WEEKLY ENERGY RECAP: Strikes and storms

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Updated 10 October 2020

WEEKLY ENERGY RECAP: Strikes and storms

  • Hurricane Delta led to a outage of about 90 percent of production, the main contributor to price rises

Crude oil prices recovered to above the $40 barrier for both benchmarks after sharp falls a week earlier. Brent crude advanced to $42.85 per barrel while WTI gained to $40.60 per barrel.

It represented a substantial uplift in an otherwise tight trading range environment.

The Brent/WTI price spread rose to $2.25 per barrel, which means that both benchmarks are moving in parallel momentum.

Hurricane Delta led to a huge outage of about 90 percent of production (or about 5 million barrels per day of medium sour crude oil) from the US Gulf of Mexico.This was the main contributor to the rise in prices over the week.

Although latest data from the EIA showed that US crude oil production hit a nine-week high of 11 million barrels per day (bpd), that may not have yet reflected the shutdown of offshore oil platformsr. This type of crude oil is mostly used for middle distillate refined petroleum products such as diesel and Jet kerosene. As long as travel by road and air remains impacted by the coronavirus, refining margins for such products also remain under pressure.

The next test will come as refineries prepare to process crude for heating fuel as the market awaits signs of whether a severe or mild winter is coming.

Though the global oil market in general and the US oil market in particular have already factored in such output shutdowns and reduced refinery runs, the bigger worry is the growing uncertainty around the second wave of the coronavirus that has forced some countries to consider reverting to either full or partial lockdowns.

The likely fallout for air travel, which is already in a parlous state and accounts for almost 8 percent of global oil demand, is a concern.

An oil industry strike in Norway also helped to buoy prices, however it is unlikely to figure next week after a pay deal was reached.

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


India’s Reliance to push on with retail deal in battle with Amazon

Updated 26 October 2020

India’s Reliance to push on with retail deal in battle with Amazon

  • The row is the latest development in a prolonged battle for dominance in India between Reliance

MUMBAI: Indian conglomerate Reliance has dismissed Amazon’s push to delay its acquisition of domestic retail giant Future Group, despite an arbitration panel suspending the deal following objections by the US online titan.
The row is the latest development in a prolonged battle for dominance in India between Reliance, owned by Asia’s richest man Mukesh Ambani, and Amazon, whose founder Jeff Bezos is the world’s wealthiest person.
Amazon, which owned a stake in one of Future Group’s firms that reportedly included an option to buy into the flagship company, claims that the $3.4-billion Reliance deal, announced in August, amounted to a breach of contract.
After an arbitration panel ordered the deal to be put on hold following Amazon’s request, Reliance said late Sunday that it would nevertheless “enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay.”
Reliance’s retail subsidiary RRVL said in a statement that it had followed “proper legal advice” before agreeing to buy Future Group, adding that the deal was “fully enforceable under Indian Law.”
Reliance, Amazon and Walmart-backed Flipkart have been locked in a frenzied contest for a share of India’s lucrative online market.
The acquisition of Future Group, which owns some of India’s best-known supermarket brands such as Big Bazaar, would strengthen Reliance’s presence in the hugely competitive e-commerce sector.
The arbitration panel has 90 days to give a final verdict on the Reliance-Future deal.