WEEKLY ENERGY RECAP: China deal should improve oil outlook

Chinese Vice Premier Liu He is handed a pen by U.S. President Donald Trump after signing "phase one" of the U.S.-China trade agreement during a ceremony in the East Room of the White House in Washington, U.S., January 15, 2020. (Reuters)
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Updated 19 January 2020

WEEKLY ENERGY RECAP: China deal should improve oil outlook

Crude oil prices traded flat over the week with Brent crude edging slightly lower to $64.85 per barrel and WTI weakening to $58.54. 

China was a major focus for traders. On one level, the US-China phase one trade deal injected some optimism into the market, but that was countered by troubling economic data. China’s 2019 gross domestic product rate grew by 6 percent, the slowest in 29 years.

Chinese refineries still processed a record high 13.04 million bpd of crude oil last year, which was an increase of 7.6 percent on 2018. 

Its 2019 crude oil imports grew 9.5 percent to 10.2 million bpd.

As the US-China trade dispute was the main reason for downward price movements throughout the year, a deal should produce optimism for a revival in global manufacturing, and thus stronger oil demand.

A short-term energy outlook report from the US Energy Information Administration (EIA) was relatively bullish. It also highlighted risk factors including supply disruptions and the pace of global economic growth that could push Brent prices out of the expected $60-$70 per barrel range in 2021.

The EIA expects US oil production growth to slow to 1.06 million bpd in 2020, dropping to 410,000 bpd in 2021 as rig counts stay low.

It estimates US oil production averaging 13.3 million bpd in 2020 and 13.71 million bpd in 2021. 

It expects Brent crude to average $64.83 per barrel and WTI at $59.25 per barrel in 2020. 

US oil output growth has dropped from the 1.64 million bpd year-on-year increase in 2018.

The IEA does not see any supply risks amid tension in the Arabian Gulf, but points to a sizable buffer against supply disruption because of the strong output and inventories of non-OPEC producers. 

This view may be questionable, though, especially given that oil inventories in OECD countries are currently only 9 million barrels above their five-year average — not the biggest of cushions.

 


Greece readies revival of coronavirus-hit economy

Updated 04 June 2020

Greece readies revival of coronavirus-hit economy

  • Tourism accounts for around 20 percent of Greek gross domestic product
  • Greece desperately needs to attract visitors this year

ATHENS: Greece geared up Thursday to revive its tourism-dependent economy, which shrank in the first quarter owing to measures against the coronavirus, the Elstat data agency said.
Prime Minister Kyriakos Mitsotakis is to headline an event later in the day to unveil a national tourism campaign for the virus-shortened season.
He has already warned the country that the economy would fall into a “deep recession” this year before rebounding in 2021.
Tourism accounts for around 20 percent of Greek gross domestic product (GDP), so it is crucial that visitors be attracted back to the nation’s beaches and iconic island villages.
Toward that end, Greece has announced a ‘bridge phase’ between June 15 and 30, during which airports in Athens and Thessaloniki will receive regular passenger flights.
Other regional and island airports are to open on July 1.
Greece plans to impose a seven- to 14-day quarantine only on travelers from only the hardest-hit areas as identified by the European Union Aviation Safety Agency (EASA).
Sample tests will also be carried out at entry points for epidemiological purposes however.
Provisional data released by Elstat showed how important it is to get the tourism sector back on its feet.
GDP fell by 1.6 percent in the first quarter of 2020 compared with the previous three months, and by 0.9 percent year-on-year, the data showed.
But data for March alone showed that month was not as bad as expected, government spokesman Stelios Petsas told a press conference.
Now, “Greece is opening its gates to the world under safe conditions for tourism workers, for residents of tourism destinations and of course, for our visitors,” he said.
With fewer than 180 coronavirus deaths among 11 million residents, Greece seeks to market itself as a healthy holiday destination.
On Tuesday, Athens said it was suspending flights to and from Qatar until June 15 after 12 people on a flight from Doha tested positive for COVID-19.
Earlier Thursday, Greek media reported that a first batch of nearly 190 tests among residents of the Cycladic islands, one of Greece’s most popular destinations, had turned up negative.
The country desperately needs to attract visitors this year.
The latest finance ministry estimate suggests that for 2020 as a whole, business activity could drop by up to 13 percent from the level in 2019.
Between 2009 and 2018, Greece suffered its worst economic crisis in modern times, and had begun to slowly regain some of the lost ground before it was hit by the impact of coronavirus restrictions.
The country was shut down for six weeks, and the International Monetary Fund forecast in May that GDP would decline by 10 percent this year before growing by 5.5 percent in 2021.