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.

 


A homegrown UAE brand bets on date’s heritage appeal

Updated 29 February 2020

A homegrown UAE brand bets on date’s heritage appeal

  • Dates are locally sourced by The Date Room from around 20 farms in the Al Ain oasis area of Abu Dhabi
  • UAE farms grow about 475,000 tons of dates a year, a significant percentage of which is exported

DUBAI: When you can answer the classic business question about a unique selling proposition (USP) in six different ways, you likely have a successful product on your hands.

Thankfully, when you are dealing with dates, unusual product features are not a problem.

There are more than 3,000 date varieties around the world, but Emirati brand The Date Room is approaching the sticky business of breaking into an established market with just half a dozen local cultivars.

From the buttery, caramel notes of the golden Kholas date to the lower-carbohydrate Razaiz type, their flavors offer a change from the more commonly available Medjool and Deglet Noor varieties.

Being locally sourced from about 20 farms in the Al-Ain oasis area of Abu Dhabi, they are also introducing UAE residents to the nation’s heritage.

“Emirati dates are unique because they’re generally much richer in taste and texture than others on the market — although they can be smaller in size,” said Tony N. Al-Saiegh, executive director of The Date Room.

The Date Room launched with two luxury boutiques in the UAE last November after founder Ahmed Mohamed bin Salem spotted a gap for local fruit in a market dominated by produce from Saudi farms.

While official market share by origin data is not available, Saudi dates may control close to 90 percent of the UAE’s retail market.

Yet, with an annual production of 755,000 tons, Saudi Arabia trails Egypt, Iran and Algeria, all of which produce in excess of a million tons each year, according to the UN Food and Agriculture Organization.

By contrast, UAE farms grow about 475,000 tons, a significant percentage of which is exported.

Dates are among the world’s oldest cultivated crops. The palm is native to the Middle East, North Africa and South Asia, with origins that go back more than 5,000 years to what is modern-day Iraq.

The appeal of dates has grown considerably in recent years. Their high fiber and mineral profile have led to their classification as a superfood, they have been used for their high natural sugar content in healthy natural alternatives to processed candy bars.

“The Date Room’s main initial motive was the fact that our own farms produce a superior quality of date in every way,” Al-Saiegh said.

“Our families have been enjoying these dates with every meal and occasion for generations, so why not introduce it to the market in a way that makes them available to everyone but also promotes the unique culture of the UAE?”

The company’s annual production runs to about 160 tons.

For now, distribution is restricted to the UAE, but Al-Saiegh says his team is in talks with distributors in India and Indonesia.

With farmers everywhere agonizing over the impact of climate change, what are the challenges facing date farmers, accustomed as their crops are to heat and aridity?

Scientists expect 2019 to be the second-hottest year on record after 2016, and they forecast that by 2070, today’s major producers will suffer from a markedly unsuitable climate.

Despite palm trees being able to tolerate the heat for hundreds of years, Al-Saiegh says his farms are already feeling the impact.

“As the weather gets hotter and the summers get longer, it’s drying out farms and (arable) land. This means more water is required because a lack of water affects the size and texture of the fruit,” he explains.

While the full impact of those changes is some years away, the Abu Dhabi government has focused on conserving the UNESCO World Heritage oasis where the UAE’s dates are grown.

On the other hand, given the way technology has transformed the local agricultural sector with solutions such as vertical, indoor and soilless farms, Al-Saiegh may soon be able to add another distinguishing feature to The Date Room’s USP.

• This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.