WEEKLY ENERGY RECAP: New Saudi energy minister brings some comfort to the market

Saudi Arabia's new Energy Minister, Prince Abdulaziz bin Salman speaks at the joint Ministerial Monitoring Committee in Abu Dhabi, United Arab Emirates September 12, 2019. (Reuters)
Updated 17 September 2019

WEEKLY ENERGY RECAP: New Saudi energy minister brings some comfort to the market

  • US crude oil inventories continued to reduce as US drilling companies cut the number of operating oil rigs for a third week in a row

Although oil prices weakened compared to a week earlier, Brent crude remained above the $60 barrier. WTI softened to $54.85 per barrel.

Oil prices have fallen by about $10 per barrel from a peak in early April, but remain broadly stable. 

The appointment of the new Saudi energy minister brought comfort to the market as he emphasized a consistent Saudi energy policy. 

Beyond the ups and downs of the oil price, it was an eventful week as global industry leaders gathered at the the 24th World Energy Congress, which itself preceded the 16th Joint Ministerial Monitoring Committee (JMMC) for OPEC and non-OPEC.

US crude oil inventories continued to reduce as US drilling companies cut the number of operating oil rigs for a third week in a row.

The Brent and Dubai price structures dipped further into “backwardation” (where the spot price is higher than the future price), pointing to tight supplies and healthy demand.

Yet this was not enough to lift the price of oil over the week as analysts remained firmly focused on the global demand outlook framed by expectations of slowing global growth and persistent trade wrangles.

Both the International Energy Agency (IEA) and OPEC monthly market reports pointed to bearish demand, even as a strong consensus emerged from the OPEC JMMC gathering.

Still, lower oil prices should also stimulate demand despite the IEA sticking to its earlier projection of demand growth at 1.1 million
barrels per day (bpd) in 2019 and 1.3 million bpd in 2020.


Big oil feels the heat on climate as industry leader promises: ‘We will be different’

Updated 4 min 25 sec ago

Big oil feels the heat on climate as industry leader promises: ‘We will be different’

  • Trump singles out ‘prophets of doom’ for attack
  • Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal

LONDON: Teenage environmental activist Greta Thunberg slammed inaction over climate change as the global oil industry found itself under intense scrutiny on the opening day of the World Economic Forum in Davos.

The teenage campaigner went head to head with US President Donald Trump, who dismissed climate “prophets of doom” in his speech.
She in turn shrugged off the US president’s pledge to join the economic forum’s initiative to plant 1 trillion trees to help capture carbon dioxide.
“Planting trees is good, of course, but it’s nowhere near enough,” Thunberg said. “It cannot replace mitigation. We need to start listening to the science and treat this crisis with the importance it deserves,” the 17-year-old said.
The 50th meeting of the World Economic Forum was dominated by the global threat posed by climate change and the carbon economy.
The environmental focus of Davos 2020 caps a year when carbon emissions from fossil fuels hit a record high, and the devastating effects of bushfires in Australia and other climate disasters dominated the news.
Oil company executives from the Gulf and elsewhere are in the spotlight at this year’s Davos meeting as they come under increased pressure to demonstrate how they are reducing their carbon footprint.
“We are not only fighting for our industry’s life but fighting for people to understand the things that we are doing,” said Vicki Hollub, CEO of Occidental, the US-based oil giant with extensive oil operations in the Gulf. “As an industry when we could be different — we will be different.”

‘Planting trees is good, but nowhere near enough,’ activist Greta Thunberg told Davos. (Shutterstock)

She said the company was getting close to being able to sequester significant volumes of CO2 in the US Permian Basin, the heartland of the American shale oil industry which is increasingly in competition with the conventional oil producers of the Arabian Gulf.
“The Permian Basin has the capacity to store 150 gigatons of CO2. That would be 28 years of emissions in the US. That’s the prize for us and that’s the opportunity. People say if you’re sequestering in an oil reservoir then you are producing more oil, but the reality is that it takes more CO2 to inject into a reservoir than the barrel of oil that it makes come out,” Hollub said.
The challenge Occidental and other oil companies face is to make investors understand what is happening in this area of carbon sequesteration, she added.
The investment community at Davos is also looking hard at the oil industry in the face of mounting investor concerns.
Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal. It accused some of these groups of failing to live up to the World Economic Forum goal of “improving the state of the world.”