UAE continues to demonstrate growth in non-oil sectors: Opec

The latest data from the Organisation of the Petroleum Exporting Countries (Opec) shows that the UAE continued to demonstrate growth in its non-oil sectors, registering a 6.7 percent expansion, y-o-y, in Q4, 23, up from 5.8 percent in Q3, 23.

In its Monthly Oil Market Report (MOMR) for June 2024, Opec says that the construction growth accelerated to 8.4percent in Q4, 23 from 8.0 percent in Q3, 23, while overall growth reached 6.4 per cent from 2.6 percent during the same period. Key services segments also experienced growth. Financial and insurance activities grew by 17.6 percent, y-o-y, in Q4, 23, up from 11.8 per cent in 3Q23.

Data from the Dubai Department of Economy and Tourism shows that 2023 was a record year for tourism in the emirate, with the number of international visitors up 19.4 percent from 2022, surpassing 2019 levels. Early indicators for 2024 point to another strong year in the tourism sector in Dubai, with the number of visitors in 1Q24 up by 11percent, y-o-y.

The Opec report referred that S&P Global’s PMI for the UAE indicated that this ongoing growth, particularly in the manufacturing sector, was supported by a 51percent increase in the issuance of new industrial licences in 2023.

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

The Opec, in a monthly report, said world oil demand will rise 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.

Opec’s report is the latest to flag robust oil market conditions heading into the second half of the year. Oil rose 3% on Monday after Goldman Sachs said transport demand would push the market into a third-quarter deficit.

Opec said steady global economic growth has continued in the first half of 2024 and forecast that world oil demand would rise by 2.3 million bpd in the second half.

“Globally, the services sector maintains a stable momentum,” Opec said.

“It is projected to be the main contributor to the economic growth dynamic in the second half of 2024, particularly supported by travel and tourism, with a consequent positive impact on oil demand.” Opec+, which groups Opec and allies such as Russia, has implemented a series of output cuts since late 2022 to support the market. The group agreed on June 2 to extend the latest cut of 2.2 million bpd until the end of September and gradually phase it out from October.

Oil was steady after the Opec report was released with Brent crude edging down towards $81 a barrel.

There is a wider than usual split between forecasters on the strength of oil demand growth in 2024, partly due to differences over the pace of the world’s transition to cleaner fuels.

The report showed that Opec, at the high end of forecasts, is sticking to its guns. Although Opec lowered its estimate of total demand in the first quarter of this year by 50,000 bpd to 103.51 million bpd, it increased its second-quarter forecast by the same increment and made no change to its full-year figure.

The International Energy Agency, which represents industrialised countries, expects much lower demand growth than Opec of 1.1 million bpd and is scheduled to provide an update on its view on Wednesday.

Goldman Sachs said on Monday solid summer transport demand will push the oil market into a third-quarter deficit of 1.3 million bpd. Figures in Opec’s report imply an even larger gap between supply and demand.

Opec projects demand for Opec+ crude, or crude from Opec plus the allied countries working with it, at 43.6 million bpd in the third quarter, much more than the group is currently pumping, according to the report.

The Opec+ group pumped 40.92 million bpd in May, the report said, citing figures from secondary sources. That marked a drop of 123,000 bpd from April with declines in Russia and Kazakhstan offsetting increases in Nigeria and smaller African producers

Asian stocks were in a guarded mood on Tuesday as investors pondered fresh political uncertainty in European markets, Reuters reported.

Moves were mostly modest, with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.5 percent in thin trade. Chinese blue chips fell 1.2 percent, having been shut on Monday, while the yuan hit a seven-month low.

Going the other way, Japan’s Nikkei firmed 0.3 percent and South Korea stocks rose 0.4 percent.

Europe market:  EUROSTOXX 50 futures also edged up 0.2 percent, steadying after Monday’s retreat, while FTSE futures were flat.

The euro, French stocks and government debt had been shaken after investors assessed the developments related to potential political instability.

Bond yields rose across Europe, with the spread between French and German debt widening notably.

Agencies