Record oil glut stands at 3 billion barrels

Updated 18 November 2015

Record oil glut stands at 3 billion barrels

LONDON: The world is awash with oil having built record stockpiles in recent months and slowing demand growth combined with resilient non-OPEC supply could worsen the glut well into next year, the International Energy Agency (IEA) said.
“Stockpiles of oil at a record 3 billion barrels are providing world markets with a degree of comfort,” the IEA said in a monthly report, adding brimming stocks offer an unprecedented buffer against geopolitical shocks or unexpected supply disruptions.
Oil prices have more than halved in the past 18 months with supply bolstered by US shale oil output and OPEC’s refusal to cede market share.
The IEA said global oil supplies breached 97 million barrels per day in October, up 2.0 million from a year earlier, as non-OPEC output recovered from lower levels in the previous month.
And even though lower oil prices will lead to a decline in US tight oil production next year, it will take months to clear the market’s glut, the IEA said.
“This massive cushion has inflated even as the global oil market adjusts to $50 per barrel. Demand growth has risen to a five-year high of nearly 2 million bpd... But gains in demand have been outpaced by vigorous production from OPEC and resilient non-OPEC supply — with Russian output at a post-Soviet record and likely to remain robust in 2016 as well,” the IEA said.
On Thursday, OPEC said in its monthly report that inventories in developed economies were showing their largest excess, relative to the five-year average, in at least 10 years.
A stock overhang that first developed in the United States due to soaring production has now spread across developed nations as well as China and India, the IEA said.
“This surplus crude provides some relief, with OPEC’s spare production buffer stretched thin as Gulf producers pump at near record rates,” the IEA said.

DISTILLATE INVENTORIES
“The shock absorber provided by oil stocks is no longer restricted to just crude. As refineries ran flat out to meet soaring demand for gasoline in top consumers the United States and China, distillate inventories ballooned as a consequence.”
High stocks could protect the market from a supply crunch should there be a lengthy spell of cold temperatures.
“But the current forecast is for a mild winter in Europe and the US If it turns out to be true, bulging stock levels will add further pressure and oil market bears may choose not to hibernate,” the IEA said.

EASING DEMAND GROWTH
Meanwhile, world demand growth is forecast to ease closer to a long-term trend of 1.21 million bpd in 2016 from a very high 1.82 million bpd this year.
“The impact of oil’s steep price plunge on end users is unlikely to be repeated and economic conditions are forecast to remain problematic in countries such as China,” the IEA said.
The IEA said that despite the resilience of producers such as Russia, non-OPEC supply is forecast to contract by more than 600,000 bpd next year.
US light tight oil, the driver of non-OPEC growth, is expected to decline by 600,000 bpd next year, versus previous expectations of contraction by 400,000 bpd.
“Record-high output in Russia provides a partial offset. Russian producers are favoring developments that boost output in the near term, while the rouble’s depreciation and Russia’s oil taxation system are neutralizing the impact of lower prices and spending curbs,” it said.
The IEA raised its forecast for 2016 call on OPEC supply by 200,000 bpd to 31.3 million.
It sees the call on OPEC in the second half of 2016 rising by 1.4 million bpd from the first half to 32 million bpd, which is higher than the group’s current production.
A market share battle between Russia and OPEC producers in Europe is intensifying. Iraq has overtaken Saudi Arabia as the second-largest seller and Iran has already lined up buyers for its oil for when sanctions are lifted.
The IEA cited market sources on Friday as saying Tehran would be able to sell at least an extra 400,000 bpd to buyers in Asia and Europe once sanctions are lifted, including to refiners in Italy, Greece and Spain who prefer to use Iranian crude as their baseload feedstock.
“For this reason, producers are likely to grow still more competitive on pricing,” the IEA said.
“Sour crude markets appear especially oversupplied with discounts versus sweet grades widening. Europe is awash with competing sour crudes from the FSU (former Soviet Union) and Middle East and US sour crudes remained depressed by refinery maintenance,” the IEA said.


UAE central bank backs anti-money laundering

Updated 25 September 2020

UAE central bank backs anti-money laundering

  • Move to safeguard financial stability in COVID-hit economy

DUBAI: The UAE central bank has said that banks should increase anti-money laundering efforts to safeguard financial stability in the country.

“To mitigate the risk of financial crimes . . . banks are urged to put more efforts towardcombating money laundering and financing of terrorism,” it said in a statement.

The bank said more than 300,000 individuals, close to 10,000 small and medium enterprises, and more than 1,500 private companies, had benefited from a 50 billion dirhams ($14 billion) liquidity scheme introduced to cushion against the impact of the COVID-19 pandemic.

On Wednesday, the UAE reported its highest daily number of coronavirus infections since the start of the pandemic.

FASTFACT

 

The UAE Central Bank expects the country’s economy to contract by 5.2 percent this year.

In a separate report, the central bank said this week that the UAE economy would likely contract by 5.2 percent this year, revising down a previous 3.6 percent contraction forecast, as virus containment measures hurt sectors such as trade and tourism.

It said that manufacturing production shrank “due to supply chain disruptions, limited export opportunities and subdued domestic demand.”

The UAE said on Thursday that it would resume issuing visas to foreign visitors to all seven of its regions after a six-month suspension imposed due to the pandemic, state media reported.

Dubai, the region’s tourism and business hub and one of the seven emirates that make up the UAE, had already lifted its own visa ban in July.

The Federal Authority for Identity and Citizenship said in a statement carried in state media that the decision was taken as part of the easing of COVID-19 restrictions in the Gulf state as well as efforts to support economic recovery plans.

All six Gulf Arab countries have lifted internal curfews and lockdowns, but restrictions on gatherings and foreign travel remain in the oil-producing region, where the total number of COVID cases stands at more than 800,000, with more than 6,800 deaths.