WEEKLY ENERGY RECAP: Price up despite rising stockpiles

WEEKLY ENERGY RECAP: Price up despite rising stockpiles
In this Nov. 22, 2013 file photo, the Centenario deep-water drilling platform stands off the coast of Veracruz, Mexico in the Gulf of Mexico. (AP)
Updated 10 November 2019

WEEKLY ENERGY RECAP: Price up despite rising stockpiles

WEEKLY ENERGY RECAP: Price up despite rising stockpiles
  • The consecutive drops in the US rig count makes WTI crude oil prices at the level of mid or low $50s unsustainable

Crude prices gained over the week despite the huge weekly build in US inventories as reported by the Energy Information Administration (EIA). Stockpiles rose by 7.9 million barrels, taking the cumulative increase to 30 million barrels over the last seven weeks. Brent crude rose to $62.51 per barrel while WTI advanced to 57.24.
Bullish signs for the oil price continue to emerge amid positive China manufacturing data and falling US rig counts. The number of US oil and gas rigs fell for the 11th time in the last 12 weeks. According to Baker Hughes, the total number of active oil rigs in the US decreased to 684. This brings the total oil and gas rig count down to 817, which is 250 rigs down from this time last year.
The consecutive drops in the US rig count makes WTI crude oil prices at the level of mid or low $50s unsustainable.
It also raises questions about the production forecasts being put out by the EIA as well as the International Energy Agency (IEA) and the narrative that suggests there will still be plenty of oil being produced even if prices remain in the low $50s range.
Although economic uncertainty continues to dominate the market, the upward momentum in oil prices encouraged money managers to increase their net-long positions in Brent and WTI crude oil futures for the third week in a row, after months of pessimism.
This is underpinning trading volumes in Brent and WTI, despite concerns about slowing global growth, the US-China trade war and other geopolitical factors that may have otherwise pointed to a supply glut. Brent crude oil futures and options money managers increased their net-long positions by 28,353 contracts to 282,352 contracts in the week ending Nov. 5. WTI net long positions grew by 11,793 contracts to 116,468 over the same period.

Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq


Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier. (Shutterstock)
Updated 23 January 2021

Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
  • Spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday — the opening day of the event

PARIS: Emerging stronger from the COVID-19 pandemic, Asia is set to dominate this year’s virtual World Economic Forum as a virus-battered West struggles and a new US president faces particularly daunting challenges.

The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier.
While the coronavirus leaves a mounting death toll and upends economies, depriving millions of people of work, China and Asian countries in 2021 are making a strong comeback from the virus that hit them first.
In virtual format because of the pandemic, next week’s event is headlined: “A Crucial Year to Rebuild Trust.”
The spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday, the opening day of the event that will last through next Friday.
The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.
US President Joe Biden will not appear at the virtual Davos, which has never been a fixture on the White House calendar — even if the new administration has pledged to revive a US multilateral foreign policy after four years of Donald Trump’s America First approach.
Trump had been an exception as he stopped in Davos twice, with the real estate billionaire enjoying mixing with the global business elite.
Before him, Bill Clinton was the only American president who had traveled to Davos, and that was just once.
Showing up from Asia are China’s and South Korea’s presidents as well as the prime ministers of India and Japan.
Following the first virtual session, Davos will move in May to Singapore, far from the luxury Swiss ski resort where it has taken place since it was launched in 1971, the brainchild of German professor Klaus Schwab.
The stated reason for the changes is health safety.

FASTFACT

The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.

But a virtual forum is not particularly attractive for the world’s well-heeled movers and shakers, who value huddles behind closed doors in fancy hotels over meetings in formal settings.
French insurance-credit group Euler Hermes said in a study this month that the “world’s economic center of gravity” (WECG) has been moving toward Asia since 2002.
“The COVID-19 crisis could accelerate the shifting global balance toward Asia,” it added.
“By 2030, we forecast the WECG, could be located around the confluence of China, India and Pakistan,” the study projected.
The speech by Xi, who addressed Davos back in 2017, seems almost to set the clock back, as if the business world seeks to erase the Trump era.
Four years ago, he presented himself as the champion of free trade, much to the joy of Davos participants who feared the newly elected Trump’s protectionist moves.
Biden is nevertheless sending John Kerry, the special climate envoy who will be welcomed after the new Democratic president has brought Washington back into the Paris climate accord.
The agenda includes workshops titled: “Stakeholder Capitalism: Building the Future” as well as “Advancing a New Social Contract” and “Resetting Consumption for a Sustainable Future.”
In a column published in mid-January, Schwab said 2021 could be a positive and historic year, 75 years after the original “Year Zero” following the devastation of World War II.
“We once again have a chance to rebuild,” he said, calling for rethinking capitalism in the light of a pandemic that has worsened inequality.
He said “COVID-19 has delivered the final blow” to the post-war model where free markets and limited government produced prosperity and progress that now is “no longer sustainable, environmentally or socially.”