WEEKLY ENERGY RECAP: Crude oil prices deteriorated sharply

Because of copious US shale oil supplies, the West African crude oil market continues to struggle with the ripple effects of the Atlantic basin being awash in crude oil availability. (File/AP)
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Updated 26 January 2020

WEEKLY ENERGY RECAP: Crude oil prices deteriorated sharply

Crude oil prices deteriorated sharply over the week, with Brent crude falling to $60.69 per barrel, the lowest in nearly two months. 

WTI dropped to $54.19 per barrel the lowest since October 2019. Pessimism seems to be back after fears that China’s coronavirus outbreak may dent crude oil demand. Still, China crude oil imports are increasing and the crude price encourages more buying to build up Chinese inventories.

Libyan supply interruptions are also affecting the market, where a similar type of light sweet oil to West African crude is made.

Traders have largely ignored Libyan supply issues because the market has become used to supply outages since 2011.

West African crude oil has usually stepped in to the fill the gap in European and the Mediterranean markets. At the same time the US shale oil revolution of the last six years has meant that less of this type of crude from West Africa has been sent to the US.

If the Libyan oil was a medium sour crude grade like the Arabian Gulf crude oil grades, the market situation would be different as this type of oil cannot be easily replaced.

Because of copious US shale oil supplies, the West African crude oil market continues to struggle with the ripple effects of the Atlantic basin being awash in crude oil availability. 

Over the longer term, prospects look bleak for European refinvers and Nigerian crude sales by implication. 

Big new refineries in Asia are posing stronger competition to Europe’s products market, as are US oil product exports which have been made cheaper and more plentiful by the growth of shale oil. Noticeably, shale oil has already displaced West African barrels from the US market. 

Today, the marginal barrel of crude oil has become extremely light, starving sophisticated refiners of heavy crude oil and thereby narrowing light/heavy differentials. 

This has meant heavier crude grades have been outperforming lighter sweet crude grades in recent years, so the loss of Libyan crude did not have a major impact.


Gradual Irish economic recovery has begun, finance minster says

Updated 05 June 2020

Gradual Irish economic recovery has begun, finance minster says

  • Donohoe said it was not surprising that data on Friday showed the domestic economy grew at a subdued pace in the first quarter
DUBLIN: Up-to-date economic data suggests Ireland is now past the low point of the economic crisis forced by the coronavirus lockdown of its economy, and a gradual recovery is setting in, Finance Minister Paschal Donohoe said on Friday.
Donohoe said it was not surprising that data on Friday showed the domestic economy grew at a subdued pace in the first quarter ahead of what he called an "unprecedented contraction" in nearly all sectors likely to be registered in the second quarter.
"However, incoming data including ultra-high-frequency data suggest that we are now past the low point and a gradual recovery is now setting in as restrictions are gradually being relaxed," he said in a statement.