Oil prices climb to 2019 high

OPEC and its allies started voluntary production cuts last month, aiming to tighten the market. Above, flames emerge from flare stacks at oil fields in Kirkuk, Iraq. (Reuters)
Updated 15 February 2019
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Oil prices climb to 2019 high

  • Leading exporter and de facto OPEC leader Saudi Arabia said on Tuesday it would cut more than half a million barrels per day (bpd) more in March
  • Bank of America Merrill Lynch: Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply

LONDON: Brent crude oil climbed above $65 a barrel to its highest this year as OPEC-led supply cuts and this week’s announcement of a higher-than-expected cut by Saudi Arabia encouraged investors.
The international oil benchmark reached $65.20 late on Friday, the 63 cent gain equating to a rise of about 1 percent. Brent approached near three-month highs and was set for a gain of nearly 5 percent on the week.
US West Texas Intermediate crude futures were also up about 1 percent, rising 53 cents to $54.94.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia started voluntary production cuts last month, aiming to tighten the market.
Leading exporter and de facto OPEC leader Saudi Arabia said on Tuesday it would cut more than half a million barrels per day (bpd) more in March than the deal called for, sending prices surging.
Prices were also buoyed by reports of a partial closure of Saudi Arabia’s Safaniya, its largest offshore oilfield with production capacity of more than 1 million bpd. The shutdown occurred about two weeks ago, a source said.
State oil giant Saudi Aramco said in a statement to Reuters that all of its facilities and operations — including Safaniyah — are safe and normal.
“Brent should average $70 per barrel in 2019, helped by voluntary (Saudi, Kuwait, UAE) and involuntary (Venezuela, Iran) declines in OPEC supply,” Bank of America Merrill Lynch said.
The bank said it expects a drop of 2.5 million bpd in OPEC supply in the fourth quarter of 2019 from a year earlier.
However, the global supply picture remains uncertain.
US oil production is on the rise, while the seizure of Libya’s main oilfield by Eastern armed forces this week could soon lead to its reopening.
But US sanctions on Venezuela and Iran have have helped to tighten global supply and security threats could threaten Nigerian production after general elections this weekend.
“Looking ahead, the prognosis for Venezuela and Iran remains skewed to the downside. As such, they should continue to act as important pillars of price support. The same, however, can’t be said for Libya,” said Stephen Brennock, of oil broker PVM.
“This risks throwing a spanner in the works for OPEC’s rebalancing ambitions and, therefore, the price recovery.”
Faltering global economic growth is also a concern, with signs of a slowdown now abundant in Europe, Asia and the US, which could lead to slowing growth in fuel demand.


Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

Updated 19 June 2019
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Paris Air Show: After Boeing showstopper, Airbus seeks order bounce

  • British Airways owner IAG signs letter of intent to buy 200 of its 737 MAX jets
  • Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes

PARIS: Airbus, reeling from the potential loss of a major customer for its best-selling A320neo as British Airways owner IAG placed a lifeline order for the grounded 737 MAX, prepared to hit back with more orders for its A321XLR on Wednesday.
The planemaker has been negotiating with US airlines investor Bill Franke whose Indigo Partners has also been known to place orders for multiple airlines within its portfolio and could reel it in for the Paris Air Show, industry sources said.
Airbus declined to comment.
After weathering intense scrutiny over safety and its public image, Boeing won a vote of confidence on Tuesday as IAG signed a letter of intent to buy 200 of its 737 MAX jets that have been grounded since March after two deadly crashes.
The surprise order lifted the energy of a previously subdued Paris Airshow, where the talk had been of the possible end of the aerospace cycle, given the issues at both Boeing and Airbus as well as geopolitical and trade tensions around the world.
Australia’s Qantas Airways said on Tuesday it would order 10 Airbus new A321XLR jets and convert a further 26 from existing orders already on the Airbus books.
Airbus is also in talks with leasing company GECAS and has been trying to secure an eye-catching order for the A321XLR from American Airlines, though the world’s largest carrier does not typically make announcements at air shows.
Airbus is looking for up to 200 orders for the A321XLR, which is designed to open up new routes.