Oil prices stable on healthy demand, but oversupply looms later in 2018

Oil prices stable on healthy demand, but oversupply looms later in 2018
“Surging US output levels will continue to undermine OPEC’s efforts for stronger oil prices,” said Singapore-based brokerage Phillip Futures in a note on Thursday. (Reuters)
Updated 15 March 2018

Oil prices stable on healthy demand, but oversupply looms later in 2018

Oil prices stable on healthy demand, but oversupply looms later in 2018

SINGAPORE: Oil prices held steady on Thursday, supported by healthy global demand but capped by the relentless rise in US production that is undermining efforts led by producer cartel OPEC to cut supplies and prop up markets.
US West Texas Intermediate (WTI) crude futures rose 7 cents, or 0.1 percent, to $61.03 a barrel by 0518 GMT.
Brent crude futures were at $64.90 per barrel, up 1 cent from their last close.
Reuters technical commodity analyst Wang Tao said market signals for Brent pointed to a continuation of recent sideways movements, although he added that technical chart indicators were “indicating the current sideways move may end very soon.”
Prices were receiving support from healthy demand. The Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday that oil consumption was expected to grow by 1.62 million barrels per day (bpd) in 2018.
But looming over markets has been a relentless climb in US crude output, which hit another record last week by rising to 10.38 million bpd, up by more than 23 percent since mid-2016. Commercial crude inventories were up by 5 million barrels, at 430.93 million barrels.
US crude production, which has already overtaken that of top exporter Saudi Arabia, is expected to rise above 11 million bpd later this year, taking the top spot from Russia, according to the International Energy Agency.
“Surging US output levels will continue to undermine OPEC’s efforts for stronger oil prices,” said Singapore-based brokerage Phillip Futures in a note on Thursday.
OPEC on Wednesday raised its forecast for non-member oil supply to almost double the growth predicted four months ago.
The group said non-OPEC producers would boost supply by 1.66 million bpd in 2018.
But since OPEC expects demand this year to grow by only 1.62 million bpd, that would leave the market slightly oversupplied and may require more or longer supply restraint.
OPEC and several other non-OPEC producers led by Russia began cutting supply in January 2017 to erase a global glut of crude that had built up since 2014.
OPEC said its combined output dropped by 77,000 bpd to 32.186 million bpd in February, led by declines in Iraq, the United Arab Emirates and Venezuela.
These cuts and rising US output mean that OPEC is losing market share.
“In 2018, demand for OPEC crude is forecast at 32.6 million bpd, down by 0.2 million bpd from the previous assessment and 0.2 million bpd lower than a year earlier,” OPEC said.


UAE’s first independent digital banking platform launches

UAE’s first independent digital banking platform launches
Updated 9 min 10 sec ago

UAE’s first independent digital banking platform launches

UAE’s first independent digital banking platform launches
  • Global leaders in digital banking, such as Revolut, one of the world’s fastest-growing apps, do not have a UAE presence

DUBAI: The first independent digital banking platform in the United Arab Emirates launched on Sunday, a neobank hoping to become a leader in the Middle East, Africa and South Asia.

Dubai-based YAP does not have a banking licence itself but has partnered with RAK Bank which provides international bank account numbers for YAP users and secures their funds under its own banking licence.

YAP, like other neobanks which do not have physical branches, does not offer traditional banking services like loans and mortgages, but offers spending and budgeting analytics, peer-to-peer payments and remittances services and bill payments.

YAP is in the process of partnering with banks in other countries, head of product Katral-Nada Hassan said, including a bank in Saudi, in Pakistan and in Ghana.

Global leaders in digital banking, such as Revolut, one of the world’s fastest-growing apps, do not have a UAE presence.

Some UAE banks have in recent years launched their own digital banking offerings targeted at digitally-savvy and younger users, such as LIV by Emirates NBD and Mashreq Neo by Mashreq Bank.

Abu Dhabi state-owned holding company ADQ last year said it plans to set up an as-yet unnamed neobank using a banking licence of the country’s biggest lender, First Abu Dhabi Bank (FAB).

“The fintech revolution has become very popular in other parts of the world and we saw a gap and unique need for this service in the Middle East,” said YAP CEO and founder Marwan Hachem

Hassan said there are challenges for fintechs looking to expand to the UAE.

“There are a lot of fintechs right now looking at partnering with banks, but that requires a lot of discussion, relationship building ... It is not an easy thing to do,” she said, adding YAP’s founders had an existing relationship with RAK Bank.

YAP is at seed funding stage, funded by founders, a private equity firm and private investors, Hassan said, adding that more than 20,000 customers have pre-registered and accounts will gradually go live in coming weeks.


