WEEKLY ENERGY RECAP: Market awaits major OPEC+ meet

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Updated 18 October 2020

WEEKLY ENERGY RECAP: Market awaits major OPEC+ meet

  • US crude oil inventories have dropped by 3.83 million barrels

Oil prices were relatively stable despite increasing pessimism and skepticism about the slow pace of the oil demand recovery. By the end of the week, prices had settled near the levels of a week earlier. Brent crude edged higher to $42.93 per barrel while WTI crude also ticked up to $40.88 per barrel. The spread between the pair narrowed to $2.05 per barrel.

The news of the week would in other circumstances have sent the price tumbling as a second wave of the virus in Europe triggered stronger distancing measures.

However the continuing efforts of OPEC+ producers helped to alleviate the downward pressure on prices despite some speculation that cohesion within the group was starting to fray ahead of the upcoming OPEC+ Joint Ministerial Monitoring Committee (JMMC) meeting this week.

It will assess oil market conditions and output cuts compliance ahead of the OPEC+ meeting scheduled for the end of November.

That gathering will decide whether to ease the existing 7.7 million bpd of output cuts to 5.7 million bpd from January 2021 onward (as already agreed in April) or to keep the output cuts unchanged because of rising inventories levels.

Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin had a phone conversation to assess current market conditions ahead of the next meeting and to emphasize continued cooperation between the countries.

Such cooperation has been extremely effective thus far in stabilizing oil markets during a frenetic period for the global economy.

The partnership between producers from inside and outside OPEC — a partnership in which the Kingdom and Russia played a leadership role — has been a big confidence booster for energy markets.

US crude oil exports hit a 14-month-low amid weak export demand, declining to 2.1 million bpd, which is alarmingly close to the levels of August 2019.

It suggests that US crude oil exports will further drop next year if prices fail to rise above close to the $40 mark and if the pandemic continues to cripple economies, which could lead to an oil surplus next year. 

The latest EIA data showed that US crude oil inventories have dropped by 3.82 million barrels but still remain about 10 percent above the five-year average.

Ski resorts out in the cold as France eases lockdown

Updated 27 November 2020

Ski resorts out in the cold as France eases lockdown

  • Frustrated resort operators count the cost of holiday season restrictions

MEGEVE, France:  Megeve, in the foothills of Mont Blanc, was gearing up to welcome back skiers before Christmas after a COVID-19 lockdown was eased.

But France’s government — while allowing cinemas, museums and theaters to reopen from Dec. 15 — says its ski slopes must stay off limits until 2021, leaving those who make their living in the Alpine village frustrated and, in some cases, perplexed.

“When you’re outside, when you’re doing sport outdoors, that’s not the moment when you’re going to give COVID-19 to someone. COVID-19 is passed on in enclosed places,” said Pierre de Monvallier, director of ski school Oxygene, which operates in several resorts including Megeve.

Announcing a phased easing of the lockdown on Tuesday, French President Emmanuel Macron said it was “impossible to envisage” re-opening ski slopes for Christmas and New Year, and that he preferred instead to do so during January.

“It felt like the door had been slammed in our face,” said Catherine Jullien-Breches, the mayor of Megeve, whose green slopes are generally covered with snow by mid-December.

“Unfortunately it’s a real drama for the economies of the villages and the winter sports resorts.”

People who live within 20 km of France’s Alpine resorts will able to visit from this weekend, but with the lifts staying shut, the main draw is missing.

“It’s like going on holiday on the Cote d’Azur and being told the sea is off limits,” said David Le Scouarnec, co-owner of Megeve’s Cafe 2 la Poste.

The problem for the resorts — and the hotels, restaurants, and workers who depend on them for their livelihood — is that their season is short, and they will have little time after the New Year to claw back lost revenue.

Other European authorities are wrestling with the same problem. Italy’s resorts regions are seeking approval for restricted skiing, but Austria, whose biggest cluster of the first wave of the pandemic was at the ski resort of Ischgl — where thousands were infected — is skeptical.

Prevarication cuts little ice, however, with Mathieu Dechavanne, Chairman and CEO of Compagnie du Mont-Blanc, which operates cable cars at Megeve and other resorts.

He said who could not understand why the government allowed trains and metros to operate, but barred him from re-opening. “It’s like we’re being punished. We don’t deserve this. We’re ready.”