Brent crude prices will average $52 a barrel in 2009, Bank of America subsidiary Merrill Lynch said, revising its previous estimates upward by $2 a barrel.
Predicting an oil price of $62 a barrel in 2010, Merrill Lynch said that the steps taken by governments to prevent their economies from falling into recession are slowly boosting energy demand. Huge refinery capacity being added across the world would contribute in keeping prices of oil products low for the next three years, said a Merrill Lynch report prepared by commodities analyst Francisco Blanch.
Brent crude for May delivery last traded at $51.22 a barrel on London’s ICE Futures Europe exchange having risen 1.1 per cent from its previous day’s close.
Nymex crude for April delivery closed at $51.06 a barrel on Saturday.
The upward revision in oil prices comes close on the heels of an Opec meeting in Vienna in which the members decided not to further shave off supplies.
The Opec has reduced daily output targets by 4.2 million barrels since September to prevent a supply glut.
Members need to trim about 800,000 barrels a day to comply with the quotas that went into effect in January. Richard Savage, Head of Energy Research at London-based Mirabaud Securities, had recently said that most of the Opec members other than Saudi Arabia are not complying with the cuts that became effective in January this year.
“We are revising up our 2009 Brent forecast to 2009 Brent forecast to $52 a barrel from $50 per barrel on the back of a tighter-than-expected oil market balance as we had into second half of 2009. The combination of sharp Opec output cuts in recent months and the worsening outlook for non-Opec production means less availability in second half of 2009,” Merrill Lynch said in a 24-page report.
“Additionally, sharp interest cuts across a broad range of EMs (Energy Markets) coupled with expansive fiscal policies, should help boost energy demand for prices, or both over the next year,” the report added.
Meanwhile, news reports yesterday said that oil prices may subside in the immediate future.
Seventeen of 33 analysts surveyed by Bloomberg News said futures will fall in the week ending March 27.
Twelve of the respondents said that the crude prices will increase and four said that there will be little change.
The reluctance of governments across the world to guarantee debts may serve as a rider to its forecasts Merrill Lynch said. “The main risk to our view remains a major sovereign debt crisis that creates a widespread contagion to the healthier EMs.”
Merrill Lynch said that the growth of production in non-Opec countries this year will not be as high as it had earlier expected.
“We are also reducing our non-Opec supply growth outlook from 271,000 b/d for 2009 down to -43,000 b/d, although this figure could still be much lower.
“On the demand side, we now expect a global oil demand contraction of 1.20 million b/d this year, and an increase of just 826,000 b/d next year.”
Making another important statement, Merrill Lynch said that the oil sand projects will be viable at 25 per cent lower than the earlier prevalent prices.
Most of the projects located in Canada, which were earlier viable for extraction of oil if it traded at $90 a barrel, will now be viable at 25 per cent lower prices.
“Given the sharp drop in the global economy, we now believe a cost reduction of 25 per cent in oil sands projects is achievable over the next few years. If achieved, this could drive the required oil price to generate acceptable returns from $90/bbl back down to the $70-$75/bbl range. We lower our long-term price assumption to $72 accordingly, but we still expect some price volatility around this figure,” it said.
Merrill Lynch said that the cuts in production made by Opec members has “created a floor” for the global crude prices. “Against our initial expectations, Opec production cutbacks have been very significant. From a peak of 30.3 million b/d, Opec-11 crude oil production has come down by 4.9 million b/d to about 25.4 million b/d, helping create a floor to global crude oil prices.” It said major oil producers like Saudi Arabia and Kuwait have cut production beyond their allotted quota.
“Moreover, it is important to note that Opec has remained a rather cohesive group during the last six months, although Saudi Arabia has continued to deliver the lion’s share of the production cuts.
“In fact, both Saudi Arabia and Kuwait have cut production beyond the targets imposed by the organisation, with Iran, Angola and Libya lagging substantially behind,” it added.
Merrill Lynch said the fast declining consumption rate has been stemmed.
