WEEKLY ENERGY RECAP: US crude glut caps prices

WEEKLY ENERGY RECAP: US crude glut caps prices
A picture taken on July 30, 2020 shows the exterior of the Shell Pernis site in Rotterdam. (AFP)
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Updated 01 August 2020

WEEKLY ENERGY RECAP: US crude glut caps prices

WEEKLY ENERGY RECAP: US crude glut caps prices

Brent crude nudged up to $43.40 per barrel after another steady week. Interestingly, Brent crude rose as futures weakened. That indicates abundant quantities of physical oil or an increased difficulty in placing barrels.

The US WTI oil benchmark took a different direction to Brent, falling to $40.27 per barrel. That may have been triggered by the historically large drop in US second-quarter gross domestic product.

WTI retreated despite US commercial crude stocks falling by 10.61 million barrels, which is the largest draw since the 11.5 million-barrel fall reported for the end of December 2019. 

This brings US inventories to a 14-week low amid rising crude oil exports that climbed to 3.21 million barrels per day (bpd). The drop in spare oil was also linked to rising consumption by refineries, which at 14.6 million bpd is the strongest since March.

Still, according to Energy Information Administration data, US crude inventories remain nearly 18 percent above the five-year average for this time of year.

The fact that US crude storage draws came amid persistently lower crude imports and higher crude exports, should have normally moved the price of US crude higher. 

Instead, it moved lower, despite the weakening of the US dollar. This may be telling the market that oil prices cannot move much higher until the huge storage glut is absorbed.

As oil prices remain steady for the third month in a row, the forward futures curve has weakened, creating a situation where increased production is favored even as refining demand recovered. This is clearly reflected in the WTI futures price curve. Rising coronavirus infections in some US states continue to weigh on market sentiment.

Rising oil demand in Asia could also be capped by a second wave of the virus. Notwithstanding such concerns, gasoline demand has improved to pre-pandemic levels in many countries.

The competition between these two forces of recovery and remission in the global spread of the virus will determine where the oil price settles in the months ahead.

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• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq


Saudi ports container handling rises 6% in December

Saudi ports container handling rises 6% in December
Updated 11 min 57 sec ago

Saudi ports container handling rises 6% in December

Saudi ports container handling rises 6% in December
  • The total cargo tonnage handled at Saudi ports in December 2020 reached more than 26 million tons
  • This increase comes as a result of the current development processes that includes raising the level of operational and logistical performance and enhancing the competitiveness of the services provided to beneficiaries

Saudi ports saw an increase of 6 percent year-on-year (YoY) in the number of containers handled in December 2020 to 631,000 twenty-foot equivalent unit (TEU).

The total cargo tonnage handled at Saudi ports in December 2020 reached more than 26 million tons, via 1,032 vessels, according to the monthly statistical bulletin of Saudi Ports Authority (Mawani).

The total vehicles cargo reached 89,000, while livestock cargo rose by 18 percent to reach more than 173,000.

This increase comes as a result of the current development processes that includes raising the level of operational and logistical performance and enhancing the competitiveness of the services provided to beneficiaries, in addition to developing quays and raising the capabilities of the infrastructure and capacities in such a vital sector, thus fulfilling the requirements of development, the national economy and global supply chains, Mawani said.