OPEC Points to 2020 Oil Surplus even as Demand Gradually Recovers

FILE PHOTO: A general view of the OPEC building and logo in Vienna , November 7, 2013. REUTERS/Leonhard Foeger/File Photo
FILE PHOTO: A general view of the OPEC building and logo in Vienna , November 7, 2013. REUTERS/Leonhard Foeger/File Photo
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OPEC Points to 2020 Oil Surplus even as Demand Gradually Recovers

FILE PHOTO: A general view of the OPEC building and logo in Vienna , November 7, 2013. REUTERS/Leonhard Foeger/File Photo
FILE PHOTO: A general view of the OPEC building and logo in Vienna , November 7, 2013. REUTERS/Leonhard Foeger/File Photo

The world faces an oil surplus in 2020 even as demand gradually recovers and record supply cuts by producers help rebalance the market, according to OPEC forecasts on Wednesday.

The latest monthly report from the Organization of the Petroleum Exporting Countries potentially increases pressure on the group and its allies, known as OPEC+, to curb more supply.

OPEC said demand would decline by 6.4 million barrels per day (bpd) in the second half of 2020, less than the drop of 11.9 million bpd in the first six months of the year, with a "gradual recovery" seen until the end of the year.

Oil prices have collapsed as lockdowns to limit the spread of the coronavirus have curtailed travel and economic activity. While some places in Europe and Asia have eased restrictions, concern over new outbreaks has kept a lid on prices.

To tackle the drop in demand, OPEC+ - which includes Russia - agreed to a record supply cut that started on May 1, while the United States and other nations said they would pump less.

OPEC said these curbs were already helping.

"The oil market was strongly supported by a reduction of the global crude oil surplus, thanks mainly to the historic voluntary production adjustment agreement," Reuters quoted it as saying.

Despite the cuts made already, OPEC still pointed to a surplus in the market this year, in part because it now expects supply from outside the group to be about 300,000 bpd higher than previously thought.

A technical committee of OPEC+ and a ministerial panel met Wednesday and are expected to hold talks Thursday to review the supply cut's impact and seek better compliance from those yet to deliver their share in full, such as Iraq and Nigeria.

Brent crude was trading above $40 a barrel after the report's release and is up from a 21-year low below $16 reached in April.

In the report, OPEC did not further reduce its forecast for world oil demand in 2020, after steep cuts in earlier months. Still, downside risks remain for consumption in top consumer the United States, according to the group.

The supply pact agreed in April involves OPEC+ cutting output by 9.7 million bpd in May and June. OPEC+ agreed on June 6 to extend the cut for another month, a decision OPEC said the market had taken well.

In its report, OPEC said it had cut supply in May by 6.3 million bpd to 24.2 million bpd. That amounts to 84% compliance with the pledges, according to a Reuters calculation – higher than some estimates.

Overall OPEC+ compliance stood at 87% in May, a source said on Wednesday.

OPEC estimated the demand for its crude this year at 23.6 million bpd, down 700,000 bpd from last month, suggesting it needs to cut about 600,000 bpd from May's rate to avoid a surplus.



Cityscape Global in Saudi Arabia to Introduce Over 100,000 Housing Units

Photo from the second edition of the Cityscape Global Exhibition in Riyadh (SPA)
Photo from the second edition of the Cityscape Global Exhibition in Riyadh (SPA)
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Cityscape Global in Saudi Arabia to Introduce Over 100,000 Housing Units

Photo from the second edition of the Cityscape Global Exhibition in Riyadh (SPA)
Photo from the second edition of the Cityscape Global Exhibition in Riyadh (SPA)

The Cityscape Global exhibition, set to open on Monday in Riyadh, is expected to introduce more than 100,000 housing units, financing options with interest rates starting at 2.59%, and discounts of up to SAR 100,000 (around $26,600) on various projects. The event will also feature one of the largest real estate auctions in the Middle East, with an estimated value exceeding SAR 1 billion ($266.6 million).
This announcement was made by Abdullah Al-Hammad, CEO of the General Real Estate Authority, during the Cityscape Global introductory meeting held on Thursday in the Saudi capital.
Al-Hammad emphasized that Saudi Arabia’s hosting of this major real estate event reflects the economic momentum the Kingdom is experiencing under Vision 2030.
He explained that the exhibition will play a key role in showcasing investment opportunities by providing comprehensive insights into real estate market trends, noting that the Kingdom is witnessing unprecedented growth in real estate and economic projects.
The exhibition will primarily focus on the Kingdom’s mega-projects, with participation from over 400 exhibitors, 100 institutional investors, and more than 500 leaders from the global real estate sector.
He added that this major gathering will facilitate access to diverse investment opportunities within Saudi Arabia’s real estate market, thus boosting foreign investment, diversifying the national economy, and supporting sustainable development.
Al-Hammad highlighted that the previous Cityscape exhibition attracted over 160,000 visitors and secured investment projects and agreements valued at over SAR 110 billion ($29 billion), including $19 billion in foreign investments. This year, the second edition is expected to see a 50% increase in transactions, projects, and agreements.
Abdulrahman Altawil, the Deputy Minister for Residential Supply Stimulus and Real Estate Development, told Asharq Al-Awsat that this major real estate event will host leading global names from various areas of the real estate industry, including development, design, and operations.
“A large number of international real estate developers are expected to participate in the event, with over 10 developers already launching projects in Saudi Arabia. The aim is to attract even more developers in partnership with local counterparts”, Altawil said.
Altawil noted that Saudi Arabia’s real estate and investment environment is highly attractive, providing promising and accessible opportunities for investors. He mentioned that the ministry is working to create a diversified landscape focused on attracting global companies to invest in the Kingdom.
The exhibition will feature a selection of experts and CEOs and will include a Real Estate Investors Forum, hosting 150 investors from 22 countries. This event aims to strengthen collaboration on investment projects, establishing itself as a key center for opportunities and investment.