“In the United States, the latest Energy Information Agency figures suggest that gasoline demand is expanding at a rate of 1.6 per cent relative to last year. In fact, after a year of extreme weakness in gasoline demand, it would appear that consumption has stabilised.
“Meanwhile, other key indicators of demand, including global air traffic, suggest that the rate of contraction has stabilised in the consumer-linked share of the global oil demand pie. In particular, the rate of contraction in Europe and Asia seems to have turned, while North American demand is arguably not falling as fast.”
In a rather surprising estimate, Merrill Lynch said oil markets may run into deficits in the second half of 2009.
“Due to a sharp contraction in oil output and a more stable demand outlook, inventories will likely not increase as fast going forward. This is particularly true for the United States, where crude oil stocks will likely draw going forward. In fact, our estimates suggest that the global oil market could move from a very large surplus into a deficit in 2H09. While we still see OECD inventories building seasonally in 2Q09, we believe a draw is likely in 3Q09.”
Merrill Lynch said that there will be a slow recovery in oil demand the next year.
“While inventories could draw in 2H09, adding upward pressure on crude oil prices, we now see a shallower global oil demand recovery next year.
“We expect a global oil demand contraction of 1.2 million b/d in 2009, up from our November estimate of a 400,000 b/d pullback. Yet we only see a modest recovery of 826,000 b/d in oil demand next year from a depressed level of 85 million b/d this year,” it said.
Merrill Lynch said that its growth forecasts are based on the expected growth of economy of the countries.
“In part, our view is linked to the muted OECD growth recovery expected United States barely expanding by one per cent next year, any increase in global oil demand will rely again on the slightly brighter outlook for emerging markets.”
Consequentially, Merrill Lynch lowered the 2010 forecast for Brent at $62 a barrel. The oil contango (future price higher than the current price) would ease in 2010, Merrill Lynch added.
“Given the shallower demand recovery and the increased spare capacity in refining and crude oil supply within Opec, we are now also lowering our 2010 WTI and Brent crude oil price forecasts from $70/bbl to $62/bbl. With the oil market turning more balanced and inventories heading for a draw, oil prices will likely strengthen in the near term.
However, long-dated prices are unlikely to follow suit, as the demand recovery will likely be shallow. In a market with abundant spare capacity and a tightening balance, the pronounced crude contango should go backward, or a flat curve.”
Health insurance provider Green Crescent Health Insurance Co will list on the Abu Dhabi Securities Exchange (ADX) on Thursday, the bourse said on Wednesday.
The firm will be the 66th listed in the Abu Dhabi capital and the second to list in the United Arab Emirates this year.
Dubai contractor Drake & Scull debuted on the Dubai bourse last week after an initial public offering in July.
Gulf stock markets have plummeted since then as a result of the global financial downturn.
Green Crescent Insurance Co (GCIC) closed a Dh250 million ($68 million) IPO in June that was 70 times oversubscribed, the bourse said in a statement.
“The money raised through our IPO will help us expand and reach our goal of becoming the leading quality provider of health insurance in the region,” it quoted CEO Carl Sardegna as saying. The firm was set up in Abu Dhabi last year.
The fair price for oil is $70-75 a barrel, said the President H.H. Sheikh Khalifa bin Zayed Al Nahyan, the state news agency reported on Wednesday.
“The prices are low and as such they affect all. Fair price per barrel from our point of view is $70-$75,” Sheikh Khalifa bin Zayed al-Nahayan said in an interview with Qatar’s Al Watan daily, carried by official UAE news agency Wam.
Earlier on Wednesday the UAE central bank governor said he did not expect oil prices to exceed around $40-44 a barrel this year and that would have great impact on the economies of the oil-exporting region.
The fair price for oil is $70-75 a barrel, said the President H.H. Sheikh Khalifa bin Zayed Al Nahyan, the state news agency reported on Wednesday.
“The prices are low and as such they affect all. Fair price per barrel from our point of view is $70-$75,” Sheikh Khalifa bin Zayed al-Nahayan said in an interview with Qatar’s Al Watan daily, carried by official UAE news agency Wam.
