WEEKLY ENERGY RECAP: All eyes on OPEC’s meet next week

OPEC’s own forecast for global oil demand growth remains unchanged in 2020 at 1.08 million bpd. (AFP)
Updated 30 November 2019

WEEKLY ENERGY RECAP: All eyes on OPEC’s meet next week

  • OPEC will meet next week on Dec. 5-6

Although Brent crude dropped below $63 per barrel by the week closing, oil prices are still very close to the levels that prevailed around OPEC’s meeting six months ago when an output cut rollover was suggested till March 2020.

OPEC will meet next week on Dec. 5-6 and so far the efforts of the OPEC+ group of producers have been successful in absorbing the market surplus.

At the end of 2016 OECD stocks were 299 million barrels above the latest five-year average, which was OPEC’s key measure for its oil output strategy for those three years.

OECD commercial oil stocks for March 2018 were 40 million barrels below the latest five-year average, which meant that the OPEC+ output cuts of 1.8 million barrels per day (bpd) since January 2017 were successful in driving OECD commercial oil stocks below the five-year average within just 15 months of the new  production cut strategy.

The continuing efforts in the past three years have ensured that the market is in balance and preventing any surplus building up.

By January this year OECD commercial oil stocks were at 19 million barrels above the latest five-year average — which coincided with the latest OPEC+ output cuts of 1.2 million bpd.

According to the OPEC monthly oil market report  of November 2019, OECD commercial oil stocks stand at 28.2 million barrels above the latest five-year average. This means that OECD commercial crude stocks have been increasing regardless of OPEC+ output cuts. However, OPEC monthly reports forecast a sharp fall in calls on its crude in the first half of next year, while non-OPEC supply is set to increase ahead of weak global demand growth.

OPEC’s own forecast for global oil demand growth remains unchanged in 2020 at 1.08 million bpd, but demand is projected to be flat in the first and second quarter, when non-OPEC supply is set to rise by 1.79 million bpd.

However, there are many non-OPEC supply uncertainties in 2020. 

According to OPEC’s own outlook, a rollover remains the most likely outcome of the 177th meeting.

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


Food for thought as Aramco’s Amin Nasser hosts Davos

Updated 19 min 8 sec ago

Food for thought as Aramco’s Amin Nasser hosts Davos

  • The theme of the reception was “the art of the possible,” aiming to highlight Aramco’s huge investment in energy technology
  • Among the foreseen events were the release of audited reserves estimates showing Aramco — officially — as the world’s biggest oil company

DAVOS: Rapidly becoming a highlight of the hectic Davos calendar is the Saudi Aramco reception and dinner, held for the past two years now at the InterContinental Hotel on the outskirts of the Alpine resort.

The egg-shaped InterConti is one of the bigger and newer establishments here, very different in style from most of the other traditional Swiss hotels. It exudes corporate power and influence and is a fitting venue for the most valuable company in history to host friends, clients and would-be partners for a few informal hours.

On Wednesday, the hotel was virtually an extension of Riyadh. In addition to the Aramco event, there was also a big presence by the Saudi Arabian General Investment Authority (SAGIA), with its slogan “Saudi Arabia: Now Live” in prominent view in the bustling lobby.

The Aramco event — hosted of course by chief executive officer Amin Nasser — was a gathering of some of the most powerful people in the Kingdom, as well as a number of the great-and-good of the energy world and representatives of the global elite.

The Saudi Energy Minister Prince Abdul Aziz bin Salman chatted amiably with guests, none the worse for wear from the door-stepping he had got from the Western press earlier in the day, which had caused a storm of disapproval on Saudi domestic media. He had a few words for everyone.

Yasir Al-Rumayyan, governor of the Saudi Public Investment Fund and chairman of Armco, was in attendance too, enjoying the refreshments and canapes of the gathering.

The theme of the reception — held in the InterConti’s cavernous basement function hall — was “the art of the possible,” aiming to highlight Aramco’s huge investment in energy technology, its big global research and development commitment, and its awareness of climate-change issues. “We are more than just a petrol pump,” was the message.

One neat synergy between traditional Saudi life and modern technology was the story of Mohamed Amanullah, leader of Aramco’s Advanced Research Center, who devised a way of using discarded date seeds — suitably processed — as a filter in the oil-drilling process. “It shows heritage and sustainability in one place,” an Aramco aide explained.

The highlight of the soiree was an address from Nasser, who took the stage to thank guests for making the trek to the InterConti. He noted that Davos 2020 had the highest number ever of Saudi delegates.

“Last year was an exceptional year for Aramco, in a variety of areas; some of them planned, some not predicted,” he told the audience.

Among the foreseen events were the release of audited reserves estimates showing Aramco — officially — as the world’s biggest oil company; the record-breaking bond issue in spring; the finding by scientific experts that the Kingdom had the cleanest crude of any of the oil majors; and, of course, the biggest initial public offering in history last month and market recognition of the fact Aramco is the biggest listed company in the world.

Some unplanned events were also mentioned, notably the attacks on Aramco facilities last September that briefly halted most of the Kingdom’s oil industry, but which was overcome with rapid efficiency. The oil price spike was short lived.

“Our job is to fulfill the global need for affordable energy,” Nasser said, highlighting Aramco’s “responsibility and moral obligation” to help alleviate energy poverty in poorer countries, especially in sub-Saharan Africa.

Nasser finished with a pledge that Aramco’s hi-tech capabilities will be enhanced and expanded for the benefit of the world. “I am confident that we can use technology to remove carbon dioxide emissions and methane from the atmosphere,” he said.

That is a mission worthy of the biggest energy company on the planet and provided food for thought for the rest of the Davos evening.