The UAE continues to show growth in non-oil sectors: OPEC


The OPEC report is the latest report that indicates a good situation on the oil market in the second half of the year.

The latest data from the Organization of the Petroleum Exporting Countries (Opec) shows that the UAE continued to demonstrate growth in non-oil sectors, recording a 6.7% year-on-year growth in Q4’23, up from 5.8 % in the third quarter of this year. .

In its Monthly Oil Market Report (MOMR) for June 2024, OPEC reports that construction growth accelerated to 8.4% in Q4’23 from 8.0% in Q3’23, while overall growth reached 6.4% from 2.6% in the same period. Key service segments also recorded growth. Financial and insurance activities increased by 17.6% in Q4 2023. y/y, compared to 11.8 percent in the third quarter of this year

Data from Dubai’s Department of Economy and Tourism shows that 2023 was a record year for tourism in the emirate, with the number of foreign tourists increasing by 19.4% compared to 2022, exceeding the level of 2019. Early indicators for 2024 point to another good year year in the tourism sector in Dubai, where the number of visitors in the first quarter of 2024 increased by 11% year-on-year.

The OPEC report pointed out that the S&P Global PMI for the United Arab Emirates shows that this continued growth, particularly in the manufacturing sector, was supported by a 51% increase in the issuance of new industrial licenses in 2023.

OPEC on Tuesday maintained its forecast of relatively strong growth in global oil demand in 2024 despite lower-than-expected consumption in the first quarter, saying travel and tourism would support consumption in the second half of the year.

OPEC said in its monthly report that global oil demand will increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

The OPEC report is the latest report that indicates a good situation on the oil market in the second half of the year. Crude oil rose 3% on Monday after Goldman Sachs said transportation demand would push the market into deficit in the third quarter.

OPEC said stable global economic growth would continue in the first half of 2024 and forecast that global oil demand would increase by 2.3 million barrels per day in the second half.

“Around the world, the services sector continues to maintain stable momentum,” OPEC said.

“It is expected to be a major contributor to economic growth dynamics in the second half of 2024, particularly supported by travel and tourism, which will consequently have a positive impact on oil demand.” OPEC+, which groups OPEC and allies such as Russia, has introduced a series of production cuts from the end of 2022 to support the market. On June 2, the group agreed to extend the latest cut of 2.2 million barrels per day until the end of September and phase it out from October.

After the release of the OPEC report, crude oil remained stable and the price of Brent crude oil dropped to $81 per barrel.

There is greater than usual divergence among forecasters on the strength of oil demand growth in 2024, partly due to differences in the pace of the global transition to cleaner fuels.

The report shows that OPEC, although the forecasts are high, maintains its position. Although OPEC lowered its estimate of total demand for the first quarter of this year by 50,000 barrels per day to 103.51 million barrels per day, it raised its forecast for the second quarter by the same amount and did not change its figures for the full year.

The International Energy Agency, which represents industrialized countries, expects demand growth to be much lower than OPEC at 1.1 million barrels a day and is expected to update its views on Wednesday.

Goldman Sachs said on Monday that solid summer transportation demand will push the oil market to a deficit of 1.3 million barrels a day in the third quarter. Data included in the OPEC report indicate an even greater gap between supply and demand.

According to the report, OPEC forecast that demand for OPEC+ crude, or oil from OPEC and its working allies, will be 43.6 million barrels per day in the third quarter, significantly more than the group is currently pumping.

According to the report, citing data from secondary sources, in May the OPEC+ group produced 40.92 million barrels per day. This represented a decline of 123,000 barrels per day compared to April, with declines in Russia and Kazakhstan offset by gains in Nigeria and smaller African producers

Reuters reported that Asian stock markets were cautious on Tuesday as investors reflected on fresh political uncertainty in European markets.

Movements were mostly modest, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.5% on weak trading. Chinese blue chips fell 1.2 percent at the close on Monday, while the yuan hit a seven-month low.

Going the other way, Japan’s Nikkei strengthened 0.3 percent and South Korean shares rose 0.4 percent.

European market: EUROSTOXX 50 futures were also up 0.2 percent, stabilizing after Monday’s rebound, while FTSE futures were flat.

The euro, French stocks and government debt were shaken as investors assessed developments related to potential political instability.

Bond yields have risen across Europe and the gap between French and German debt has widened significantly.