• The positive atmosphere in the oil market has grown with the hopes of controlling Corona increasing



    Oil prices resumed weekly gains after a series of consecutive losses after the spread of the Coronavirus in China, and Brent crude increased 5.23% in its first weekly gain, within six weeks, while American crude achieved a weekly increase of about 3.44%.
    The positive atmosphere in the market has grown with increasing hopes that China will quickly control the Coronavirus, as well as expecting new measures to revive the Chinese economy and bypass the current recession, while many are betting on the new step expected from the OPEC + coalition next March. Strong indications of a new reduction in production levels to meet the abundance of supplies in the markets and address the weak global demand for oil.
    In this context, the Organization of Petroleum Exporting Countries "OPEC" pointed to the assertion of Suhail Al Mazrouei, Minister of Energy and Industry in the Emirates, that oil has a bright future, as well as "OPEC", which is approaching the celebration of the 60th anniversary of its founding, pointing out that "OPEC" was and is still A steadfast force in leading the world towards further growth and prosperity, and there is a strong will towards continuing to play this role in the coming years.
    A recent report of the organization - quoting Al Mazrouei - pointed out that OPEC has made a major shift in people's lives towards more prosperity around the world, noting that even with the increase in the shift towards renewable energy resources, crude oil will retain its main role in the energy mix.
    He added that technological progress will also enable the oil industry to be strengthened in order to achieve growth and prosperity while reducing its environmental footprint, pointing out that, for example, this will be achieved through raising levels of efficiency in controlling emissions and capturing and storing carbon.
    The report promised that the UAE plays its large and influential role in contributing to an ambitious plan to expand the use of renewable energy in the local market and to adopt an effective and important energy strategy until 2050, the most prominent of which is the adoption of a major transformation related to new resources​.

     Minister Al Mazrouei mentioned​ that his country is shifting from a level of about 100 percent of dependence on natural gas - which is the cleanest resource of fossil fuels - to 50 percent of a contribution that comes from new environmentally friendly resources, most notably renewable energy sources at 44 percent and energy resources Nuclear is about 6 percent, and the energy mix is ​​expected to change in this manner more stable by 2050.
    He explained that the new energy policies in the UAE require huge expenditures - according to the assurances of the Minister of Energy - where about $ 160 billion is allocated to support new projects for energy, and the share of fossil fuels will be about 50 percent, pointing out that the main goal will remain to reduce the carbon footprint by capture and store carbon​.
    ​The report stated that Abu Dhabi National Oil Company "ADNOC" was a pioneer in disseminating the latest technologies to capture and store carbon to reduce emissions and achieve the best and most efficient use of oil and natural gas resources, noting that energy production to meet demand and the deployment of new technologies also requires increasing investments continuously, pointing to the need for huge investments in the future, just as investors are looking to obtain a fair return on their capital.​
    The report added that the developed countries have more ambitions towards renewable energy than developing countries, where they seek to achieve their best development of energy resources, while oil and gas remain a pillar of development in developing and emerging economies, especially in Africa and Asia.
    He pointed out that for Nigeria in particular, and according to the Minister of Petroleum Resources, there is a focus in the near future on promoting oil and gas investments, stressing that there is no justification for reducing investments in the oil sector, noting the fundamental importance of this vital industry in meeting the total global demand for energy in the future Perspective.​
    The report stressed that tackling climate change is not a race against oil, but rather is an intense effort against carbon emissions, noting that we should not pressure oil investments to reach the zero level, as it is not objective to consider it the sole responsible for carbon emissions, stressing the continuation The main role of oil in the energy mix is ​​energy even in light of the increasing dependence on renewable energy sources.
    The report pointed to Nigeria's keenness to praise the historical role of "OPEC" in supporting the stability of a sustainable market, noting the importance of celebrating the 60th anniversary of the establishment of "OPEC" next September, explaining that without "OPEC" the market could have witnessed a bad situation From the lack of stability, as the market was likely to fully run out of control and the future of the oil industry may be affected negatively and by the absence of clear future visions​
    Nigeria seeks to modernize old refineries and support plans to expand refining capacity starting from the first quarter of this year, in addition to the intensification of gas projects in Nigeria next year, pointing to the need to do a lot in gas distribution to ensure better energy stability.
    The report quoted Manuel Salvador, Minister of Petroleum of Venezuela, and President of the "OPEC" conference in 2019, that last year witnessed the agreement between the producers on vital measures, including additional production adjustments and the continuous progress in the cooperation charter in the "OPEC +" coalition, which made it a very fruitful and prosperous year. Pointing out the emphasis on enhancing continuous cooperation between "OPEC" and non-members of the organization through the development of the "Declaration of Cooperation" and the Joint Charter.​

