WEEKLY ENERGY RECAP: Oil price fights infection

China will be able to soften the crude oil demand hit from coronavirus after the government reported the lowest number of new cases. (AP/File)
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Updated 23 February 2020

WEEKLY ENERGY RECAP: Oil price fights infection

  • Of greater concern is the big drop in demand for oil in China — especially from Russia

Crude oil prices recorded their second weekly gain despite the pall of coronavirus hanging over commodity markets. 

Brent crude advanced to $58.50 per barrel and WTI rose to $53.46 per barrel on optimism that China will be able to soften the crude oil demand hit from coronavirus after the government reported the lowest number of new cases.

Nevertheless, oil has lost about 15 percent since the beginning of the year on fears that the outbreak will squeeze global energy demand.  Now the market is wondering if it is possible for the Brent price to break the $60 barrier before OPEC’s much anticipated meeting in early March.

While supply disruptions in Libya continue to affect the market, analysts have grown somewhat weary with their impact.

Of greater concern is the big drop in demand for oil in China — especially from Russia, where the spot price for Russian East Siberia Pacific Ocean crude (ESPO) has weakened further.

Lower Chinese refinery demand has caused floating storage to accumulate offshore in China where most of these idling (anchoring) very large crude carriers have been loaded with March barrels and not yet with April deliveries. 

The market has also started to see the impact on lower refining margins in Asia and Europe.

This is largely as a result of lower demand for petroleum refined products — especially for the Jet fuel which has been affected by global flight restrictions related to coronavirus.

Jet fuel prices are now expected to fall to near-record lows. 

Lower demand for petroleum-refined products in China has led Beijing to cut gasoline and diesel retail prices for the second time in 2020. 

This reflects China crude oil demand, which has fallen by about a third.

The US Energy Information Administration (EIA) lowered its outlook for crude oil demand growth.

That took into account not only coronavirus but also lower-than-expected heating fuel consumption caused by the Northern Hemisphere’s warmer winter.


Bayut and Dubizzle fire M&A starting pistol

Updated 02 June 2020

Bayut and Dubizzle fire M&A starting pistol

  • The two owner companies will also run a $150 million investment round
  • EMGP will continue operating both Bayut and Dubizzle in the UAE

LONDON: The owners of Dubai-based listings sites Dubizzle and Bayut announced the merger of their MENA and South Asia operations as the regional property sector comes under pressure.

Dubai-based Emerging Markets Property Group (EMPG) and OLX Group made the disclosure in a statement carried by the UAE-based WAM news agency website.

The agreement includes a 550 million dirhams ($150 million) investment round, led by existing EMPG shareholders and OLX group. OLX has become EMPG’s largest single shareholder with 39 percent of shares, the statement said.

Both sites are known for their extensive listings in the real estate sector which has come under renewed pressure in recent months because of the coronavirus pandemic.

“This merger of EMPG and OLX will allow us to better serve our customers, given that both operate brands with a strong following and will allow us to leverage existing tech and data to paint a more accurate picture of the state of affairs in the real estate industry across the region,” said Haider Ali Khan, the head of EMPG — MENA . “At the same time, we will be making significant technology investments to provide more value to all users of property, automotive and other segments of the Dubizzle and OLX platforms.”

Merger and acquisition (M&A) activity is expected to accelerate this year as companies facing disruption from the coronavirus pandemic seek to cut costs and adapt to a rapidly changing marketplace.

Ali Maabereh, head of mergers and acquisition (M&A) at KMPG in Saudi Arabia predicted M&A activity will increase in GCC countries large corporates seek capital injections to satisfy working capital needs.

“The current pandemic is creating a lot of uncertainties and contradictions in what to expect after the dust settles. The expected key impacts on companies are shortages of liquidity and working capital requirements. Though companies might be running a healthy P&L, there will be significant pressure on working capital requirements,” he said.