Oil demand growth at decade low

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Global oil demand in the first half of 2019 grew at its slowest pace since 2008, hurt by increasing signs of economic slowdown. (Shutterstock)
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Updated 10 August 2019

Oil demand growth at decade low

  • Mounting signs of a global economic slowdown outweigh potential supply interruptions

LONDON: Mounting signs of an economic slowdown and a ratcheting up of the US-China trade war have caused global oil demand to grow at its slowest pace since the financial crisis of 2008, the International Energy Agency (IEA) said.

The IEA said global oil demand in the first half of 2019 grew at its slowest pace since 2008 hurt by mounting signs of an economic slowdown and a ramping up of the US-China trade war.

Rystad Energy said the oil market was going “from gloomy to gloomier,” calling into question the consultancy’s own bullish view for the first part of 2020.

“Economic recession risk and further escalation of the US-China trade war are key concerns in the near term. How long OPEC+ is willing to continue to manage production adds uncertainty,” said Bjørnar Tonhaugen, head of oil market analysis at Rystad Energy.

The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, agreed in July to extend their supply cuts until March 2020 to boost oil prices.

Russia’s energy ministry said IEA’s estimates were largely in line with its own forecasts and that Moscow had taken into account the possibility of a slowdown in oil demand when it extended an output cut deal with OPEC.

“Market focus in oil has clearly shifted. It is squarely on future demand, rather than on supply,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.

Saudi Arabia plans to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories, a Saudi oil official said on Wednesday.

The UAE also will continue to support actions to balance the oil market, Energy Minister Suhail Al-Mazrouei said in a tweet on Thursday.

Oil prices rose on Friday, supported by expectations of more OPEC production cuts.

Brent crude futures were up 89 cents at $58.27 a barrel in early trade while (WTI) futures were at $53.33 per barrel, up 79 cents.

“Despite a further cut in oil demand growth by the IEA, oil prices are trading marginally higher, as the demand growth cut was already announced previously by the head of the IEA and the agency still expects larger inventory draws for 2019,” UBS analyst Giovanni Staunovo 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.