Oil pressured by high US crude exports

A pumpjack sits on the outskirts of town at dawn in the Permian Basin oil field in the oil town of Midland, Texas. (AFP)
Updated 23 February 2018
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Oil pressured by high US crude exports

SINGAPORE: Oil prices dipped lower on Friday as investor concerns about high US crude exports outweighed an unexpected drop in oil inventories in the world’s biggest fuel consumer.
US West Texas Intermediate (WTI) crude futures were at $62.74 a barrel at 0750 GMT, down 3 cents from their last settlement. Brent crude futures were down 2 cents at $66.37 a barrel.
WTI was still on track to rise about 1.7 percent for the week, and Brent was up 2.2 percent, with both contracts set for their second weekly gains after falling steeply early in the month.
Friday’s dips followed gains during the previous day when the Energy Information Administration (EIA) said US crude stockpiles fell by 1.6 million barrels in the week to Feb. 16, to 420.48 million barrels, despite a seasonal slowdown in demand at the end of the northern hemisphere winter season.
“A counter-seasonal draw should always be taken bullishly -as it has been — but this week’s net crude imports were very low,” US investment bank Jefferies said, adding that “extremely low” imports also contributed to the draws.
Other analysts pointed to the shape of the oil price curve as the reason for the stock draw.
“Part of that (inventory fall) is the shape of the oil curve which makes it uneconomic to store product,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
The forward price curves for Brent and WTI are in a shape known as backwardation, in which prices for immediate delivery are more expensive than those for later sale, making it uneconomical for traders to buy and store oil.
While the reduction in US inventories supported crude prices, America’s low imports and surging exports were weighing crude down, traders said.
US crude exports jumped to just above 2 million barrels per day (bpd) last week, EIA data showed, close to a record high of 2.1 million hit in October. That helped pull down net imports to below 5 million bpd, the lowest level since the EIA started recording the data in 2001.
US crude oil production was virtually unchanged last week at 10.27 million bpd, close to the levels of top producer Russia and more than Saudi Arabia, the world’s biggest oil exporter, currently pumps.


Mideast plays key role in Chinese export of armed drones, report says

Updated 17 December 2018
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Mideast plays key role in Chinese export of armed drones, report says

  • China has exploited America’s selective drone export policy to become an increasingly influential player in meeting demand
  • The report is entitled “Armed Drones in the Middle East: Proliferation and Norms in the Region”

BEIRUT: The use of armed drones in the Middle East, driven largely by sales from China, has grown significantly in the past few years with an increasing number of countries and other parties using them in regional conflicts to lethal effects, a new report said Monday.
The report by the Royal United Services Institute, or RUSI, found that more and more Mideast countries have acquired armed drones, either by importing them, such as Jordan, Iraq, Saudi Arabia and the United Arab Emirates, or by building them domestically like Israel, Iran and Turkey.
China has won sales in the Middle East and elsewhere by offering drones — otherwise known as UAVs or unmanned aerial vehicles — at lower prices and without the political conditions attached by the United States.
The report , entitled “Armed Drones in the Middle East: Proliferation and Norms in the Region,” said that by capitalizing on the gap in the market over the past few years, Beijing has supplied armed drones to several countries that are not authorized to purchase them from the US, and at a dramatically cheaper price.
“China, a no-questions-asked exporter of drones, has played and is likely to continue playing a key role as a supplier of armed UAVs to the Middle East,” it said.
The report explored where and how each of the states have used their armed drones and whether they have changed the way these countries approach air power. It found that Iran, the UAE and Turkey all changed the way they employ airpower after they acquired armed drones.
For Turkey and the UAE, armed drones enabled them to conduct strikes in situations where they would not have risked using conventional aircraft, it said. Iran developed armed drones from the outset specifically to enable to project power beyond the reach of its air force, which is hamstrung by obsolete aircraft and sanctions, the report added.
The report said it remains to be seen whether and how the loosening of restrictions on the exportation of armed drones by the Trump administration will alter dynamics in the region.
“Nonetheless, proliferation in armed UAVs in the Middle East is unlikely to stop and could, in fact, even accelerate,” the report said.