Oil bulls oust bears in the first week of 2019

Oil prices have started 2019 on the upswing. (Reuters)
Updated 07 January 2019

Oil bulls oust bears in the first week of 2019

RIYADH: After dwindling to near 16-month lows at the end of 2018, oil prices bounced back in the first week of the year, helped by OPEC’s proactive output cuts and positive economic news from the US.
The year 2019 started with a progressive rebound in oil prices after the 2018-year end nose-dive when Brent crude ended slightly above $52 per barrel. The first week in 2019 closed with Brent crude at $57.06 per barrel and WTI at $47.96 per barrel — one of the best weekly gains in two years.
It marked a change in the bearish sentiment that produced heavy losses in December 2019 when Brent averaged $56.55, the lowest monthly average since September 2017.
OPEC output fell by 530,000 bpd to 32.6 million bpd in December, which is the sharpest pullback since January 2017.
As usual, Saudi Arabia handled most output cuts in December of 420,000 bpd to 10.65 million bpd from a record of just above 11 million bpd reached in November 2018.
The Saudi output cut was compounded by unplanned losses in Iran and in Libya.
Saudi Arabia proactive move has confounded some of the raised voices that called for depressed oil prices “lower for longer.”
These voices suggested oil prices would be weak in 2019 with sluggish demand for crude and the uncertainty over full compliance from OPEC members, including the largest producer Saudi Arabia, over the agreed 1.2 million bpd supply reduction.
On the physical market side, expectations for continued strong oil demand growth in 2019 remain in place, despite concerns about the global economic slowdown that were offset by the positive economic data from the US.
The steep downward price volatility that the oil market experienced at the end of 2018 may have attled US shale oil investors.
During the last quarter of 2018, macroeconomic headwinds raised the specter of a slowing global economy and lower oil demand growth, putting downward pressure on prices while the physical market remained strong throughout 2018.

World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 16 January 2019

World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.