Oil prices dip amid well-supplied market, Iran sanction waivers

US crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million, data from the American Petroleum Institute showed on Tuesday. (Reuters)
Updated 07 November 2018
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Oil prices dip amid well-supplied market, Iran sanction waivers

  • Washington re-imposed sanctions against Iran’s oil exports on Monday but granted waivers to its biggest customers
  • Output from the world’s top-three producers Russia, the US and Saudi Arabia, broke through 33 million bpd for the first time in October

SINGAPORE: Oil prices dipped on Wednesday as rising output and US sanction waivers that allow Iran’s biggest buyers to keep taking its crude reinforced the outlook for a well-supplied market.
Front-month Brent crude oil futures were at $72.04 per barrel at 0337 GMT, down 9 cents, or 0.1 percent, from their last close.
US West Texas Intermediate (WTI) crude was at $61.92, down 29 cents, or 0.5 percent, from its last settlement.
Brent and WTI have slumped by 17.4 and 19.7 percent from recent peaks touched in early October.
US bank J.P. Morgan said the “sell-off in oil was due to excessive crude” from rising production “whilst Iranian supply was still in the market.”
Washington re-imposed sanctions against Iran’s oil exports on Monday but granted waivers to its biggest customers, allowing them limited imports for the next 180 days.
Refinitiv Eikon data showed Iranian crude exports have fallen to 1 million barrels per day (bpd) so far in November, down from around 3 million bpd in mid-2018.
But Iran supply is expected to rise after November as waivers are used to start ordering more Iranian oil.
“Waivers are likely to be more extensive than the market expected,” energy consultancy FGE said, estimating that waivers overall would allow 1.2 to 1.7 million bpd of exports.
What’s more, a flotilla of supertankers carrying around 9 million barrels of Iranian oil worth about $650 million is sitting outside China’s Dalian port.
Most ships arrived in the last 30 days, shipping data showed, as Iran tried to get as much crude as possible into markets before the sanctions took effect.
“With the waivers, prices can be managed in the $70-$80 per barrel range, with the upside at around $85 per barrel and the downside limited to $65 per barrel,” FGE said.
Beyond Iran, US bank Morgan Stanley said “supply continues to come in higher-than-expected, particularly from the US, Middle East OPEC, Russia and Libya.”
Output from the world’s top-three producers Russia, the United States and Saudi Arabia, broke through 33 million bpd for the first time in October. These three countries now meet more than a third of global consumption.
Iraq, second-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), plans to raise output to 5 million bpd in 2019, from 4.6 million bpd currently.
Eyeing the wave of new supply, Morgan Stanley lowered its year-end and first-half 2019 Brent price forecast from $85 per barrel to $77.50.
Inventories are also swelling.
US crude stocks climbed by 7.8 million barrels in the week ending Nov. 2 to 432 million, data from the American Petroleum Institute showed on Tuesday.
J.P. Morgan said “global floating storage has increased by 3.6 million barrels since July ‘18 to 33.9 million barrels.”
Despite the well-supplied market, J.P. Morgan still warned “the risk to supply remains very high” due to geopolitical risk and a “lack of spare capacity.”
Part of this risk comes from Venezuela, where crude production is in “free-fall” and could soon drop below 1 million bpd, the International Energy Agency’s Executive Director Fatih Birol said on Tuesday, down from the more than 2 million bpd it averaged last year.


Careem looks to raise up to $200 million in China

Updated 20 November 2018
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Careem looks to raise up to $200 million in China

  • Investment bank China International Capital Corporation (CICC) is advising Dubai-based Careem, but it was not immediately clear when or if a deal would be finalized
  • Careem said in October it had secured $200 million in a new funding round from existing investors

HONG KONG: Careem, Uber’s main Middle East rival, is looking at raising between $100 million and $200 million from Chinese investors, a source with direct knowledge of the matter told Reuters.
Investment bank China International Capital Corporation (CICC) is advising Dubai-based Careem, but it was not immediately clear when or if a deal would be finalized, the source said, adding there was a lack of familiarity and interest among Chinese investors in Middle Eastern start-ups.
Beijing-based CICC and Careem both declined to comment.
Reuters reported on Monday that CICC and New York-based investment bank Jefferies were both advising Careem on potential investment options and capital raising, including a possible Middle East M&A deal with Uber.
Careem, which counts German car maker Daimler and China’s largest ride-hailing company DiDi Chuxing among its other backers, competes head-to-head with Uber in most of the major cities in the Middle East.
Careem said in October it had secured $200 million in a new funding round from existing investors, and that it expected to raise more to finance expansion plans.
That investment, combined with previous fund raising and company growth into new markets and segments, gave Careem an estimated valuation of more than $2 billion.
Reuters reported in March that Careem was in early talks to raise as much as $500 million.