The stagnant Eurozone economy, the large Q2 contraction in Japan and the slowdown in emerging markets are all contributing to the weakness in hydrocarbon demand and putting downward pressure on international oil prices, QNB has said in a report.

By Pratap John
Chief Business Reporter

Qatar’s crude oil production fell in September to 690,000 barrels per day (bpd) but QP’s "redevelopment" plans should stabilise output to around 700,000bpd, a QNB report has shown.

In recent years, Qatar Petroleum (QP) has implemented a “redevelopment programme” to steady production at its oil fields. This heavy investment in existing oil fields, such as Bul Hanine, Al Shaheen and Dukhan, should lead to a stabilisation of oil production around 700,000bpd, QNB said in its latest edition of monthly monitor.

The report also showed Qatari oil prices fell in September owing to weak global demand.

The stagnant Eurozone economy, the large Q2 contraction in Japan and the slowdown in emerging markets are all contributing to the weakness in hydrocarbon demand and putting downward pressure on international oil prices, QNB said.

Declining oil prices dented investor sentiment in the Gulf region last month, the monthly monitor said. The best performer in the region was Qatar Stock Exchange, which shed only 1.7% in October.

Overall, all the regional markets ended in negative territory as investors preferred to book profits.
Dubai benchmark index (DFMGI) declined the most by 9.9% month-on-month (MoM). Saudi’s ‘Tadawul All-Share TASI Index’ was the second worst performer over the month, losing 7.6%.

All the regional markets ended in negative territory, as investors preferred to book profits.

The report showed Qatar’s international reserves increased $0.3bn to reach an all-time high of $43.8bn at end-September. This compares to a level of $39.3bn at end-September 2013.

The large increase reflects the strong current account surplus Qatar is enjoying. The latest data show that the import cover stood at 8.2months at end-September 2014, well above the IMF-recommended level of three months for pegged exchange rates.

Qatar’s international reserves have been steadily rising over the years on large current account surpluses.

Going forward, QNB Group expects international reserves to rise further in 2014 and 2015 on continued high current account surpluses.

The share of investment in Qatar’s GDP rose to 30.4% in the second quarter of this year, compared with 27.9% a year earlier, QNB said citing new data published by the Ministry of Development Planning and Statistics (MDPS). This is driven by the implementation of major projects in preparation for the FIFA 2022 World Cup.

As a result, non-hydrocarbon real GDP growth continued to expand at a double digit rate (11.3%) in Q2. The share of private consumption to GDP rose to 14.5% in Q2 (13.9% a year earlier).

The share of private consumption remains low by international standards, but is expected to rise over the medium term.

Looking ahead, QNB said large scale infrastructure spending and population growth was expected to drive growth in construction, manufacturing and transportation, while hydrocarbon production was expected to recover.