Power Up: Oil demand in question
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Aug 12 - Hello Power Up readers!OPEC today lowered its demand growth outlook for the first time in a year, a move that highlights the challenge the group could face as it prepares to phase out a layer of output cuts. Oil prices are up anyway, marking the fifth consecutive session of gains as fears of a U.S. recession eased and tensions in the Middle East stoked new supply concerns. Brent is trading above $80 a barrel and WTI is near $78 a barrel.
OPEC lowers its outlook ahead of planned output increases
The Organization of the Petroleum Exporting Countries on Mondaycut its demand forecast for the first time since it was made in July of last year on concerns around China's economy.
This comes as the group is set to begin unwinding a layer of production cutsof 2.2 million barrels per day from October. Despite current cuts, the group's output is increasing and was up 117,00 bpd month-over-month in July to 40.9 million bpd, led by Saudi Arabia.
OPEC now sees demand rising by 2.11 million bpd this year, versus previous expectations of 2.25 million bpd. That is still well above the International Energy Agency's forecast of 970,000 bpd, which will be updated tomorrow.
It lowered its forecast for next year's demand growth to 1.78 million bpd, versus 1.85 million bpd previously. Demand grew at 1.4 million bpd on average annually before the COVID-19 pandemic.
Saudi exports to China are expected to fall in September to 43 million barrels, down about 3 million barrels from August, as demand there is slowing.
Global oil demand will need to grow at a faster rate to absorb the rise in production as OPEC rolls off some of those cuts. U.S. and Chinese demand disappointed in the first seven months of the year. We've got a nice dive into the factors at play here.
In another corner of the energy world, petrochemical producers in Europe and Asia are facing troubles amid a build out of capacity in China and as higher energy costs in Europe are depressing margins, Mohi Narayan and Joyce Lee report.
Some 24% of global petrochemical capacity is at risk of permanent closure by 2028 due to weak margins, consultancy Wood Mackenzie estimates. Asian propylene production margins could see a loss of around $20 per metric ton this year.
Taiwan's Formosa Petrochemical has shut two of its three naphtha crackers for a year, and in Malaysia, PRefCHem - a venture between Petronas and Saudi Aramco - has had its cracker shut since earlier this year.
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Spot prices for Asian liquefied natural gas hit a seven-month high last week following concerns of Russian supply disruptions after Ukraine mounted a surprise incursion, Marwa Rashad reports. The jump in prices also follows unplanned nuclear outages in South Korea.
Brazilian state-oil company Petrobras is open to paying extraordinary dividends this year, its chief financial officersaid during an earnings call on Friday. The company posted worse-than-expected results during the second quarter with a net loss of 2.6 billion reais ($472.22 million).
Nigeria's 650,000-bpd Dangote oil refineryis asking regulators to require producers to abide by a law that requires them to supply local production facilities, Isaac Anyaogu reports. This request comes as the massive facility is struggling to gets sufficient supplies in Nigeria.
Utility company Hawaiian Electric raised going concerndoubts on Friday after disclosing it did not have a financing plan in place for the $1.99 billion Maui wildfire settlement. The company said it is working with financial advisers to develop a plan.
New Fortress Energy missed second-quarter earnings estimates, sending its stock down 25%. The dour report came amid delays in start up a floating LNGexport facility off the coast of Altamira in Mexico.
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Editing by Marguerita Choy
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