US oil retreats from 2019 high as production soars

An oil rig drilling in shale in North Dakota. (AFP)
Updated 15 March 2019

US oil retreats from 2019 high as production soars

  • Market is awaiting the outcome of the OPEC+ meeting for signs of future demand

NEW YORK: US crude futures briefly hit a 2019 high on Friday but retreated along with benchmark Brent oil as worries about the global economy and robust US production put a brake on prices.

West Texas Intermediate (WTI) crude oil futures were down 12 cents at $58.49 per barrel at 12:08 p.m. EDT (16:08 GMT), having hit their highest so far this year at $58.95.

Brent crude futures were at $66.85 per barrel, down 38 cents from their last settlement, and below their 2019 peak of $68.14 reached on Thursday.

US crude was on track to end the week 3.2 percent higher, and Brent was up 1.7 percent.

“The market is taking a pause as it tries to digest mixed reports that give us different ideas of future supply and demand,” said Phil Flynn, an analyst at Price Futures group in Chicago. “The OPEC+ meeting could give us a little direction,” he said.

The Organization of the Petroleum Exporting Countries and other oil producing countries, including Russia, who form OPEC+, agreed last year to cut production, partly in response to increased US shale output.

OPEC+ ministers will meet on April 17-18 to decide production policy.

“If OPEC+ decide to extend (cuts), we expect that inventories will continue to draw through at least Q3,” US investment bank Jefferies said.

The International Energy Agency said on Friday that the market could show a modest surplus in the first quarter of 2019 before flipping into a deficit in the second quarter by about 0.5 million barrels per day (bpd).

It said a comfortable supply cushion by OPEC could prevent any price rally in case of possible disruptions and that non-OPEC oil output growth led by the United States should ensure demand is met.

Oil price gains have been limited by concerns that an economic slowdown that has gripped large parts of Asia and Europe will dent growth in fuel demand. However, oil consumption has held up so far.

Crude oil use in China, the world’s biggest importer, in the first two months of 2019 rose 6.1 percent from a year earlier to a record 12.68 million bpd, official data showed this week.

Goldman Sachs said growth in global demand for crude in January was “nearly 2.0 million barrels per day, with strength visible in both emerging markets and developed economies.”


Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 51 min 56 sec ago

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.