Weekly Energy Recap: Market builds momentum

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

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.


IMF chief sees ‘high degree of uncertainty’ in global outlook

IMF chief sees ‘high degree of uncertainty’ in global outlook
Updated 19 min 36 sec ago

IMF chief sees ‘high degree of uncertainty’ in global outlook

IMF chief sees ‘high degree of uncertainty’ in global outlook
  • IMF had rapidly increased concessional financing to emerging market and developing economies

WASHINGTON: The head of the International Monetary Fund on Monday said the global lender needed more resources to help heavily indebted countries, citing a highly uncertain global economic outlook and a growing divergence between rich and poor countries.
IMF Managing Director Kristalina Georgieva, who has long advocated a new allocation of the IMF’s own currency, Special Drawing Rights (SDRs), said doing so now would give more funds to use address both the health and economic crisis, and accelerate moves to a digital and green economy.
Under outgoing President Donald Trump, the United States, the IMF’s largest shareholder, has blocked such a new SDR allocation, a move akin to a central bank printing money, since it would provide more resources to richer countries since the allocation would be proportionate to their shareholding.
Swedish Finance Minister Magdalena Andersson, the new chair of the IMF’s steering committee speaking at an online news conference with Georgieva, said it was clear the need for liquidity remained great, and she would consult with member countries on options for expanding liquidity.
Andersson, the first European to head the International Monetary and Financial Committee in more than 12 years and the first women, started her three-year term in the role on Monday.
Georgieva said the IMF had rapidly increased concessional financing to emerging market and developing economies, including through donations by member countries of some $20 billion in existing SDRs. That would continue to play an important role, but further steps were needed, she said.
“It will continue to be so important, even more important, for us to be able to expand our capacity to support countries that have fallen behind,” Georgieva said.
She said a new SDR allocation had never been taken off the table by IMF members, she said, adding that some members continued to discuss it as a possible move. A possible sale of gold from the IMF’s reserves would have “some opportunity costs” for the IMF, but would be up to members, she said.
She said she expected the Group of 20 major economies to extend the current moratorium in official debt service payments by the poorest countries, now slated to end in June, but much would depend on the pace of vaccinations in coming months.