Oil prices double in three-month recovery from ‘Black Monday’

Saudi Arabia's Manifa oil field. The Kingdom oversaw agreements among the OPEC+ alliance to cut oil production. (Aramco)
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Updated 22 July 2020

Oil prices double in three-month recovery from ‘Black Monday’

  • Brent crude, the global benchmark, nudged the $45 level for most of the day
  • Rises come as e OPEC+ led by Saudi Arabia and Russia moved to stage two of their deal

DUBAI: Oil prices continued their steady recovery on Tuesday as traders absorbed the significance of last week’s OPEC+ continuation of historic output cuts.

Brent crude, the global benchmark, nudged the $45 level for most of the day, at one point hitting $44.89 — its highest in more than four months of tumultuous trading, and more than double its low point on “Black Monday” in April.

The OPEC+ alliance led by Saudi Arabia and Russia have moved to stage two of their deal, adding about 2million barrels per day (bpd) to the global market, much of it for domestic summer consumption.

Renewed optimism about big global economies reopening, especially in Asia, also boosted sentiment among traders. “Crude exports are keeping the market buoyant, with China buying as much as they can at levels that make refining margins look handsome,” said Matt Stanley, director of international oil trader StarFuels in Dubai.

China has emerged as a big buyer of crude oil at the historically low prices of the past few months, looking to have fuel on hand as its economy recovers fast from the coronavirus lockdown.

Imports to China by sea are up by around 3 million bpd, and a lot of that is in floating storage.

Saudi Aramco is a major supplier to China, and has been raising its selling prices there as demand has picked up again.

Analysts at the financial consultancy Seeking Alpha said there was a rebalancing under way in global oil markets, with global inventories falling at a rate of about 4 milion bpd from the high levels of oversupply at the height of the crisis.

“The Saudis in particular are well aware that the Chinese took full advantage of low oil prices,” the consultancy said.

Energy officials in Riyadh adopted a “wait and see” attitude to reports that Iraq was exporting more oil in July than it had agreed to under the OPEC+ deal. Baghdad had pledged to reach 100 per cent compliance and make up the shortfall by September, but is currently significantly below levels of compliance with the new cuts schedule.


Qatar Airways expects to keep Airbus A380s parked for years

Updated 19 October 2020

Qatar Airways expects to keep Airbus A380s parked for years

  • State-owned airline parked its 10 A380s due to the devastating impact of the coronavirus crisis on travel demand
  • Qatar Airways boss Akbar Al-Baker criticizes rivals operating the A380 as ‘foolish’

DUBAI: Qatar Airways does not expect to use its Airbus A380s for at least the next two years, its chief executive said on Monday, longer than a previous projection for the superjumbos to possibly return to service in 2021.
The state-owned airline has parked its 10 A380s due to the devastating impact of the coronavirus crisis on travel demand.
“We don’t think we are going to operate our A380s for at least the next couple of years,” Akbar Al-Baker told an online conference.
He had said in June the jets would remain parked until at least the middle of next year. The Gulf carrier plans to start retiring its A380s from 2024 when its oldest superjumbo reaches ten years of service.
The A380s would return once the airline saw the growth rate of 2019, before the pandemic struck, Baker said.
The 100 destinations to which the airline is currently flying is 25 fewer than planned due to a new wave of infections in Europe and travel restrictions, he said.
Baker criticized rivals operating the A380 as “foolish,” saying there was insufficient demand and so prices would be driven down.
Air France retired its A380s this year, while British Airways and Qantas retired their Boeing 747s as the crisis sent air travel into free fall.
Gulf carrier Etihad Airways is mulling whether its parked A380 fleet will ever return, while Emirates, the largest superjumbo operator, has resumed some services with the jet.