Oil prices reach 3-month high as OPEC output falls

Output by the Organization of the Petroleum Exporting Countries (OPEC) has fallen sharply over the past two months to its lowest level in four years. (Reuters)
Updated 26 February 2019
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Oil prices reach 3-month high as OPEC output falls

  • The US crude oil inventory build could not push oil lower
  • Brent seems to have moved back above $70 per barrel amid a tight market

RIYADH: Oil prices continued to rise slowly for a second consecutive week, reaching a three-month high. The US crude oil inventory build could not push oil lower. Brent seems to have moved back above $70 per barrel amid a tight market.
Output by the Organization of the Petroleum Exporting Countries (OPEC) has fallen sharply over the past two months to its lowest level in four years, to 30.8 million barrels per day (bpd) in January, causing any oil surplus to disappear. This might move the oil market into a deficit toward the end of the first quarter.
By the weekend, Brent crude rose to $67.12 per barrel and WTI rose to $57.26 per barrel. The Brent / WTI spread remains wide at $9.86 per barrel. The wide spread helps traders to hedge US crude oil exports that help increase the flow heading East.
This is the reason behind US exports jumping to above 3 million bpd in the last two weeks. The Energy Information Administration (EIA) reported US crude output at 12 million bpd for the first time last week, up from 11.9 million bpd the week prior.
The surge in US crude oil exports has brought stronger competition for West African light sweet crudes heading to the Asian market, as the arbitrage economics remain highly favorable for more US crude purchases, especially with lower freight costs to Asia that have fallen by about a third since early December 2018, S&P Platts Global reported.
OPEC output cuts kept Dubai crude relatively expensive amid medium / heavy sour crude tightness in the market. This supply tightness pushed Dubai crude’s discount to Brent to narrow to a record low in January and early February.
However, the Dubai benchmark moved steadily higher and reached a premium of $0.20-$0.30 per barrel to Brent by mid-February. This has led to robust trading activities in the physical market amid tightening medium / heavy sour crude oil supplies, which was further tightened after the loss of the heavier Venezuelan grades that made heavy crudes priced more competitively.
Global refiners already suffer from poor refining margins for naphtha and gasoline (the light ends of a crude barrel), while rising US production puts more light sweet crude oil in a global market that is already saturated with these crude supplies, necessitating refineries worldwide to sweeten their blends as much as they can economically handle.
Since the global market is already soaked with gasoline and naphtha refined products, that is depressing refining margins, while refiners are having to pay more to secure supplies of the medium / heavy sour crudes. The constrained medium / heavy crude market has supported fuel oil prices that have escalated, while its inventories are at low levels, especially for high-sulfur fuel oil.

  • Faisal Mrza is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalmrza.


Fraudsters exploit interest in Libra digital currency

Updated 23 July 2019
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Fraudsters exploit interest in Libra digital currency

  • Fake Libra opportunities or offerings have popped up on Facebook and Instagram
  • Criminals routinely seize on hot topics to try to dupe people online
SAN FRANCISCO: Fraudsters are out to cash in on interest in Facebook-backed digital currency Libra, hawking bogus buying opportunities at online venues including the social network itself.
Libra is to launch next year, overseen by an association based in Europe, but as with other hot topics it has been seized on by nefarious characters intent on tricking people with false accounts, pages, and information.
Fake Libra opportunities or offerings have popped up on Facebook’s main social network and its image-centric online community Instagram, according to a report Monday in the Washington Post.
A number of Libra-themed deceptive accounts were removed from the Facebook platform after the California-based company was alerted by the Post, according to the publication.
Some of the fake accounts used the official Facebook logo and photos of chief executive Mark Zuckerberg.
“Facebook removes ads and Pages that violate our policies when we become aware of them, and we are constantly working to improve detection of scams on our platforms,” the Internet titan said in response to an AFP inquiry.
The Libra Association was reported to be working with Facebook to get deceptive pages about the currency deleted.
Criminals routinely seize on hot topics to try to dupe people online, from natural disasters and major tragedies to celebrity news.
A buylibracoins.com website accessible Monday offered a fake chance to buy the digital currency, encouraging potential victims to share contact details of friends in a referral program.
Fraudsters were said to be setting also hunting for victims at other online venues such as Twitter and YouTube.
The rise of fake Libra offerings comes as Facebook tries to dispel worries and build trust in what it hopes will be a global currency that gives life-changing financial tools to people around the world.
G7 finance ministers and central bankers last week dealt a blow to Facebook’s planned new cryptocurrency Libra, issuing a barrage of warnings about its dangers for the global economy at a two-day meeting outside Paris.
Facebook in June unveiled its plans for Libra in an announcement greeted with concern by governments and critics of the social network behemoth, whose reputation has already been tarnished by its role in spreading fake information and extremist videos.
Ministers from the Group of Seven (G7) major global economies “agreed that projects such as Libra may affect monetary sovereignty and the functioning of the international monetary system,” France, the current G7 chair, said in a statement.
It said projects like Libra with a “global and potentially systemic footprint... raise serious regulatory and systemic concerns, as well as wider policy issues, which both need to be addressed before such projects can be implemented.”
US Treasury Secretary Steven Mnuchin said his concerns about Libra and other cryptocurrencies — which he had made clear in White House news conference this month — were shared by G7 counterparts.
Libra is widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.