WEEKLY ENERGY RECAP: Spot market tightens

Oil prices were relatively steady with Brent crude holding above $63 per barrel near an eight-week high. (Reuters/File)
Updated 23 November 2019

WEEKLY ENERGY RECAP: Spot market tightens

  • US crude inventories rose by 1.8 million barrels despite refinery runs increasing by 519,000 bpd

Oil prices were relatively steady with Brent crude holding above $63 per barrel near an eight-week high and WTI finishing above $57 per barrel.

The physical spot market is getting tighter and strong demand for Arabian Gulf medium sour crude has reflected that trend.

So as yet, there are no signs of any weaker oil demand as had been anticipated.

Both OPEC and the International Energy Agency (IEA) have pointed to a swelling oil glut next year due to booming non-OPEC supplies, especially in the US.

The physical market tells a different story. The scenarios envisaged by both OPEC and the IEA are based around unrealistic outlooks that focus on lower projected oil demand as a likely consequence of the ongoing trade war between the US and China. As a result, the pair have warned about a looming supply glut which could emerge in 2020.

But again, the real physical market tightness suggests otherwise.

US crude inventories rose by 1.8 million barrels despite refinery runs increasing by 519,000 bpd. However, US crude in storage at the Cushing, Oklahoma, delivery hub for WTI fell 2.3 million barrels, which represents the biggest drawdown in three months, as reported by the IEA.

The US oil and gas rig count continued to fall in what was the 13th drop for the past 14 weeks. 

According to Baker Hughes, the US oil rig count is down three from last week to 671, with gas rigs unchanged at 129. US shale oil rigs also continued to drop.

The overall positive demand picture has encouraged money managers to continue to increase their net-long positions in Brent crude oil futures for the 4th consecutive week in a row. That followed nine months of decline.

Brent crude oil futures and options money managers increased their net-long positions by by 543 contracts to 311,304 in the week ending Nov. 19.

However, they cut net long positions in WTI crude oil futures and options by 19,593 contracts to 133,581, over the same period.


SoftBank to invest $40bn for new Indonesia capital

The new capital is to be built on the island of Borneo, where the Kutai National Park is known for its rainforests and its population of orangutans and other primates. (Shutterstock)
Updated 18 January 2020

SoftBank to invest $40bn for new Indonesia capital

  • Son joins Abu Dhabi crown prince and former British PM in steering committee for city

JAKARTA: Japan’s SoftBank is offering to invest $30 billion to $40 billion in the development of a new Indonesian capital, an official said Friday.

The billionaire founder and chief executive of SoftBank, Masayoshi Son, hinted at partnering with the Indonesian government to fund the project when he met President Joko Widodo last week in the capital, Jakarta.
Son and former British Prime Minister Tony Blair have been included in the steering committee to be led by Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan to oversee the construction of the new capital city on the island of Borneo.
Indonesian Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan told a news briefing that SoftBank was offering $30 billion to $40 billion, though it was not immediately clear what project the Japanese conglomerate would invest in specifically.
“We have not yet decided how they would invest, it could be for education, a research center or hospital development,” Pandjaitan said. He said he will meet Son in Davos and Tokyo later this month to finalize the plan.
After meeting Widodo last week, Son told reporters that he was interested in supporting “a new smart city, the newest technology, a clean city and a lot of artificial intelligence.”
Widodo announced last August that Indonesia’s capital will move from overcrowded, sinking and polluted Jakarta to a site in the sparsely populated East Kalimantan province on Borneo, known for rainforests and orangutans.

BACKGROUND

The capital’s relocation to a 256,000-hectare (632,580-acre) site almost four times the size of Jakarta will cost an estimated 466 trillion rupiah ($34 billion). The government is set to begin the construction later this year.

The capital’s relocation to a 256,000-hectare (632,580-acre) site almost four times the size of Jakarta will cost an estimated 466 trillion rupiah ($34 billion). The government is set to begin the construction later this year.
Investors from Asia, the Middle East, the US and China have shown interest in developing the city, Pandjaitan said.
Jakarta, with 30 million people including those in the greater metropolitan area, is prone to earthquakes and flooding, and is rapidly sinking due to the uncontrolled extraction of ground water.
Monsoon rains and rising rivers early this month left more than 60 people dead and 500,000 displaced.
Mineral-rich East Kalimantan was once almost completely covered by rainforests before illegal logging removed much of its original growth. It is home to only 3.5 million people and is surrounded by Kutai National Park, known for orangutans and other primates and mammals.
Indonesia is an archipelago nation of more than 17,000 islands, but currently 54 percent of the country’s nearly 270 million people live on Java, the country’s most densely populated island where Jakarta is located.