WEEKLY ENERGY RECAP: Slow and steady recovery as demand emerges from lockdown

Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, US. (Reuters)
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Updated 24 May 2020

WEEKLY ENERGY RECAP: Slow and steady recovery as demand emerges from lockdown

  • Even tensions between the US and China did not dampen sentiment

Crude oil prices rose for the fourth consecutive week with signs of an easing supply surplus as a result of higher compliance with OPEC+ output cuts and the gradual lifting of coronavirus lockdowns globally.

Brent crude rose to $35.12 per barrel as WTI also advanced to $33.25 per barrel. The spread between both grades narrowed to $1.87 per barrel, keeping US crude oil exports less competitive compared to Brent-related barrels.

Even escalating tensions between the US and China over the pandemic did not dampen sentiment.

Oil prices now appear to be ticking higher, slowly but surely, giving market participants more confidence in an assured recovery.

Commodities markets are behaving much differently in May than they did in March and April as the emergence of some economies from lockdowns has improved overall sentiment.

The latest Commodity Futures Trading Commission (CFTC) report highlights where speculators think the market is heading.

Long positions rose by 9,478 contracts to a total of 680,253. Each contract equates to some 1000 barrels.

This was the first increase in about a month.

Turning to the physical market, the production cuts undertaken by producers have had a big impact, especially as underlying demand has picked up in countries that are emerging from lockdown.

Despite some question marks hanging over economic growth in China, the country’s oil imports have recovered and are already close to pre-pandemic levels. 

China’s oil demand has re- bounded to about 13 million barrels per day, which is close to the 13.4 million bpd level seen before the initial lockdown. This has allayed fears about a slower-than-expected economic recovery in China.


Abu Dhabi fund suspends debt service repayments for countries, companies

Updated 47 min 48 sec ago

Abu Dhabi fund suspends debt service repayments for countries, companies

  • Debt service repayments would be suspended for eligible countries and individual companies from Jan. 1 until Dec. 31

DUBAI: Abu Dhabi Fund for Development has suspended debt service repayments for some countries and companies for the year, the state-financed fund said on Sunday.
The fund provides financial assistance to companies in the United Arab Emirates and to developing countries, which has included Pakistan, Egypt, Sudan and Ethiopia.
Debt service repayments would be suspended for eligible countries and individual companies from Jan. 1 until Dec. 31, the fund said in a statement.
It did not say which countries or companies would benefit or what the criteria would need to be met to be eligible.
“At a time when the world is reeling under the effect of the pandemic ... it is imperative for us to support particularly those that need it most, especially the low-income countries,” the fund’s director general Mohammed Saif Al-Suwaidi said.