WEEKLY ENERGY RECAP: Oil rises on US growth and easing of trade tensions with China

WEEKLY ENERGY RECAP: Oil rises on US growth and easing of trade tensions with China
The crude oil market is heading toward 2020 on the front foot as trade talks continue on a positive trajectory. (AFP/File)
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Updated 21 December 2019

WEEKLY ENERGY RECAP: Oil rises on US growth and easing of trade tensions with China

WEEKLY ENERGY RECAP: Oil rises on US growth and easing of trade tensions with China
  • Investors are buying into the OPEC+ output strategy

Oil continued its upward momentum for the third consecutive week and rose to its highest level in six months. Brent crude advanced to $66.14 per barrel and WTI reached $60.44 per barrel.

According to Baker Hughes data, the US oil rig count saw an increase of 18 rigs, the first double-digit growth since the beginning of April. However the current oil and gas rig tally of 813 is still 267 down from this time last year.

The crude oil market is heading toward 2020 on the front foot as trade talks continue on a positive trajectory and with manufacturing data pointing to steady US economic growth.

The upbeat mood encouraged money managers to increase their net long positions in Brent crude oil futures and options by 24,517 contracts to 398,360 in the week ending Dec. 17. Net long contracts in WTI crude oil futures and options also rose by 43,793 contracts to 272,218 over the same period.

The International Energy Agency (IEA) reported the latest OECD commercial stocks drew 32.5 million barrels to 2.9 million barrels below the five-year average and covered 60.6 days, one day below the average. This means that OECD commercial inventories have been falling fast in recent months by almost 100 million barrels.

The strong market fundamentals and positive sentiment have helped the oil price move up steadily since September with less volatility than previous months. This shows that investors are buying into the OPEC+ output strategy even if the rise in oil prices has been more about positive develop- ments in the wider market,

As US-China trade tensions ease, the global economic outlook is expected to improve, underpinning energy demand. Even as the trade war rumbled on in 2019, the growth in China crude oil imports was undiminished, hotting a re- cord 11.18 million bpd in November and surpassing the US record mark of 10.77 million bpd set in 2005.


Egyptian minister hails reforms as public investment jumps 70%

Updated 03 December 2020

Egyptian minister hails reforms as public investment jumps 70%

Egyptian minister hails reforms as public investment jumps 70%
  • The rate of economic growth reached about 1.8 percent — less than the population growth rate
  • A plan to control population increase will begin in January 2021

CAIRO: The volume of public investment in Egypt grew by 70 percent in the 2020/2021 fiscal year, reaching 595 billion Egyptian pounds ($37.9 billion), Minister of Planning and Economic Development Hala Al-Saeed has said.

In a speech at the Egypt Economic Summit 2020, she said that Egypt could become one of only three economies across the Middle East to achieve economic growth this year.

The growth followed reforms that helped make the Egyptian economy “more flexible” and “able to absorb external shocks,” she said.

Al-Saeed said Egypt faced great challenges that led to imbalances in the monetary, financial and external axes, which caused a decline in Egyptian economic indicators. The rate of economic growth reached about 1.8 percent — less than the population growth rate.

The minister added that a plan to control population increase will begin in January 2021, as Egypt’s population is expected to grow by 2.5 million annually and reach 130 million in 2030.

Al-Saeed said that achieving development requires sustained economic progress to overcome weak population growth and the challenges facing the Egyptian economy in light of political and economic changes and the coronavirus pandemic.

The challenge helped Egypt commit to reforms based on comprehensive planning and an ambitious vision for the future, in the form of Egypt’s Vision 2030 sustainable development strategy, the minister said.

Egypt’s implementation of reforms since November 2016 led to “overall stability” and “comprehensive growth.” This was reflected in positive indicators that the Egyptian economy saw before the coronavirus outbreak, she added.

The rate of economic growth was about 5.6 percent in the first half of the 2019/2020 fiscal year, and about 5 percent during the third quarter. There was an average growth of 5.4 percent in the first nine months of the year, before the coronavirus outbreak.

Al-Saeed said that international institutions had “positive expectations” regarding the Egyptian economy.

She referred to the results of the World Economic Outlook report issued by the International Monetary Fund in October 2020, in which the Fund raised its expectations for Egypt’s gross domestic product growth to 3.5 percent for the year, compared with a previous forecast of 2 percent in the June report.

If the prediction is realized, it will make Egypt among only three economies in the Middle East and Central Asia to achieve economic growth this year.