Oil market oversupplied in 2019 on US production: energy watchdog

The International Energy Agency predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020. (Reuters)
Updated 12 July 2019

Oil market oversupplied in 2019 on US production: energy watchdog

  • The demand for OPEC crude oil in early 2020 could fall to only 28 million barrels per day

LONDON: Surging US oil output will outpace sluggish global demand and lead to a large stock build around the world in the next nine months, the International Energy Agency (IEA) said on Friday.
The forecasts appear to predict the need for producer club OPEC and its allies to reduce production to balance the market despite extending their existing pact, forecasting a fall in demand for OPEC crude to only 28 million barrels per day (bpd) in early 2020.
“Market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future,” the IEA said in its monthly report.
“Clearly, this presents a major challenge to those who have taken on the task of market management,” it added, referring to the Organization of the Petroleum Exporting Countries and producer allies such as Russia.
The demand for OPEC crude oil in early 2020 could fall to only 28 million bpd, it added, with non-OPEC expansion in 2020 rising by 2.1 million bpd — a full 2 million bpd of which is expected to come from the United States.
At current OPEC output levels of 30 million bpd, the IEA predicted that global oil stocks could rise by 136 million barrels by the end of the first quarter of 2020.
Maintaining its forecasts for oil demand for the rest of 2019 and 2020, the Paris-based agency cited expected improvement in US-China trade relations and US economic expansion as encouraging but flagged tailwinds elsewhere.
“There are indications of deteriorating trade and manufacturing activity. Recent data show that global manufacturing output in 2Q19 fell for the first time since late 2012 and new orders have declined at a fast pace,” it said.
The IEA said that markets were concerned by escalating tension between Iran and the West over oil tankers leaving the Gulf but that incidents in the region’s shipping lanes have been overshadowed by supply concerns.
“The oil price impact has been minimal with no real security of supply premium,” the IEA said. “For now, maritime operations in the region are close to normal and markets remain calm.”
Tightened US sanctions on Iranian crude drove down Tehran’s June exports by 450,000 bpd to 530,000 bpd, near three-decade lows.


Middle East airlines’ passenger traffic nosedive in April

Updated 06 June 2020

Middle East airlines’ passenger traffic nosedive in April

  • UAE-based Emirates and Etihad Airways will resume some transit flights
  • IATA said the global demand for air services is starting to show recovery

DUBAI: Passenger traffic for Middle East airlines plummeted 97.3 percent in April, versus a less-steeper dive of 50.3 percent a month earlier, the International Air Transport Association (IATA) said in a report.
“April was a disaster for aviation as air travel almost entirely stopped. But April may also represent the nadir of the crisis,” Alexandre de Juniac, IATA’s director general and CEO, said in a statement
“Flight numbers are increasing. Countries are beginning to lift mobility restrictions. And business confidence is showing improvement in key markets such as China, Germany, and the US.”
UAE-based Emirates and Etihad Airways will resume some transit flights after the country lifted a suspension on services where passengers stop off in the country to change planes, or for refueling.
Emirates, one of the world’s biggest long-haul airlines, would operate transit flights to 29 destinations in Asia, Europe and North America by June 15 while Etihad would carry transit passengers to 20 cities in Europe, Asia and Australia from June 10.
With aircraft of Middle East airlines grounded, and replicated globally due to the coronavirus pandemic, capacity tumbled 92.3 percent while the load factor decreased to 27.9 percent in April.
But IATA said the global demand for air services is starting to show recovery “after hitting bottom in April.”
There “are positive signs are we start to rebuild the industry from a stand-still. The initial green shoots will take time – possibly years – to mature,” de Juniac added.
Meanwhile, the Abu-Dhabi based carrier will extend salary cuts for employees until September even as other UAE airlines Emirates and Air Arabia confirmed job cuts due to the effects of the coronavirus pandemic.
“Etihad is continuing to consider all options to protect jobs and preserve cash at this challenging time. Regretfully, Etihad has extended its salary reduction until September 2020, with 25 percent reduction for junior staff and cabin crew, and 50 percent for employees at manager level and above. Housing allowance and a number of benefits continue to be paid,” a statement from Etihad said.