Global oil demand growth to slow in 2016: IEA

Updated 13 October 2015

Global oil demand growth to slow in 2016: IEA

PARIS: The world’s demand for oil is expected to slow in 2016 in response to a more pessimistic outlook for the global economy, likely keeping the crude market oversupplied, the International Energy Agency (IEA) said.

“Global demand growth is expected to slow from its five-year high of 1.8 million barrels per day in 2015, to 1.2 mb/d in 2016,” moving closer toward its long-term trend, the IEA said in its monthly oil market report.
That will probably mean a continued oil supply glut next year, especially with the expected arrival of Iranian crude.
“A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels — should international sanctions be eased — are likely to keep the market oversupplied through 2016,” it said.
Citing the International Monetary Fund’s recent downward revisions on global growth estimates by one-fifth of a percentage point, “projections for commodities demand logically require some trimming,” the report said
Global consumption is expected to average 95.7 million barrels a day next year, down 100,000 from estimates in last month’s report.
One surprise is the resilient oil demand in China despite its economic slowdown.
“Our preliminary August estimate posted a near double-digit percentage point gain in year-on-year terms despite the otherwise ailing macroeconomic backdrop,” the Paris-based agency said.
Crude oil prices were relatively stable in September and rallied early this month on “expectations of a lower US output and rising tension in the Middle East,” the IEA said.
But they dipped Tuesday following the IEA’s latest forecasts,Brent North Sea crude for delivery in November shedding 13 cents to stand at $49.73 per barrel in afternoon London deals.
US benchmark West Texas Intermediate for delivery in November slid 26 cents to $46.84 per barrel compared with Monday’s close.
The IEA, which analyzes energy markets for advanced oil-consuming nations, noted that oil prices at $50 per barrel was “a powerful driver in rebalancing the global oil market, but the big question is just when will equilibrium be restored.”
Russia’s military intervention in Syria has raised international political tensions and created uncertainty — although for now the global oil supply glut is tempering market reaction.
“Some of this uncertainly may start to clear next year although, considering Iran, the market may be off balance for a while longer,” the report said.
Crude output by the 12-nation OPEC cartel rose by 90,000 barrels a day to 31.72 million in September driven by Iraq, now the world’s biggest source of additional supply.
Iraq’s banner month to a record 4.3 million barrels per day was due to a recovery in northern exports from disruptions along the country’s pipeline to Turkey.
“But severe budgetary strain and ongoing issues with security and infrastructure are likely to limit supply growth in the near-term for Iraq,” the IEA added.
As for non-OPEC producers, supply growth is eroding with the sharpest slowdown in the US. In September non-OPEC oil production is estimated to have dropped by 180,000 barrels per day to 58.3 million.
In 2016 lower oil prices and steep spending cuts are expected to reduce non-OPEC output by nearly 500,000 barrels per day, the report added.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 6 min 31 sec ago

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.