Weekly Energy Recap: Market builds momentum

Beyond the geopolitical sphere, the year started with a fresh round of deeper OPEC+ cuts. (Reuters/File Photo)
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Updated 04 January 2020

Weekly Energy Recap: Market builds momentum

RIYADH: The oil market closed out 2019 on a bullish note with prices again on the upswing. The weekend air strikes in Baghdad triggered another surge in the market.
Beyond the geopolitical sphere, the year started with a fresh round of deeper OPEC+ cuts, with the group cutting a further 500,000 bpd on top of the earlier agreed 1.2 million bpd.
This coincided with a huge fall in US crude inventories in the last week of 2019 by some 7.8 million barrels.
Such developments have made for a very tight market with room for further appreciation, especially given the improving macroeconomic backdrop and signs of a thaw in US-China trade relations.
It is noteworthy that some US oil workers are leaving Iraq, even if Iraqi officials insist production will not be affected by attacks early Friday that killed a top Iranian military commander.
Still, it highlights an obvious supply risk and one wonders if the psychology of the market may shift from fears around a potential supply surplus to worries of a supply shortage and in turn, whether this will be enough to encourage upward momentum in US exploration and production spending this year.


Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.