The International Energy Agency says the world oil market appears to be rebalancing, despite lower-than-expected demand in the first part of the year.
“Rebalancing is essentially here and, in the short term at least, is accelerating,” the IEA declared in its latest monthly oil market report, which comes nine days before the May 25 Opec meeting, when the member countries and their outside partners will decide what steps they need to take next to keep that rebalancing on track.
The IEA, a Paris-based energy watchdog for consumer countries, said that Opec and its 11 supporting non-member countries, led by Russia, have been complying fairly well with their deal but noted that the US oil sector has rebounded strongly, while Libya and Nigeria, exempt from Opec’s deal, have also shown strong improvement.
The agency said it is sticking with its forecast for demand to grow by 1.3 million barrels per day, to 97.9 million bpd, over the whole year, despite lower-than-expected demand so far this year. It warns, however, that even with better demand and continued supply restraint, absorbing the enormous glut of oil will be slow going.
“The IEA gave a pretty cautious endorsement of the effectiveness of Opec’s production cuts, anticipating that global inventories would start to see draws from the second quarter onward,” said Ed Bell, the head of commodities research at Emirates NBD bank in Dubai. “But getting inventories close to their five-year average is doubtful with the current scale of Opec’s limited output.”
Demand in the US was particularly disappointing early this year, according to the report, with February demand down 500,000 bpd on the previous year at 19.2 million bpd.
Other poorly performing major oil markets include Germany, Turkey and India, with the latter a big let-down for oil sellers as their hopes have been pinned on the subcontinent to take over from China as the biggest single source of oil demand growth over the next few years.
The IEA said the effects are still being felt of India’s demonitisation policy, where the government bungled its attempt earlier this year to take cash out of the economy – to curb the black market, among other things – thus hurting demand across a number of sectors, including oil products.
China compensated for most of the weakness in the US in the first quarter and is expected to continue to be one of the main growth stories this year, with “robust economic activity and continued expansions in the petrochemical sector [meaning] China [will] account for roughly one-third of global oil demand growth” this year, the IEA reckons.
Furthermore, it is banking on demand coming back strong in India later this year, so that China and India together will account for three quarters of world demand growth for the year.
The IEA is also looking for a sharp upturn in refinery crude runs to make up for slower demand early on this year. “Starting in March, refinery activity is building up and by July global crude throughputs will have increased by 2.7 million bpd,” the IEA predicts.
On the supply side, it noted the continued surprisingly strong performance in the US. After bottoming out last September, output there increased by nearly 465,000 bpd to the end of February to more than 9 million bpd, it’s highest in a year. The IEA now expects US output to increase by 790,000 bpd this year, up by 100,000 bpd from its previous prediction.
Toward the end of the year, even if the producers’ goal of getting inventories toward their five-year average is achieved, “the market will hardly be in a position where it’s short of oil”, says Mr Bell, who notes that the OECD’s stocks will still be higher than when the oil price slump started three years ago in terms of days demand cover. “Russia and Saudi Arabia more or less acknowledged this yesterday when they announced their support for a nine-month extension of the deal,” he says.
There are a number of analysts now seeing the glut lasting well beyond the early part of next year. “In our current base case, we see 2018 as being strongly oversupplied, to the tune of close to 1.5 million bpd in the broader oil complex on average for the year,” says Eugene Lindell, the chief oil analyst at JBC Energy in Vienna. “The potential extension of the cuts programme to the end of March would not alter this picture drastically.”
amcauley@thenational.ae
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Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
if you go
The flights
The closest international airport to the TMB trail is Geneva (just over an hour’s drive from the French ski town of Chamonix where most people start and end the walk). Direct flights from the UAE to Geneva are available with Etihad and Emirates from about Dh2,790 including taxes.
The trek
The Tour du Mont Blanc takes about 10 to 14 days to complete if walked in its entirety, but by using the services of a tour operator such as Raw Travel, a shorter “highlights” version allows you to complete the best of the route in a week, from Dh6,750 per person. The trails are blocked by snow from about late October to early May. Most people walk in July and August, but be warned that trails are often uncomfortably busy at this time and it can be very hot. The prime months are June and September.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
MATCH INFO
Manchester City 3
Danilo (16'), Bernardo Silva (34'), Fernandinho (72')
Brighton & Hove Albion 1
Ulloa (20')
UAE currency: the story behind the money in your pockets
THE BIO
Family: I have three siblings, one older brother (age 25) and two younger sisters, 20 and 13
Favourite book: Asking for my favourite book has to be one of the hardest questions. However a current favourite would be Sidewalk by Mitchell Duneier
Favourite place to travel to: Any walkable city. I also love nature and wildlife
What do you love eating or cooking: I’m constantly in the kitchen. Ever since I changed the way I eat I enjoy choosing and creating what goes into my body. However, nothing can top home cooked food from my parents.
Favorite place to go in the UAE: A quiet beach.
The Energy Research Centre
Founded 50 years ago as a nuclear research institute, scientists at the centre believed nuclear would be the “solution for everything”.
Although they still do, they discovered in 1955 that the Netherlands had a lot of natural gas. “We still had the idea that, by 2000, it would all be nuclear,” said Harm Jeeninga, director of business and programme development at the centre.
"In the 1990s, we found out about global warming so we focused on energy savings and tackling the greenhouse gas effect.”
The energy centre’s research focuses on biomass, energy efficiency, the environment, wind and solar, as well as energy engineering and socio-economic research.
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
COMPANY PROFILE
Name: Lamsa
Founder: Badr Ward
Launched: 2014
Employees: 60
Based: Abu Dhabi
Sector: EdTech
Funding to date: $15 million
Name: Brendalle Belaza
From: Crossing Rubber, Philippines
Arrived in the UAE: 2007
Favourite place in Abu Dhabi: NYUAD campus
Favourite photography style: Street photography
Favourite book: Harry Potter
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Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
The specs: 2018 Ducati SuperSport S
Price, base / as tested: Dh74,900 / Dh85,900
Engine: 937cc
Transmission: Six-speed gearbox
Power: 110hp @ 9,000rpm
Torque: 93Nm @ 6,500rpm
Fuel economy, combined: 5.9L / 100km
If you go
Flying
Despite the extreme distance, flying to Fairbanks is relatively simple, requiring just one transfer in Seattle, which can be reached directly from Dubai with Emirates for Dh6,800 return.
Touring
Gondwana Ecotours’ seven-day Polar Bear Adventure starts in Fairbanks in central Alaska before visiting Kaktovik and Utqiarvik on the North Slope. Polar bear viewing is highly likely in Kaktovik, with up to five two-hour boat tours included. Prices start from Dh11,500 per person, with all local flights, meals and accommodation included; gondwanaecotours.com