Earlier on Wednesday the UAE central bank governor said he did not expect oil prices to exceed around $40-44 a barrel this year and that would have great impact on the economies of the oil-exporting region.
The fair price for oil is $70-75 a barrel, said the President H.H. Sheikh Khalifa bin Zayed Al Nahyan, the state news agency reported on Wednesday.
“The prices are low and as such they affect all. Fair price per barrel from our point of view is $70-$75,” Sheikh Khalifa bin Zayed al-Nahayan said in an interview with Qatar’s Al Watan daily, carried by official UAE news agency Wam.
Earlier on Wednesday the UAE central bank governor said he did not expect oil prices to exceed around $40-44 a barrel this year and that would have great impact on the economies of the oil-exporting region.
Downtown Burj Dubai is offering a visual treat for residents and visitors as testing work of The Dubai Fountain, the world’s tallest performing fountain, progresses for the official unveiling of the music, water and visual spectacle. At 900 ft (275 metre) in length, The Dubai Fountain is located on the 30-acre Burj Dubai Lake, and is one of the world’s most advanced water, light and sound fountains. It is billed to become one of Dubai’s popular tourist attractions, when officially launched later this year.
While testing of The Dubai Fountain progresses all through the day, its music components are tested after 8pm every evening making it audio-visual delight. Onlookers from The Dubai Mall and Souk Al Bahar lake promenade can witness the fountain rising to a height of up to 500 ft, equivalent to that of a 50-storey building.
Undertaken zone by zone across its entire length, most of the testing and operations are being executed underwater. It involves a series of electronic, mechanical and process checks, executed by experts from WET, the California-based designer of The Dubai Fountain, who also designed the Fountains of Bellagio.
The current testing, mostly computer controlled with limited human involvement, will feature random water jets that gain momentum as each connection device and nozzle is tested and cleared. Simultaneously, a team of choreographers will get to work to synchronise the water movement to selected music pieces. Work on the music-water synchronization had started much earlier with WET designers using its proprietary VirtualWET programme to build the show, piece by piece.
Mr Mohamed Alabbar, Chairman, Emaar Properties, said: “The Dubai Fountain is an unparalleled light and music spectacle for the city, and will add to its tourist appeal. Undertaking a project of magnificent proportion demands extensive testing to ensure the smooth integration of its varied aspects. Like Burj Dubai and The Dubai Mall, Emaar’s landmark projects, The Dubai Fountain is also marked by international partnerships with several specifically trained professionals working on it including a team of expert choreographers.” He added: “The Dubai Fountain is not only a celebration of the affinity for aesthetic water features that is associated with the Arab world. It also creates a new lifestyle destination for Dubai in the 500-acre Downtown Burj Dubai community. Several innovative lifestyle concepts are being developed around the Dubai Fountain including an abra service on Burj Dubai Lake, an amphitheatre and a range of colourful activities.” Highlighting the advances in fountain engineering, The Dubai Fountain has a unique construction design, featuring five circles of varying sizes and two arcs. In comparison, the Fountains of Bellagio in Las Vegas has only one arc and three circles. WET also introduces different types of feature equipment in these geometries to create the desired choreographic show capabilities. The Dubai Fountain has double the mass of nozzles including fan nozzles that are not present in the Las Vegas master-piece.
When fully operational, The Dubai Fountain will have over 22,000 gallons of water airborne at any given moment. Powerful nozzles take the water-jets to heights ranging from 3 to 500 ft. Over 6,600 most advanced incandescent large fountain lights and 25 colour projectors create a visual spectrum of over 1,000 water expressions. Adding to its allure, the fountain will sway to the melody of selected Arabic and World music.
