WEEKLY ENERGY RECAP: Global trade outlook improves

The EIA said that crude inventories dropped by 4.8 million barrels. (Reuters)
Updated 08 September 2019

WEEKLY ENERGY RECAP: Global trade outlook improves

  • Bullish sentiment returned to the market after the US and China agreed to hold trade talks in October

Oil prices kept an upward momentum for the second week running, with Brent finishing at $61.54 per barrel and WTI advancing to $56.52.

Bullish sentiment returned to the market after the US and China agreed to hold trade talks in October that renewed hopes for a resolution to their dispute. 

The Energy Industry Administration released a positive weekly inventory report. Strong drawdowns in US crude oil and gasoline inventories, and a dip in production eased fears of an imminent recession. 

The EIA said that crude inventories dropped by 4.8 million barrels to 423 million barrels. EIA data showed large demand for gasoline and distillate fuels such as diesel and heating oil.

An increase in output from both OPEC and Russia did not appear to weigh on prices even as some market participants made much of the uptick in OPEC production of just 150,000 barrels in August. 

OPEC production in August was 29.71 million million barrels per day (bpd), while in July the group accounted for 29.56 bpd.  In July, OPEC compliance for cutting 1.2 million bpd was 159 percent.

Still, that wasn’t enough to lift prices as traders remained focused on the grim global economic outlook.

The oil media largely ignored the slowdown in upstream spending that is being driven by the uncertainty over the direction of the oil price.

This raised questions over the growth in US shale output that is so sensitive to downward oil price movement.

New US pipeline capacity starting up in the second half of 2019 will speed the transport of shale oil from the Permian Basin and Eagle Ford to export terminals around Houston and Corpus Christi. This could have a drastic impact on prices for the US measure.

 


Higher impairment charges hit UAE banks Emirates NBD and ADCB

Updated 27 January 2020

Higher impairment charges hit UAE banks Emirates NBD and ADCB

DUBAI: Dubai's biggest lender Emirates NBD reported a 15 percent drop in fourth-quarter earnings on Monday, below analysts' forecasts, on a jump in impairment charges, sending its shares down around 1 percent.

The bank booked impairment charges of 2.06 billion dirhams ($560.88 million) in the quarter, up more than three times from a year earlier due to higher bad debt charges as it consolidated results of newly acquired Turkish lender DenizBank.

Even without DenizBank, impairment charges were up 78 percent on lower writebacks and recoveries. The bank did not give details of these charges.

Banks in the United Arab Emirates (UAE) are bracing for more writedowns from the real sector amid a downturn, especially in the Dubai property market.

Fitch Ratings recently warned a weakening property market in the UAE was likely to put more pressure on the asset quality of the banking sector.

Emirates NBD reported a net profit of 2.02 billion dirhams in the fourth-quarter, down from 2.39 billion dirhams in the same period a year earlier. EFG Securities had projected a net profit of 2.45 billion dirhams.

Full year profit, however, surged 44 percent, underpinned by double-digit growth in net interest income, stronger loan growth and gains from the listing of the bank's unit Network International.

Separately, Abu Dhabi Commercial Bank, the UAE's third-biggest bank, also reported a 16 percent drop in fourth-quarter profit on Monday, hurt by an increase in impairment charges.

Emirates NBD said it expected the Expo 2020 world fair to support multiple sectors in Dubai, but a softening real estate market remained a risk for 2020.