Escalating violence ups pressure for Myanmar sanctions

Escalating violence ups pressure for Myanmar sanctions
Updated 21 min 47 sec ago

Escalating violence ups pressure for Myanmar sanctions

Escalating violence ups pressure for Myanmar sanctions
  • The UN special envoy urged the Security Council to act to quell junta violence that this week killed about 50 demonstrators
BANGKOK: The escalation of violence in Myanmar as authorities crack down on protests against the Feb. 1 coup is raising pressure for more sanctions against the junta, even as countries struggle over how to best sway military leaders inured to global condemnation.
The challenge is made doubly difficult by fears of harming ordinary citizens who were already suffering from an economic slump worsened by the pandemic but are braving risks of arrest and injury to voice outrage over the military takeover. Still, activists and experts say there are ways to ramp up pressure on the regime, especially by cutting off sources of funding and access to the tools of repression.
The UN special envoy on Friday urged the Security Council to act to quell junta violence that this week killed about 50 demonstrators and injured scores more.
“There is an urgency for collective action,” Christine Schraner Burgener told the meeting. “How much more can we allow the Myanmar military to get away with?“
Coordinated UN action is difficult, however, since permanent Security Council members China and Russia would almost certainly veto it. Myanmar’s neighbors, its biggest trading partners and sources of investment, are likewise reluctant to resort to sanctions.
Some piecemeal actions have already been taken. The US, Britain and Canada have tightened various restrictions on Myanmar’s army, their family members and other top leaders of the junta. The US blocked an attempt by the military to access more than $1 billion in Myanmar central bank funds being held in the US, the State Department confirmed Friday.
But most economic interests of the military remain “largely unchallenged,” Thomas Andrews, the UN special rapporteur on the rights situation in Myanmar, said in a report issued last week. Some governments have halted aid and the World Bank said it suspended funding and was reviewing its programs.
Its unclear whether the sanctions imposed so far, although symbolically important, will have much ímpact. Schraner Burgener told UN correspondents that the army shrugged off a warning of possible “huge strong measures” against the coup with the reply that, “‘We are used to sanctions and we survived those sanctions in the past.’”
Andrews and other experts and human rights activists are calling for a ban on dealings with the many Myanmar companies associated with the military and an embargo on arms and technology, products and services that can be used by the authorities for surveillance and violence.
The activist group Justice for Myanmar issued a list of dozens of foreign companies that it says have supplied such potential tools of repression to the government, which is now entirely under military control.
It cited budget documents for the Ministry of Home Affairs and Ministry of Transport and Communications that show purchases of forensic data, tracking, password recovery, drones and other equipment from the US, Israel, EU, Japan and other countries. Such technologies can have benign or even beneficial uses, such as fighting human trafficking. But they also are being used to track down protesters, both online and offline.
Restricting dealings with military-dominated conglomerates including Myanmar Economic Corp., Myanmar Economic Holdings Ltd. and Myanmar Oil and Gas Enterprise might also pack more punch, with a minimal impact on small, private companies and individuals.
One idea gaining support is to prevent the junta from accessing vital oil and gas revenues paid into and held in banks outside the country, Chris Sidoti, a former member of the UN Independent International Fact-Finding Mission on Myanmar, said in a news conference on Thursday.
Oil and gas are Myanmar’s biggest exports and a crucial source of foreign exchange needed to pay for imports. The country’s $1.4 billion oil and gas and mining industries account for more than a third of exports and a large share of tax revenue.
“The money supply has to be cut off. That’s the most urgent priority and the most direct step that can be taken,” said Sidoti, one of the founding members of a newly established international group called the Special Advisory Council for Myanmar.
Unfortunately, such measures can take commitment and time, and “time is not on the side of the people of Myanmar at a time when these atrocities are being committed,” he said.
Myanmar’s economy languished in isolation after a coup in 1962. Many of the sanctions imposed by Western governments in the decades that followed were lifted after the country began its troubled transition toward democracy in 2011. Some of those restrictions were restored after the army’s brutal operations in 2017 against the Rohingya Muslim minority in Myanmar’s northwest Rakhine state.
The European Union has said it is reviewing its policies and stands ready to adopt restrictive measures against those directly responsible for the coup. Japan, likewise, has said it is considering what to do.
The Association of Southeast Asian Nations, or ASEAN, convened a virtual meeting on March 2 to discuss Myanmar. Its chairman later issued a statement calling for an end to violence and for talks to try to reach a peaceful settlement.
But ASEAN admitted Myanmar as a member in 1997, long before the military, known as the Tatmadaw, initiated reforms that helped elect a quasi-civilian government led by Aung San Suu Kyi. Most ASEAN governments have authoritarian leaders or one-party rule. By tradition, they are committed to consensus and non interference in each others’ internal affairs.
While they lack an appetite for sanctions, some ASEAN governments have vehemently condemned the coup and the ensuing arrests and killings.
Marzuki Darusman, an Indonesian lawyer and former chair of the Fact-Finding Mission that Sidoti joined, said he believes the spiraling, brutal violence against protesters has shaken ASEAN’s stance that the crisis is purely an internal matter.
“ASEAN considers it imperative that it play a role in resolving the crisis in Myanmar,” Darusman said.
Thailand, with a 2,400 kilometer (1,500-mile)-long border with Myanmar and more than 2 million Myanmar migrant workers, does not want more to flee into its territory, especially at a time when it is still battling the pandemic.
Kavi Chongkittavorn, a senior fellow at Chulalongkorn University’s Institute of Security and International Studies, also believes ASEAN wants to see a return to a civilian government in Myanmar and would be best off adopting a “carrot and stick” approach.
But the greatest hope, he said, is with the protesters.
On Saturday, some protesters expressed their disdain by pouring Myanmar Beer, a local brand made by a military-linked company whose Japanese partner Kirin Holdings is withdrawing from, on people’s feet — considered a grave insult in some parts of Asia.
“The Myanmar people are very brave. This is the No. 1 pressure on the country,” Chongkittavorn said in a seminar held by the East-West Center in Hawaii. “It’s very clear the junta also knows what they need to do to move ahead, otherwise sanctions will be much more severe.”

