Expectations for next month’s Opec ministerial meeting now weigh heavily on the oil market after the sharpest sell-off in years over the past month, analysts said.
The declines continued on Thursday, leaving benchmark Brent crude futures down 72 cents late in the UAE day at US$83.06, the lowest price in four years. In New York, West Texas Intermediate futures were off $1.36 at $80.42, while on the Dubai Mercantile Exchange the Oman crude contract closed down 98 cents at $82.76. The losses since the midsummer high, when Brent was above $115 a barrel, are now approaching 30 per cent.
A wide range of banks have now lowered their oil price forecasts, a move that should be seen more as recognition of the reality that has set in. The new price ranges from banks such as Barclays, Macquarie, Deutsche Bank, ANZ and Société Générale still vary widely – from low $80s to nearly $100 for the rest of this year, and from low $80s to well above $100 for next year – but there was some level of consensus about the main issues facing the market.
In the near term, the scheduled meeting of Opec’s oil ministers on November 27 now looms large. Even though analysts differ on whether Opec even has the power to influence the market, the very fact that it has been given such importance now means that an agreement to cut production – or a lack thereof – will set the tone for the market for the rest of this year.
As ever, Saudi Arabia’s is the most important voice and comments by the oil minister, Ali Al Naimi, in recent weeks have been taken by many to mean the Saudis are prepared to accept oil prices down near $80 a barrel for some time.
“My interpretation is that this is a negotiating position,” said Peter Stewart, the chief energy analyst at Interfax Energy Services. “Saudi wants to be in a position where if it cuts production then it wants to make sure the pain is shared by other Opec members. It is going to be a very interesting meeting, but what the Saudis absolutely do not want is that they cut and then prices stay at $80 and they get a double-whammy – lower production and lower prices.”
Another point of agreement is that the world economy and energy demand growth are the single-most important factors for the medium term. This was evident in the huge oil futures sell-off that followed the report earlier this week from the International Energy Agency in which it lowered its forecast oil demand for this year and next. Though the move was entirely predictable given that the IMF and others had already downgraded their forecasts for global economic growth, the IEA report seemed to jolt the oil market, perhaps because it also reported that Opec crude production had surged to a 13-month high last month, mainly because of extra output from Libya.
“There are a lot of fears about the macroeconomy, and even though the physical oil market looks better, this is a macro move,” said Amrita Sen, an oil analyst at Energy Aspects, a research company. “Longer-term, non-Opec supply will be impacted – there are a lot of expensive projects out there. But that won’t save us near term.”
Whether oil prices at the new lower levels will curb some of the more expensive oil producers remains an open question.
Last week the Energy Information Agency in the United States reported that total US crude oil production averaged 8.7 million barrels per day in September, the highest monthly production since July 1986. Last year, production averaged 7.4 million bpd and it is expected to average 9.5 million bpd next year, which would be the highest since 1970.
Much of that is shale oil, and analysts have speculated that Saudi Arabia is hoping lower oil prices will discourage some of the investment in that sector. According to Mr Stewart, break-even oil prices for shale oil projects vary widely, from about $80 a barrel to as low as $40.
Nevertheless, Michael Lewis, the chief commodities strategist at Deutsche Bank, said that lower US shale (or “tight”) oil production offers some hope to Opec if it has the patience.
“In the event of a failure of Opec to respond promptly to oil price declines, we note that 9 per cent of 2015 US tight oil production would become uneconomic at $90 [a barrel for Brent] and 39 per cent at $80,” he said.
amcauley@thenational.ae
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
Company%20Profile
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Company%20Profile
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COMPANY%20PROFILE
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The Year Earth Changed
Directed by:Tom Beard
Narrated by: Sir David Attenborough
Stars: 4
Company%20profile
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COMPANY%20PROFILE%20
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Cinco in numbers
Dh3.7 million
The estimated cost of Victoria Swarovski’s gem-encrusted Michael Cinco wedding gown
46
The number, in kilograms, that Swarovski’s wedding gown weighed.
1,000
The hours it took to create Cinco’s vermillion petal gown, as seen in his atelier [note, is the one he’s playing with in the corner of a room]
50
How many looks Cinco has created in a new collection to celebrate Ballet Philippines’ 50th birthday
3,000
The hours needed to create the butterfly gown worn by Aishwarya Rai to the 2018 Cannes Film Festival.
1.1 million
The number of followers that Michael Cinco’s Instagram account has garnered.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
COMPANY%20PROFILE%20
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BACK%20TO%20ALEXANDRIA
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ETamer%20Ruggli%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ENadine%20Labaki%2C%20Fanny%20Ardant%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3.5%2F5%3C%2Fp%3E%0A
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Company info
Company name: Entrupy
Co-founders: Vidyuth Srinivasan, co-founder/chief executive, Ashlesh Sharma, co-founder/chief technology officer, Lakshmi Subramanian, co-founder/chief scientist
Based: New York, New York
Sector/About: Entrupy is a hardware-enabled SaaS company whose mission is to protect businesses, borders and consumers from transactions involving counterfeit goods.
Initial investment/Investors: Entrupy secured a $2.6m Series A funding round in 2017. The round was led by Tokyo-based Digital Garage and Daiwa Securities Group's jointly established venture arm, DG Lab Fund I Investment Limited Partnership, along with Zach Coelius.
Total customers: Entrupy’s customers include hundreds of secondary resellers, marketplaces and other retail organisations around the world. They are also testing with shipping companies as well as customs agencies to stop fake items from reaching the market in the first place.
DMZ facts
- The DMZ was created as a buffer after the 1950-53 Korean War.
- It runs 248 kilometers across the Korean Peninsula and is 4km wide.
- The zone is jointly overseen by the US-led United Nations Command and North Korea.
- It is littered with an estimated 2 million mines, tank traps, razor wire fences and guard posts.
- Donald Trump and Kim Jong-Un met at a building in Panmunjom, where an armistice was signed to stop the Korean War.
- Panmunjom is 52km north of the Korean capital Seoul and 147km south of Pyongyang, North Korea’s capital.
- Former US president Bill Clinton visited Panmunjom in 1993, while Ronald Reagan visited the DMZ in 1983, George W. Bush in 2002 and Barack Obama visited a nearby military camp in 2012.
- Mr Trump planned to visit in November 2017, but heavy fog that prevented his helicopter from landing.
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Mohammed bin Zayed Majlis
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
Company%20profile
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Honeymoonish
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Fire and Fury
By Michael Wolff,
Henry Holt
The Penguin
Starring: Colin Farrell, Cristin Milioti, Rhenzy Feliz
Creator: Lauren LeFranc
Rating: 4/5
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