“At WET, we aspire to total mastery of nature’s elements,” said Mark Fuller, WET’s founder and Chief Excellence Officer. “And with The Dubai Fountain, we not only defy gravity, we have utilized the latest technology in lighting, robotics, and our signature water Shooters to create an unparalleled experience that brings people together through a shared experience of light, sound and emotion.” The Dubai Fountain will be a spectacular addition to the varied lifestyle offerings of Downtown Burj Dubai, the flagship mega-project of Emaar. The fountain overlooks Burj Dubai, the world’s tallest building, and is on the footsteps of The Dubai Mall, one of the world’s largest shopping and entertainment destinations. Emaar Boulevard, a 3.5 km boulevard is another lifestyle attraction at Downtown Burj Dubai, which also has four fully-operational hotels. Souk Al Bahar, a modern shopping mall with Arabesque architectural features, is an added attraction. Several homes and offices have been handed over to customers bringing Dubai’s new downtown to life.
Under the patronage and with the support of HRH Princess Haya Bint Al Hussein wife of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, Dubai Health Authority have partnered with global organizations in an effort to create a platform for raising public awareness on issues related to the well being and health of children and young Arabs.
This year the DHA is working with the World Health Organization, UNICEF, the Arab League and others, to highlight the importance and significance of the strategies and programmes aimed at specific areas of child health. The 4th Arab Children Health Congress (ACHC), which will take place 20 – 22 April 2009 in Dubai, will focus on �Accidents, Injuries and Trauma’.
The perceptions, concerns and causes of accidents and injuries among children is discussed in research released today. The research provided by YouGov Siraj to support the Dubai Health Authority’s ACHC, found that 42% of respondents knew of children who had suffered from accidents or injuries occurring at home, school or on the roads in the UAE. However, significantly, 15% didn’t talk to children – their own or those that they knew – about ways to prevent accidents. The findings highlight the need for greater awareness and education on this issue, which will be addressed at the Congress.
Further research from the World Health Organisation (WHO) and UNICEF estimates that nearly one million children under the age of 18 years die as a result of an unintentional injury1. Tens of millions more children are non-fatally injured and many of these require hospital treatment. For survivors, the impairment that injuries can cause and the resulting need for care and rehabilitation have far-reaching impacts on a child’s prospects for health, education and social inclusion and on their parents’ livelihood Senator Dr. Rowaida Al Maaitah, Head of Scientific Committee ACHC said: “Every day around the world the lives of more than 2,000 families are torn apart by the loss of a child to an unintentional injury – due to a road traffic crash, a drowning, burn, fall or poisoning – most of which could be prevented. Our own research emphasizes the unsurprising, but significant prevalence of such accidents in this region, and also draws attention to the urgent need for increased education here.
“By addressing these issues at this year’s Arab Children Health Congress, we aim to encourage better understanding of the causes of different accidents occurring in a variety of common settings, and educate on how these accidents can be minimized.” Now in its fourth year, the Arab Children Health Congress is committed to raising awareness around these issues of accidental injuries and trauma, and the adverse effects such conditions have on not only children’s lives, but also their families
In a bold move, Abu Dhabi government-linked Aabar Investments has taken advantage of the low prices for shares in global companies and bought a 9.1 per cent stake in German carmaker Daimler.
This brings investment in international companies by UAE entities to more than Dh134 billion over the past two years. Dubai World and Mubadala Development Company are among the companies that have snapped up stakes in infrastructure and financial services groups, among others, across the world, as the UAE increasingly seeks to diversify its investments.
Dubai-based Gulf News observed Wednesday in its editorial that “Buying huge stakes in global corporations might seem a risky move at a time when the world economy is in serious trouble. The value of shares in many international companies has suffered stomach-churning declines over the past two years.
It added that for many but the bravest it is hard to see profitable investment opportunities in the present economic environment and it takes a steady nerve to hold on to shares when their value goes up and down by wide margins almost daily.
“But it is widely accepted wisdom among investors that it is the time you spend in the market that determines how well your investments perform. Aabar Investments and other UAE companies which have put money into equity stakes on the international markets, have taken the long view”, the paper said.
President HH Sheikh Khalifa bin Zayed Al Nahyan, stressed that the UAE was looking forward to the forthcoming Arab Summit in Qatari capital, Doha, to mend Arab fence and settle the regional issues amicably.
