Oil dives after OPEC delays output decision

Saudi Arabia’s Energy Minister Khalid Al-Falih, left, at the OPEC conference in Vienna, Austria. (AFP)
Updated 07 December 2018
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Oil dives after OPEC delays output decision

  • OPEC met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan
  • An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure

NEW YORK: Oil prices fell in choppy trading on Thursday after OPEC and allied exporting countries ended a meeting without announcing a decision to cut crude output, and prepared to debate the matter on Friday.
The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna to decide production policy in coordination with other countries including Russia, Oman and Kazakhstan.
An OPEC delegate said the organization had agreed on a tentative deal to cut oil output but had not come up with a final figure.
Earlier, Saudi Energy Minister Khalid Al-Falih said OPEC needed Russia to cooperate, and said a decision was likely by Friday evening.
“If everybody is not willing to join and contribute equally, we will wait until they are,” Al-Falih said.
Market watchers had expected a joint cut of 1 million to 1.4 million barrels per day (bpd).
Brent crude futures were down $2.57, or 4.2 percent, on the day to $58.99 a barrel by 4:41 p.m. GMT, off the session low of $58.36. US crude futures fell $2.37, or 4.5 percent, to $50.52 a barrel, bouncing off the session low of $50.08 a barrel.
The crude benchmarks have slumped about 30 percent this quarter.
Prices found support briefly after data showed US crude stockpiles declined last week for the first time in 11 weeks. The US became a net exporter of crude and refined products for the first time since at least 1991, data from the US Energy Information Administration showed.
“Fears of a further escalation in the US-China trade war, and potential for OPEC+ not cutting oil production deep enough will continue to weigh on oil prices in today’s trading session,” said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
“All eyes are now fixated on (an) OPEC+ joint declaration, and a combined output cut of at least 1 million barrels per day will be required to see a meaningful recovery in oil prices.”
Led by Saudi Arabia, OPEC’s crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million bpd.
European equities hit their lowest in two years and commodity-sensitive currencies such as the Russian rouble fell sharply, in part because of the slide in the oil price, but also with the arrest of a top executive of Chinese tech giant Huawei in Canada for extradition to the US. The arrest came just as Washington and Beijing prepare for crucial trade negotiations.
Barclays said in its Global Outlook published on Thursday that “investors need to lower their expectations” and “2019 should be a period of lower returns and higher volatility.”
Barclays said it expected “the global economy to slow over the next several quarters” although it added that “not one major economy is near recession.”
US crude inventories have climbed steadily as domestic production surged to new peaks. Exports of US crude also jumped to a record 3.2 million barrels per day last week, adding to global supplies. Stockpiles at Cushing, Oklahoma, the delivery point for US crude futures, rose to the highest in nearly a year.


China flags up UAE as Silk Road mega-hub with $300m port deal

Updated 47 min 31 sec ago
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China flags up UAE as Silk Road mega-hub with $300m port deal

  • Cosco has invested an initial $300 million in CSP Abu Dhabi Terminal
  • The expansion plan foresees a capacity of 9.1 million TEU by 2023

ABU DHABI: China, the world largest trading nation, has thrown its weight behind Abu Dhabi as the Middle East hub for its Belt and Road Initiative (BRI) in an alliance with the UAE capital’s Khalifa Port.

Cosco, the Shanghai-based, state-owned group that ranks among the biggest shipping companies in the world, has invested an initial $300 million in the CSP Abu Dhabi Terminal, the first step in an investment program that could help make it one of the biggest ports in the Arabian Gulf over the next five years. Additional investment is pledged.

The expansion plan foresees a capacity of 9.1 million TEU (20-foot equivalent units, the standard measurement in the global container industry) by 2023. Jebel Ali, just 50 km away in Dubai, is currently by far the biggest port in the region with capacity of 22.1 million TEU.

China’s BRI is a state-sponsored strategy to enhance land and sea trading infrastructure in Asia, the Middle East and Africa via multibillion-dollar investments in trading hubs across the eastern hemisphere.

The Cosco-Abu Dhabi deal was unveiled at a ceremony at the port attended by prominent UAE and Chinese leaders.

Sheikh Hamed bin Zayed Al-Nahyan, chief of the Abu Dhabi Crown Prince Court, said: “China and the UAE share a strong and long-standing bond across a variety of ties, including economic, cultural, and trade and investment, and a common vision of a stable and prosperous future for our peoples and the world.”

He Jianzhong, China’s deputy minister of transport, said: “(The) terminal is the latest major achievement from China and the UAE’s joint efforts to implement ‘the 21st-century Maritime Silk Road’ in the ports and shipping industry.”

The deepwater, semi-automated container terminal includes the largest container freight station in the Middle East, covering 275,000 square meters.

“The state-of-the-art facility offers facilities for full and partial bonded container shipments, the full range of container packing services, short-term warehousing for deconsolidated cargo, as well as easy connectivity with container terminals in Khalifa Port,” a joint statement said.

The terminal has a design capacity of 2.5 million TEU and will begin with a handling capacity of 1.5 million TEU, with 1,200 meters of quayside. The water depth of the terminal is 16.5 meters, allowing it to accommodate mega-vessels typically carrying in excess of 20,000 TEU.

Ning Jizhe, deputy director of China’s National Development and Reform Commission, a state planning organization, said: “This inauguration ceremony is not only a milestone in the cooperation of China’s ‘Belt and Road Initiative,’ but also a good start for China and the UAE’s pragmatic cooperation in other key areas.”

Trade ties have been growing between China and the UAE since a visit by Abu Dhabi Crown Prince Mohammed Bin Zayed Al-Nahyan to Beijing three years ago. Chinese President Xi Jinping visited the UAE last summer.

The deal with Cosco is aimed at attracting foreign investment into the UAE via the Khalifa Industrial Zone of Abu Dhabi (KIZAD), the huge logistics and manufacturing zone that borders the port.

China’s BRI is one of the most ambitious infrastructure projects in history, but has been criticized by some observers for leaving the partners of Chinese companies in debt.