Fall in oil prices reflects fears over economic slowdown

Crude prices continued to slide despite the first drawdown on US crude stocks in several weeks. Above, a maze of crude oil pipes and valves at the Strategic Petroleum Reserve in Freeport, Texas (Reuters)
Updated 02 June 2019

Fall in oil prices reflects fears over economic slowdown

  • Markets found themselves torn once again between supply fears and a looming economic slowdown
  • OPEC’s oil production dropped to a four-year low of 30.17 million barrels per day (bpd) in May

RIYADH: The downward movement in oil prices last week seemed unjustified given the current strong market fundamentals, as markets found themselves torn once again between supply fears and a looming economic slowdown. The Brent crude price closed the week closer to $60 per barrel.
OPEC’s oil production dropped to a four-year low of 30.17 million barrels per day (bpd) in May, according to a Reuters survey, with exports from Iran tumbling to around 400,000 bpd.
Crude prices continued to slide despite the first drawdown on US crude stocks in several weeks. Prices mostly dip on macroeconomic growth concerns, with the US-China trade dispute continuing to overshadow sentiment on the global oil markets.
However, Chinese crude oil imports hit a record 10.2 million bpd, marking a massive increase of 1.2 million bpd year-on-year, tempering concerns over the impact of a trade war on the global economy and oil demand.
One of the main reasons that no oil shortages have materialized yet is that Asia refiners have already shut down 2-3 million bpd of refining capacity for planned maintenance, which will continue throughout June. This seasonal maintenance contributed to relatively lower demand.
Since Asian refiners buy almost 60 percent of their crude intake from the Arabian Gulf, relative prices for sour crudes have been robust. After those facilities’ initial runs on mostly light sweet crude oil from the US shale exports, they began taking more sour medium crude as upgrading units have gone into service.

  • Faisal Mrza is an energy and oil market adviser. He was formerly with OPEC and Saudi Aramco. Reach him on Twitter: @faisalmrza


Dubai port operator DP World suspends staff travel to China

Updated 29 January 2020

Dubai port operator DP World suspends staff travel to China

  • DP World’s website shows it operates at three ports in mainland China and at another port in Hong Kong

DUBAI: DP World, one of the world’s largest port operators, has suspended all staff travel to China until further notice due to the  Wuhan coronavirus outbreak.

Companies including Facebook, LG Electronics and Standard Chartered are among those restricting travel for employees to China, where the death toll from a flu-like virus rose above 100 on Tuesday.

“All travel to China is suspended until further notice, unless for emergency purposes. We continue to monitor World Health Organization and government advice,” a spokesman at DP World told Reuters on Tuesday.

DP World’s website shows it operates at three ports in mainland China and at another port in Hong Kong.

Chinese nationals, however, would be permitted to travel back to China if they needed to go home, the spokesman added.

“All our ports are complying with the official government health ministry directive for operations, staff health precautions and risk mitigation plans,” he said, adding that ports need to continue to operate for welfare and health purposes, including the import of food and medicine.

Dubai’s Emirates airline has advised its flight crew to stay in their hotels when on a layover in China due to the coronavirus, an internal notice seen by Reuters showed.

The US has warned against travel to China, where the coronavirus outbreak has left millions of Chinese stranded during the country’s biggest holiday of the year.