Speaking to Qatari Al Watan newspaper in an interview, Sheikh Khalifa said the Arab leaders, who will take part at the summit, will open new page of Arab joint work despite current challenges in the region. “The summit will tackle the regional issues, including the Palestinian issue in the light of the Israeli occupation, as well as, the Golan Heights, Lebanon issues and the current situation in Iraq.” He deemed the US President Barack Obama’s message to Iran as positive and prelude to a serious dialogue that could bring to an end the perennial tension between the two countries.
Sheikh Khalifa said that the UAE constantly “calls for a dialogue to preserve stability, because we are against tension whether between US and Iran or others in order to safeguard security of Gulf and Arab region”, indicating that any proximity between the US and Iranian leaderships would keep this strategic region at bay in regard to wars and crisis.
“Dialogue is required to overcome crisis. It is the sole channel to overcome problems in the region and usher in a new era of peace and stability”, he added.
On the UAE three Islands occupied by Iran, Sheikh Khalifa said he was hoping the Iranian leadership would respond to “our demand and put things right by restoring the UAE sovereignty to the three Islands. After all, we are not requesting something impossible, but we are calling for legitimacy over our three Islands- Abu Mousa, Tunb Greater and Lesser Tunb”.
He reiterated that the UAE would accept a verdict whatever it is from the International Court of Justice.
Sheikh Khalifa said the “Iranian nuclear programme is worrying us, particularly if it is not peaceful. We are against any non peaceful nuclear programme in the region. And no one in the region will stage protest against the Iranian nuclear programme in case it is peaceful.” He welcomed Syrian President Bashar al-Assad or other Arab leaders’ mediation to settle the issue of occupation of the three UAE Islands by Iran. “We respect President al-Assad and welcome his mediation, and we also welcome any Arab mediation, because we need peace and justice and do not want but our legitimacy over the three Islands”.
Sheikh Khalifa called for the US and European countries and others to put pressure on Israel to accept peaceful just solution of the Palestinian problem in line with the Arab Peace Initiative, which advocates setting up of an independent Palestinian State with Jerusalem (Al Quds) as a capital in return for recognition of Israel.
About the current oil prices at the world market, he said “the prices are low and as such they affect all. Fair price per barrel from our point of view is $70- $75″.
On proposal to construct a bridge between Abu Dhabi and Doha, Sheikh Khalifa said, the proposal exists and would be executed in the best interest of the two countries and peoples. “We are in contact with HH Sheikh Hamad bin Khalifa Al Thani, Emir of Qatar, to remove the impediments which hamper construction of the bridge”.
He said the effects of the global financial crisis have touched all, adding that “it is natural the UAE is affected too as we play pivotal regional and international financial and economic roles”. Sheikh Khalifa noted that when the global financial crunch began “we moved immediately to curb it as we injected liquidity into our banking system, and resuscitated some corporations affected much by the crisis”.
Sheikh Khalifa called on the Palestinians to respond to the efforts being exerted by Egypt through embracing the higher national interests against partial ones, hoping that these efforts will bring about Unified Palestinian Stance, able to deal with the issues of next phase, whether peace process or reconstruction.
The Federal National Council (FNC) passed today three federal bills on the Sheikh Zayed Housing Programme, creation of the federal customs authority and Emirates Securities and Commodities Authority.
In its 8th session, the house also gave its nod for recommendations regarding the Marriage Fund.
At the outset of the session, First Deputy Speaker Ahmed Shabib Al Dhahiri praised a statement issued by the ordinary meeting of the Arab Parliament condemning Iranian officials for their remarks on UAE sovereignty over its three islands, occupied by Iran. The statement backed UAE’s peaceful efforts to resolve the issue.
Ministers of health, education and economy answered questions raised members of the house in areas of their specialisations.
Two federal decrees on the Emarati-Spanish agreement on mutual exemption of holders of diplomatic passports from entry visa requirements and the UAE-FAO agreement concerning the organisation’s sub-regional office for GCC and Yemen.
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