WEEKLY ENERGY RECAP: Calm after the storm

An oil tanker and a container ship sit off shore of the port of the Long Beach during the outbreak of the coronavirus disease (COVID-19) in Long Beach, California, US. (Reuters)
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Updated 31 May 2020

WEEKLY ENERGY RECAP: Calm after the storm

  • The rebound came as countries began to reopen after coronavirus lockdowns

Crude oil prices capped a fifth week of gains without the volatility that characterized much of April when prices plummeted.

Brent crude rose to $35.33 per barrel as WTI advanced to $35.49. 

The spread between Brent and WTI has also been narrowing over the last three weeks, closing last week at $1.87 per barrel. But this week closed at nearly parity.

This may point to speculators overextending in WTI Nymex futures.

While WTI crude registered its highest ever month-to-month movement, it remains about 94 percent below its level at the start of the year. And the current price is still not high enough to encourage upstream capital spending that would help to lift production.

OPEC+ producers gave the market a confidence boost by following through on commitments to crude oil output supplies cuts.

US-China trade tensions, while certainly back in full swing, did not significantly affect price movements over the week.

The average Brent price rose to $28 per barrel in May from $18 per barrel in so-called “Black April,” which was the strongest monthly gain in prices in 21 years.

The rebound came as countries started to reopen after coronavirus-related lockdowns. 

However, prices are moving in a narrow range consistent with the gradual pace of the global recovery. This is what the oil market needs.

The US Energy Information Administration reported a huge jump in the weekly crude oil inventory by 8 million barrels, which is the largest inventory build in four weeks. That brought the overall inventory up to to 535 million barrels, which while significant, did not affect oil prices.

Baker Hughes reported the ninth consecutive week for oil and gas rig declines in the US. They fell to to 301 —  683 lower than this time last year.




Saudi Arabia’s 6-point plan to jumpstart global economy

Updated 07 July 2020

Saudi Arabia’s 6-point plan to jumpstart global economy

  • Policy recommendations to G20 aim to counter effects of pandemic

DUBAI: Saudi Arabia, in its capacity as president of the G20 group of nations, has unveiled a six-point business plan to jump start the global economy out of the recession brought on by the COVID-19 pandemic.

Yousef Al-Benyan, the chairman of the B20 business group within the G20, told a webinar from Riyadh that the response to the pandemic -— including the injection of $5 trillion into the global economy — had been “reassuring.”

But he warned that the leading economies of the world had to continue to work together to mitigate the effects of global lockdowns and to address the possibility of a “second wave” of the disease.

“Cooperation and collaboration between governments, global governance institutions and businesses is vital for an effective and timely resolution of this multi-dimensional contagion transcending borders,” Al-Benyan said.

“The B20 is strongly of the view there is no alternative to global cooperation, collaboration and consensus to tide over a multi-dimensional and systemic crisis,” he added.

The six-point plan, contained in a special report to the G20 leadership with input from 750 global business leaders, sets out a series of policy recommendations to counter the effects of the disease which threaten to spark the deepest economic recession in nearly a century.

The document advocates policies to build health resilience, safeguard human capital, and prevent financial instability.

It also promotes measures to free up global supply chains, revive productive economic sectors, and digitize the world economy “responsibly and inclusively.”

In a media question-and-answer session to launch the report, Al-Benyan said that among the top priorities for business leaders were the search for a vaccine against the virus that has killed more than half-a-million people around the world, and the need to reopen global trade routes slammed shut by economic lockdowns.

He said that the G20 response had been speedy and proactive, especially in comparison with the global financial crisis of 2009, but he said that more needed to be done, especially to face the possibility that the disease might surge again. “Now is not the time to celebrate,” he warned.

“Multilateral institutions and mechanisms must be positively leveraged by governments to serve their societies and must be enhanced wherever necessary during and after the pandemic,” he said, highlighting the role of the World Health Organization, the UN and the International Monetary Fund, which have come under attack from some world leaders during the pandemic.

Al-Benyan said that policy responses to the pandemic had been “designed according to each country’s requirements.”

Separately, the governor of the Saudi Arabian Monetary Authority said that it was “too early” to say if the Kingdom’s economy would experience a sharp “V-shape” recovery from pandemic recession.