    The report quoted the Venezuelan minister, that last year was full of challenges in reference to the sanctions against the oil sector in his country and the targeting of the Venezuelan economy in a large way, which created many difficulties for the Venezuelan people and dealt a blow to oil production in the country.
    The report pointed to the aspiration of Venezuela to return to the production of oil in the country to its normal levels, noting that the production of Venezuela recorded in 2018 the level between 1.5 to 1.6 million barrels per day, before imposing sanctions on the country in early 2019.
    The report sees that 2020 represents a milestone for OPEC, as the 60th anniversary of the founding of the organization comes, considering that there are many reasons for celebration, the most important of which is that "OPEC" has provided and provided many benefits to producers and consumers, the most important of which is to maintain the stability of the oil market, noting that Oil has provided many benefits and everyone must cooperate to see it as a tool to promote the development and welfare of peoples.
    Oil prices had risen more than 1 percent at the end of the week, achieving its first weekly gains since early January, with investors betting that the effect of the coronavirus will be short-term and their attachment to the hope for more stimulus measures from the Chinese Central Bank to address any slowdown economically​.
    According to "Reuters", Brent crude rose 98 cents, equivalent to 1.74 percent is determined to settle at $ 57.32 a barrel, crude and increased 5.23 percent during the week, the first weekly gain in six weeks.
    US West Texas Intermediate crude futures rose 63 cents, or 1.23 percent, to close at $ 52.05 a barrel, and the weekly increase was 3.44 percent.

    Jim Ritterbusch, The president of Ritterbusch & Co., said that ​"The massive liquidation process, which pushed prices down sharply last month, is likely to be completed to be replaced by purchase, as well as coverage of the city centers of speculators, who have recently entered the market," 
    Brent has fallen about 15 percent since the start of the year, due to factors including concerns that the virus will harm the global economy, but market sentiment improved with the reopening of factories in China and the government easing monetary policy with the second-largest economy in the world.
    Dan Bruilett, the US Secretary of Energy, believes that the impact of the virus outbreak in China on global energy markets is marginal, and is unlikely to dramatically affect oil prices even as Chinese demand drops by 500,000 barrels per day.
    In the face of declining demand, the Organization of Petroleum Exporting Countries (OPEC) and its allies are considering, within the framework of what is known as "OPEC +", to reduce production by up to 2.3 million barrels per day.
    For its part, the US Energy Information Administration reported that US stocks of crude oil rose higher than expected last week, while gasoline and distillate stocks decreased.
    Crude inventories increased by 7.5 million barrels over the past week to reach 435 million barrels, and analysts had expected in a poll to increase stocks by three million barrels​.

    The net US imports of crude oil rose 806 thousand barrels per day to 4.01 million barrels per day last week.
    And American energy companies raised the number of oil rigs operating for the third week in four weeks even at a time when producers plan to continue to cut spending on new drilling activities for the second year in a row in 2020.
    Baker Hughes Energy Services said in its closely watched report that energy companies added an oil rig in the week ending February 7, bringing the total number of drilling rigs to 676.
    The number of operating rigs was 854 in the same week a year ago, and in 2019, the number of oil rigs, an early indicator of future production, fell by an average of 208 rigs after rising by 138 in 2018 as independent exploration and production companies cut spending on new drilling With shareholders seeking better financial returns in a situation where energy prices are falling.
    Despite the decline in the number of drilling rigs drilling new wells last year, US oil production continued to rise, in part because the productivity of the remaining rigs - the amount of oil, produced by new wells per platform - increased to record levels in most of the large rocky basins.​
    However, production growth is expected to slow in the coming years, after rising 18 percent in 2018 and 11 percent in 2019.
    The U.S. Energy Information Administration expects that US crude production will rise about 9 percent in 2020 to 13.3 million barrels per day and 3 percent in 2021 to 13.7 million barrels per day from the record level of 12.2 million barrels per day in 2019.
    Since the beginning of the year, the total number of oil and gas rigs operating in the United States has averaged 791, and most drilling rigs produce oil and gas.​

© All Rights Reserved for Asharqia Chamber