Oil prices fall as US stockpiles rise, but Middle East tensions support

The UAE-flagged A. Michel, one of the four tankers damaged in alleged ‘sabotage attacks,’ off the coast of Fujairah in this photo released by the Emirati National Media Council. (Emirati National Media Council/AFP)
Updated 15 May 2019

Oil prices fall as US stockpiles rise, but Middle East tensions support

  • US crude stockpiles unexpectedly rose last week, data from industry group the American Petroleum Institute show
  • Armed drones struck two of Saudi Arabia’s oil pumping stations, days after the sabotage of oil tankers near the UAE

TOKYO: Oil fell on Wednesday after data showed a surprise rise in US crude stockpiles and as Chinese industrial output grew less than expected in April, but prices were supported by mounting tensions in the Middle East.
Brent crude futures were at $71.06 a barrel at 0646 GMT, down 18 cents, or 0.3 percent, from their last close. Brent ended 1.4 percent higher on Tuesday.
US West Texas Intermediate (WTI) crude futures were at $61.33 per barrel, down 45 cents, or 0.7 percent, from their previous settlement. WTI closed up 1.2 percent in the previous session.
US crude stockpiles unexpectedly rose last week, while gasoline and distillate inventories increased, data from industry group the American Petroleum Institute showed on Tuesday.
Crude inventories climbed by 8.6 million barrels in the week to May 10 to 477.8 million, compared with analyst expectations for a decrease of 800,000 barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.1 million barrels, the API said.
The US Energy Department’s Energy Information Administration (EIA) reports official numbers later on Wednesday.
“If the EIA report confirms a strong build we could see that weigh on oil prices ... but too many geopolitical risks remain that should keep prices supported,” Edward Moya, senior market analyst at OANDA told Reuters by email.
Oil prices have drawn support after Saudi Arabia on Tuesday said armed drones struck two of its oil pumping stations, two days after the sabotage of oil tankers near the United Arab Emirates, while the US military said it was braced for “possibly imminent threats to US forces in Iraq” from Iran-backed forces.
The attacks took place against a backdrop of US-Iranian tension following Washington’s decision this month to try to cut Iran’s oil exports to zero and to beef up its military presence in the Gulf in response to what it said were Iranian threats.
Meanwhile, the Organization of the Petroleum Exporting Countries on Tuesday said that world demand for its oil would be higher than expected this year as supply growth from rivals including US shale producers slows. That points to a tighter market if the exporter group refrains from raising output.
Elsewhere, growth in China’s industrial output slowed more than expected to 5.4 percent in April from a 4-1/2 year high in March, reinforcing views that Beijing will have to roll out more stimulus measures as a trade war with the United States intensifies.
US President Donald Trump on Tuesday called the trade war with China “a little squabble” and insisted talks between the world’s two largest economies had not collapsed.
“I think the markets are anxiously awaiting trade progress since the political damage of a catastrophic end of talks could cost President Trump re-election in 2020,” Moya said.
“Trump is motivated to make a deal happen and we should see a framework agreement reached by the G20 summit (next month),” he said.


Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.