Aramco in unique position to ‘surge’ capacity to meet oil demand recovery

Aramco in unique position to ‘surge’ capacity to meet oil demand recovery
Updated 35 min 28 sec ago

Aramco in unique position to ‘surge’ capacity to meet oil demand recovery

Aramco in unique position to ‘surge’ capacity to meet oil demand recovery
  • Oil prices jumped about 3 percent on Friday
  • Brent crude was up by about 4 percent over the week while WTI oil gained 7 percent

DUBAI: Saudi Aramco is uniquely positioned to respond to a surge in global oil demand according to a report from Bank of America Merrill Lynch.

“At maximum sustainable capacity of 12 million barrels per day (bpd) and proven ability to produce even more, Aramco is one of the few companies globally that can substantially boost output without committing additional capex,” the bank said on Sunday. “We believe that Aramco is uniquely positioned in the global oil world to meet potential resurgence of oil demand.
After the collapse of oil prices in 2020 linked to the COVID-19 pandemic, the market has staged a strong recovery so far this year with a number of banks raising their price estimates for the full year.
Oil prices jumped about 3 percent on Friday, to reach their highest in more than a year after OPEC and its allies decided not to increase supply in April.
Brent crude was up by about 4 percent over the week while WTI oil gained 7 percent.
The rapidly improving outlook for the sector has also sweetened the dividend out look for the company if the oil price remains within the $60 to $75 per barrel range, the bank said.
“Our scenario analysis suggests that Aramco would be well placed to implement its higher dividend distribution guidance given during the IPO and even increase dividends beyond its minimum $75 billion pledge,” Bank of Amerrca Merrill Lynch said.
The collapse of global oil demand over the last year has meant that the global onshore and offshore rig count has dropped to one of the lowest levels ever in the past few months.
With Aramco holding the lion’s share of spare capacity, it is poised to capitalize on a an oil price rebound.
“Given the capex dearth, oil market deficit, and forecast demand resurgence, Aramco remains one of the very few oil companies globally with the ability to surge production substantially without committing additional capex,” the bank said.


China exports soar to highest level in decades after COVID-19 hit

China exports soar to highest level in decades after COVID-19 hit
Updated 07 March 2021

China exports soar to highest level in decades after COVID-19 hit

China exports soar to highest level in decades after COVID-19 hit
  • Exports were boosted by electronics and mask shipments

BEIJING: China's export growth jumped to the highest in over two decades, official data showed Sunday, with imports also surging in a sharp bounceback from the coronavirus outbreak that had brought activity to a near halt.
Exports spiked 60.6 percent on-year in the January-February period, above analysts' expectations and boosted by electronics and mask shipments, while imports rose 22.2 percent, official data showed Sunday.


California theme parks, stadiums to reopen soon

California theme parks, stadiums to reopen soon
Updated 07 March 2021

California theme parks, stadiums to reopen soon

California theme parks, stadiums to reopen soon
  • Parks initially will be open only to state residents amid safety precautions

LOS ANGELES: California health officials on Friday gave Walt Disney Co.’s Disneyland and other theme parks the go-ahead to reopen at limited capacity from April 1, after a closure of almost a year due to the coronavirus disease (COVID-19) pandemic.

Capacity will be limited to between 15 percent and 35 percent, the California Department of Health said in an update. Masks and other safety measures will be required and the parks initially will be open only to state residents.

Outdoor stadiums and ball parks will also be allowed to reopen at reduced capacity, starting April 1.

Ken Potrock, president of the Disneyland Resort, said in a statement that the decision meant “getting thousands of people back to work and greatly helping neighboring businesses and our entire community.”

“With responsible Disney safety protocols already implemented around the world, we can’t wait to welcome our guests back,” Potrock said.

He did not give a date for the reopening of Disneyland in the southern California city of Anaheim.

Disney shares were trading at $195.10 after hours, after closing at $189.99.

Disney in September said it was furloughing some 28,000 workers, mostly across its US theme parks in California and Florida. Walt Disney World in Florida reopened in July last year, with limited capacity.

Friday’s announcement follows a decline in coronavirus disease (COVID-19) cases in California and the rollout of vaccines. A parking lot at Disneyland is currently being used as a mass vaccination site.

Theme parks like Disneyland, Universal Studios, Legoland and Knott’s Berry Farm protested strongly last October when California health officials ruled out any quick reopening of their attractions.

The California Attractions and Parks Association called Friday’s announcement “encouraging news.”

“Parks now have a framework to safely and responsibly reopen ... putting people safely back to work and reinvigorating local economies,” the association said in a statement.