somewhat, there are others at work, said the IEA. “The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela’s production.
A plunge in Venezuelan supply cut OPEC crude output to 32.23 million bpd in December, boosting compliance to 129 percent. Declines are accelerating in Venezuela, which posted the world’s biggest unplanned output fall in 2017.”
Said the IEA: “Venezuelan production is now about half the level inherited by president Chavez in 1999 - and in December output was 490,000 bpd a day lower than a year ago, having fallen to 1.61 million bpd.
The agency said it was reasonable to assume that the decline will continue, but it was impossible to say at what rate. But if output and exports sank further, it was fair to assume other producers would probably step in with the flexibility to deliver oil similar in quality to Venezuela’s shipments to the US and elsewhere, including China.
Market tightening in the final months of 2017 was evident and continued into 2018. OECD commercial stocks declined for the fourth consecutive month in November, by 17.9 million barrels, with a large fall in middle distillates, said IEA. Preliminary data for December suggested a further fall of 42.7 million barrels.
“Additionally, global crude oil markets saw an exceptionally tight fourth quarter in 2017 as the large draw in OECD crude stocks coincided with a decline in Chinese implied crude balances.”
On the demand side, estimates for 2017 and 2018 were roughly unchanged at 97.8 million bpd and 99.1 million bpd respectively.
“The slowdown in 2018 demand growth is mainly due to the impact of higher oil prices, changing patterns of oil use in China, recent weakness in OECD demand and the switch to natural gas in several non-OECD countries. Production was steady on a year ago as non-OPEC gains of nearly 1 mb/d offset declines in OPEC.”
The price of Brent crude oil closed earlier this week above $70 for the first time since Dec. 2, 2014, and money managers have placed record bets on the recent upward momentum continuing. Whether or not the recent price rise has run out of steam and “seventy really is plenty” remained to be seen, said the agency.
“However, such are the geopolitical uncertainties and the ever-dynamic prospects for US shale that we should expect a volatile year,” it added.
Meet the Dubai ad men who pay you to sit in traffic
- Blockchain technology challenges traditional outdoor media
- Adverts connect to driver mobile phone
LONDON: A new startup founded by UAE-based entrepreneurs is in the process of test-running a blockchain-based technology that could help people turn their cars into mobile advertising vehicles.
It could challenge the use of traditional advertising methods such as outdoor billboards, the founders of The Elo Network claim.
The platform — which has been set up by Mohammed Khammas and Mohammed Bafaqih and incorporated in the Cayman Islands — will enable people to be paid for displaying adverts on the side or back of their vehicles while they go about their daily routines of driving to work, the mall or doing the school run.
The adverts will feature low-frequency bluetooth ‘beacons’ that connect to the drivers' mobile phone which will be able to monitor when the driver is in the car and where the car is being driven.
There is a minimum threshold for the number of miles being driven a day, but the main prerequisite is that the driver is in the car. Drivers will still be paid even if stuck in a traffic jam.
Advertising clients will be able to put out requests that drivers head to a particular area — for instance to be close to a new brand launch — with drivers being paid up to 4 or 5 times more than their standard rate if they accept.
While the concept of paying people to use their cars for advertising is not new, it is the use of blockchain technology that will make The Elo Network particularly grounding-breaking in the advertising world, its founders said.
“Billboards are very expensive and static and don’t give you the KPIs and insightful information that brands want these days. You solve that by getting them that data,” Bafaqih said.
The Elo Network collates detailed data by tracking the movements of the drivers and their day-to-day activities. Data points such as a particular area’s population density can been collected.
The information will be encrypted ensuring that the brand will never know the identity of the driver, said Bafaqih.
“It creates data sets that didn’t exist before. You don’t have to worry about privacy but at the same time the brand can know about your patterns. They can know where you go in mornings, where you drive, what normal patterns are created in certain areas and countries,” he said.
This level of detail is increasingly important for brands looking to run targeted campaigns, and it is something that traditional billboards are unable to offer.
The technology will also be used to overcome the payment problems that other similar car advertising schemes have faced.
“Historically what happens, where there is a authority that is issuing payments, it causes a lot of problems. There can be disputes on how much they (the drivers) are owed or how many miles were driven or what campaign someone has done,” he said.
Under the Elo Network program, the blockchain technology allows you to create so-called “Smart Contracts” — which is a software protocol that enforces and verifies the performance of a contract.
“It says driver A is going to be paid — for example — a dollar per mile — so as the person drives he starts receives ‘IOUs’. Those IOUs are convertible at any time,” he said.
With no ‘middle man’ involved, the driver is able to redeem their IOUs and get paid as and when they want.
The network is currently at ‘proof of concept’ stage and is test-running the platform with a number of brands. It is anticipated that the network will be rolled out to the public toward the end of this year and early 2019.