WEEKLY ENERGY RECAP: Vaccine hopes spur demand

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Updated 22 November 2020

WEEKLY ENERGY RECAP: Vaccine hopes spur demand

  • Refiners in Asia are ramping up in anticipation of the winter peak in demand for heating oil

Oil prices rose to their highest level in three months after recording a third weekly gain.

It came amid huge optimism for improving oil demand, driven by hopes for an effective coronavirus disease vaccine. 

This spurred speculators to return to the previously subdued futures markets.

The vaccine may prove to be the proverbial light at the end of the tunnel for refiners who have been idling capacity in response to the pandemic-triggered demand decline. Still, more closures are looming in Europe as refiners continue to battle against weak margins as demand for refined petroleum products is hit by renewed lockdowns. 

The picture is somewhat different in Asia where capacity is growing and at a stronger pace than expected.

Refiners in Asia are ramping up in anticipation of the winter peak in demand for heating oil. 

While new lockdowns in the US and Europe weighed on demand, Chinese refineries have processed vast quantities of crude in October. 

The world’s second-largest economy continues to show signs of improving oil demand as crude imports rose to 11.83 million barrels per day (bpd), showing big improvements on a month-to-month basis. 

Reuters reported an additional 100 million barrels in 2021 for private Chinese private refiners’ stockpile, which means that floating storage in China should have been depleted.

OPEC+ producers showed strong compliance in October that reached 101 percent,  cutting oil production by 7.7 million bpd.This bodes well for January when the group must decides on its strategy for the new year.

The producers  have all demonstrated great flexibility in responding to the situation at hand, and that dexterity is likely to continue.


Egypt plans big rail expansion, nears agreement with Bechtel

Updated 10 min 29 sec ago

Egypt plans big rail expansion, nears agreement with Bechtel

  • Egypt also plans a 438.5km fast rail at a cost of $8.2 billion

CAIRO: Egypt is rushing ahead with plans for an expansion of its metro and railway networks and is near agreement with Bechtel to implement Cairo’s sixth metro line, Transport Minister Kamel Al-Wazir said on Monday.

Speaking to the American Chamber of Commerce, Wazir said most of the bigger transport projects, which also include dry ports and river transport, should be finished by the end of 2024.

Egypt was working on a memorandum of understanding with Bechtel for feasibility studies and implementation of the $5 billion, 30km sixth metro line, he said.

“Just yesterday we had the contracts and we quickly reached near-agreement,” Wazir said.

“We told them to submit a written offer. If we reach agreement we will begin working at once and expedite all the contracts and agreements.”

Egypt had lined up finance for the metro line from Canada, America, Britain, France and Japan, Wazir said. He did not give its route, but reports have said it will run east of the Nile from north to south.

Last week, Egypt’s Orascom Construction said it and Japan’s Mitsubishi Corporation had signed an $800 million contract with Egypt’s National Authority for Tunnels for work on the 19km first phase of Cairo’s fourth metro line, with financing from Japan.

That line will extend underground from central Cairo to the Pyramids to the west, connecting 16 stations.

Among planned new railways around Cairo are a 49km $175 million line from 6th of October city to the Nile north of Cairo, a 69km $235 million cargo line from Bilbeis to eastern Cairo and a $435 million, 227km dual line to Atay Al-Baroud on the western edge of the Delta.

Egypt also plans a 438.5km fast rail at a cost of $8.2 billion.

In Alexandria it plans a $1.7 billion metro line to the eastern suburb of Abu Qir and a $406 million upgrade of an above-ground tramline through the city.